The Demonetization Move and Its Effects
A new era of India’s economy dawned on November 8, 2016, with the declaration of the demonetization move by the Prime Minister of India, Narendra Modi. People of all shades of opinion were taken aback as the news came out like a bolt from the blue. It leads to the cash crunch in the next few days; the situation was more or less similar across all the states in India: the lining up of the common people in a queue near the banks to exchange their old 500 and 1000 rupee notes became commonplace.
Is Cashless Economy a Bane or a Boon to India?
Amid the hue and cry from the politicians from different parties in following days, the potential of the cashless economy in India became a hot topic for discussion. The fact that the economy of the country had been primarily based on cash prior to the decision, served to further underline its importance.
While the radical experiment affected certain businesses in the subsequent days, especially the ones related to micro and small-scale industries, it also promised to bring about some benefits to Indian economy in the long run.
The move was aimed at tackling various issues related to black money – the term denoted to the funds either earned on the black market or by virtue of criminal activities like bribery, kickbacks and other corrupt practices.
That an organized group of people had been hoarding cash in India, which was not taxed, due to covert support by some politicians and bureaucrats, was doing rounds for a long time even before the implementation of the measure. However, the heightened frequency of the circulation of fake currency notes, coupled with the rise in the level of corruption, swung the current Government of India into action.
So far, it has had mixed results but the larger consensus of opinion on the issue seems to be in favor of demonetization. Those, whose views correspond with this school of thought believe it will not only clear the air in terms of corruption but also pave the path for a stronger and prosperous India.
The Benefits of Cashless Indian Economy
For people have been wondering about the benefits of remonetization, here are its benefits:
- The move would put an end to the circulation of fake currency notes
- It would result in corruption-free or clean governance
- It would bring about a sharp decline in crimes related to theft, bribery, stash of currency notes, and other associated crimes
- The flow of funds to terrorist, and naxal elements wouldn’t be as smooth as it used to be before, Thus, it would go a long way toward curbing the menace of terrorism, maoism, naxalism, etc.
- The measure would lead to the digitization of transactions, which are faster, better and more reliable
- More deposition of money in banks in near future implies that a massive amount of money, which was out of the banking system, would come back to the system This would certainly help the Government keep the rate of inflation under control
- Fearing the subsequent penalties with regard to evading taxes, most taxpayers would make it a habit to file their income tax returns in a timely manner
- Defaulters of bank, telecom bills, electricity bills, property tax would find it rather difficult to get away with their delayed payments. Consequently, they would consider clearing their dues in time
- It would revive the Indian economy in a big way by reducing its fiscal deficit
Infographics created by CouponChaska.
Going by the above-mentioned benefits of remonetization, it becomes crystal clear that the measure holds a lot of potentials to transform India to the nation dreamt by our forefathers. With its wider scope, it not only gives hope for extinguishing the unaccounted money, but to also transform it to the financial strength of the Government to undertake financial projects and launch greater initiatives in the country.
Overall, it can be safe that the future of the move seems bright as its pros outweigh its cons by a huge margin.