8th Nov. 2016 was a death knoll for the black knights who hoarded money. Black money was so much in use that it had become very important for the government to tighten the noose around the wrong doers who did not pay taxes and swindled the money just around the very noses of the government officials.
And therefore, our honorable Prime Minister Mr. Narendra Modi declared that the notes of ₹500 and ₹1000 would be demonetized. There was so much hue and cry al around and instability. This major step was taken by the prime Minister to bring out the black money that ruled the roost. The defence gave enough time to them to voluntarily deposit the tax but it fell on their deaf ears.
Crores of currency notes were lying dump as they had lost their value. The salaried class was the happiest as life would be less stressful for them. They had no stacks of black money. The yawning gap between the rich and the poor would now come down. Now people who had hoarded money and did not come forward were crying and cribbing.
A pandemonium started. It was as if the Pandora’s box was opened and out came demonetization. Due to this India was supposed to be moving towards cashless, digitalized economy. It could eliminate corruption counterfeiting and financing for terror activities.
As a result, banks would get flush with funds, interest rates would have come down. Tax rates would also come down over a period of time. It would help us to give a bigger spurt to our economy.
There were three principle monetary destinations of demonetization—battling black money, counterfeit notes and making a credit only economy by pushing advanced exchanges. Did demonetization accomplish those objectives?
Black Money
Killing black money was the practical objective of demonetization. Black money alludes to cash that not will be not accounted in the financial framework or money for which duty isn’t paid to the state. However, what has occurred truly? As indicated by the RBI information, practically the whole lump of cash (more than close to 100%) that was discredited came to the financial framework. Of the Rs 15.41 lakh crore worth discredited notes, notes worth Rs 15.31 lakh crore have returned.
In February, 2019, the then money serve Piyush Goyal told Parliament that Rs 1.3 lakh crore black money has been recuperated through all enemy of black money measures including demonetization. Keep in mind, the public authority had initially expected that basically Rs3-4 lakh crore black money will get doused external the financial framework because of demonetization practice alone. Thus, information proposes that demonetization was a disappointment in uncovering the black money in the framework.
Fake notes keep on being circled even presently.
Currency in circulation
Making a credit only economy was pitched as one more significant objective of demonetization in the later period. How has this gotten? Cash has demonstrated that it stays the King in the post note-boycott years. Indeed, advanced installments have risen. Focal point: People actually really like to bargain in real money generally even though there is an expansion in computerized exchanges. Question is wouldn’t the advanced channels have gotten even without an exceptionally troublesome monetary move?
The negative impact of demonetization was felt across the all segments of economy, especially agriculture and industry. An examination of the information uncover that demonetization has neglected to meet its expressed objectives besides in specific regions like empowering more computerized exchanges and more formalization of the monetary framework. Yet, the activity has neglected to meet the key targets, predominantly resolving the issue of dark cash. The aggravation related with the activity has outweighed the gains.
References
https://www.livemint.com/Politics/uCSwolE7ugfGfuv2O0wWbN/How-demonetisation-impacted-the-Indian-economy.html
https://www.moneycontrol.com/news/business/demonetisation-4-years-on-a-look-at-what-it-achieved-and-didnt-6086571.html
https://www.hindustantimes.com/india-news/five-years-since-demonetisation-what-has-changed-101636310390379.html
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