Effects of demonetization of currency: Another viewpoint

Lots of discussions are going on regarding effects of decision of Prime minister Narendra Modi to ban Rs. 500 and Rs 1000 notes as legal tender.
In my viewpoint, this decision will have three fold effects. Let me put it in this manner. Basically currency in the economy is in three forms ; lying idle ( black money i.e. on which tax is not paid and is not in circulation also and is used by people generally to buy properties, jewellery etc ) circulating in the economy ( whether tax is paid or not is secondary issue) , and currency used in anti social activities( black money used in activities like terrorism, prostitution, kidnapping etc )

1) Currency which is lying idle i.e.the money in the hands of big players which has been lying idle or part of it is being used by people for purchasing lands, jewellery or similar purpose.
 This cash will become paper now. It wont have any impact on tax system of country but real estate, jewellery business will have set back as illegal money will not find way to it now.

2) Currency which is in circulation in the economy ( whether tax is paid or not is secondary issue) : The money on which tax has been paid will remain as it circulating as before without impacting the system. But the people who have circulating money on which tax is not been paid will try to pay tax and convert it into white. This will give boost  to tax system and bring reforming change in the economy and tax collection will have pick up

3) Currency which is highly been used for anti national/social activities will  no longer be able to get rotated and this will have have high social impact than economic impact. Socially, India will become better place to live in . All these activities will be stopped.

Demonetization explained in different manner 


Now , As per various articles, I have read it has been estimated out of total money in circulation 85% will not return. This money which will not return will led to addition in reserve for RBI. RBI will have surplus with them which they can spend on building infrastructure , reduction in tax rates and ultimately it will be beneficial for general people like us. This money will ultimately make India a better place to live in.
85% of Total money in circulation will not return according to various reports and analysis available on internet 





Effects of demonetization of currency: Another viewpoint Effects of demonetization of currency: Another viewpoint Reviewed by AkanshaJain on 22:25 Rating: 5

4 comments:

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