Is India Awaiting Economic Revolution After Currency Demonetisation?
Demonetisation of the high denomination notes of Rs.500 and Rs.1000 has been the boldest step taken by the Government of India on November 8th, 2016, which lead to ceasing all the old currency worth Rs.500 and Rs.1000 as a form of legal tender in India. This announcement was very shocking for the Indian citizens specifically for the ones who have a great amount of unaccounted cash, i.e., the black money holders. So let us evaluate whether it is a worthy move by PM which shall lead to a notable change in the Indian economy.
It is not wrong to say that this demonetisation is one of the generations’ memorable experiences and economic events of our time. Every citizen of India is dealing with its impact in some or the other way. The short-term implications which are negative in a sense can be ignored at some point of time, but the people want to know how it would reform the entire economy in the long run.
Here are some of the major points of consideration that would let us know whether India is awaiting growth or not:
- The decision made by PM on November 8th, 2016, met with mixed reactions of the people where a majority of them who are in favour believe it to be the best way to curb black money and the right step towards building a strong nation.
- Mr Arun Jaitley—Finance Minister of India, said that this move would clean the whole economy by enhancing the economic size and revenue base.
- With a withdrawal of approximately 86% of the Indian currency in circulation by this reform there has been a great impact on the market liquidity, which has lead to negative impacts on the growth rates at least in the short span of time.
- As per the Finance Minster, the benefits of this move would be appreciable in the long run as every economic transaction that was taking place out of the economy will take place within the economy itself leading to greater benefits.
- On the other hand, the inflation rates are expected to fall for a certain period in the medium term due to the lower money supply as the unaccounted cash will be thrown out of the system.
- As the tax rates have been raised by the government for the tax evaders or the black money holders, they will have to pay a larger sum to the government which will lead to rising revenue and increasing GDP, which is beneficial for the economy.
- The increased revenue of the government will be used to build nation’s infrastructure, roads, transport, etc., leading to the development of the nation.
- With the rising demand and requirement of bank accounts, the transactions shall be held using the banking channels which reduce the cash transactions and increase transparency.
- Apart from bank accounts, people would start using the online payment channels which will give a boost to Digital India Initiative of the government.
- Due to increase in the deposits, banks will charge less interest on loans from the borrowers. Accordingly, the foreign investments shall be enhanced, and commodity prices would fall leading to a reduction in inflation.
- When the demand for houses and nation development projects will rise, the skilled, as well as the unskilled manpower, will find the sources of employment which would gradually lead to a reduction in the unemployment rates.
- People will start investing their money in the gold deposit or monetisation schemes as an alternative to bank deposits which will reduce the gold imports in some way and hence the importation expenses will fall leading to the growth of the economy.
- With the removal of black money and unaccounted cash from the nation, real estate agents would not be able to demand cash and the property rates would fall down to a great extent. In this manner, people would be in a better position to buy their own houses at a low price.
- In some or the other way, bribery will be reduced as the officials will have fear to take cash by way of bribes and this would reduce our ranking in the corruption index.
- Reduction in corruption would be helpful for the foreign investors to initiate investing in India. But with this demonetisation India’s rank on a global scale in terms of doing business will improve with the reduced corruption.
- The other illegal activities like smuggling, terrorism, etc., will also get reduced as they completely rely on cash funding. This, in turn, would lead to a secure environment in the country.
- Even if the black money is torn out or burnt, it would help the Indian economy to grow higher as the same amount wouldn’t be utilised for any corruptive or illegal activity in the nation.
Accordingly, the move of demonetisation by Prime Minister would definitely lead to a revolutionised change for the nation. Indian economy will soon lessen down the gap between poor and rich. It will rejuvenate the life of the Indian citizens, and we will become part of one of the truly developed nation.
Hence, it is not at all wrong to comment here that “Yes India is awaiting a positive revolution in the economy due to currency demonetisation.” We, strongly believe that it would be worthwhile making an investment at this time as it would lead us to a great height of success in the future and we would be able to achieve all our dreams.
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