Will India benefit from De-monetisation of Rs.500/- and Rs.1000/-

The aim of de-monetisation of Rs.500/- and Rs.1000/- was to bring down the black money economy. According to a latest report by ‘Yes Institute ‘, an estimated sum of Rs.4 Trillion is the total size of un- accounted money in cash, also known as black money is being in circulation of India , which was found to be the main cause for all the problems of Indian Economy.

Abolition of Corruption:

With a curb on black money, corruption has been shown the door which has been closed behind its back for a long time. The black money part of the value of property will not exist anymore. Anyone who is saving honestly can find a property which was out of his/her bounds earlier in less than half the originally quoted money. The ratio of white vs. black money was found in the ratio of (50: 50).

Taming Inflation:

This surgical strike of de-monetisation, will affect all the sectors of the economy; since the hoarded black money holders will be afraid to make purchases in the market due to a fear of declaring the assets. This will reduce the circulation of money in the hands of people and decrease the demand for the producer; leading the economy to go through the phase of deflation and that will lead to a fall in the products prices and eventually get cheaper.

Ease in availability of Bank Loans:

As more money gets into banks from the black money hoarders, the bank reserves would increase and that would make banks to lend more money to the honest consumer and producer. Further to increase the bank lending, the interest rate also would be reduced and the cost of production to producer also will become reduced, which will again boost production without increasing products prices. This would result in increase d production, increased GNP and “Make in India Scheme” would become a reality.

Digital India Formation:

The digital currency will now slowly get into the consumer and the market mindset under the new scheme of things. Only a limited amount of money could be encashed via ATMs and banks, paving way for soft money being circulated via online portals. Nowadays for Uber taxi fare, one can easily pay from Paytm app. And need not tender any cash currency, all the transactions could be done via various apps in the smart mobile phone. Again for this, more smart phones would be produced at an economical price leading to economic prosperity.

Eradication of Hawala Money:

Hawala is an Arabic word, which means transaction. The use of black money for buying gold and financing the terrorist are done by un-accounted money (Not accounted and no IT paid or filed with the Govt.) kept in foreign banks. It is not a hidden fact that money looped via hawala from across the borders of India, is used to proliferate terrorism domestically. Several intelligence reports have confirmed that hawala money transactions only lead to terrorism. This Modi’s Magic on curbing terrorism will lead to reduction of terrorism around the Indian Territories.

 

 

 

 

Why there is “hue and cry” in the society over demonetisation?

A honest tax payer would be protected and the tax evader will have to face the penalty of 200% tax payable would be levied, if the cash deposited in bank accounts does not match with income declared . It is also unethical to exploit economically challenged people for individuals benefit. On other hand currently certain agencies exist in the society which converts unaccounted money into white for a mere profit of 30%; one such route being used by them is: depositing money in the name of Farmers as agricultural income which will be non taxed in India. For any criminal offences the government also has informed, they would be strictly punished with fine and 7 years of imprisonment.

What the Government still needs to work on:

According to Wikipedia, “In February 2012, the director of India’s Central Bureau of Investigation said than Indians have US$500 billion of illegal funds in foreign tax havens, more than any other country. Further certain percentage of unaccounted money stocked in the form of valuable commodities such as gold and securities in the vaults by certain section of people. In the next action, the bank locker details have to be given to Government Authorities, while filing I.T and in other mandatory disclosures

Conclusion:

In this demonetisation effort, in the beginning, people were used to exchange the old currency with new currency by an identification mark, but this was done after few days, otherwise, this exercise would have been more fruitful. Henceforth, the economy would be driven by digital money and the physical currency use would slowly vanish ; paving way for India becoming one of the economically super power countries in the world. The reference materials are taken from different Newspapers.