Demonetization pros and cons in 2018
Demonetization-A word added to Indian economy on November 8th, 2016 by Prime Minister Narendra Modi. This move has shaken Indian economy from its roots. Two major currencies of India, rupee 500 and 1000 note became just bits of papers overnight. The ulterior motive of Demonetization was to bring out the black money kept by people in market, to force individuals in paying taxes which they used to avoid by not depositing funds in bank. This caused much chaos, and people suffered because of cash crunch. Long cue in bank, ATMs, shops annoyed everyone. Few thought of it as a master stroke and few belittled it by saying an unnecessary surgical operation.
However,it’s interesting to see how this has affected our lives in this span of time. Obviously,like any other instance it has positive effects and negative. Let us have a look at the pros and cons of demonetization in 2018:
1. Economic Digitization: We Indian always chose cash as preferred mode of transaction until demonetization hit us hard. Cash crunch made people use more of online services, Paytm, UPI, e commerce sites, stores that used cards for accepting payments. Since then, if not majority, but many people have used digital mode for their payments and bills.
2. Inflation: Falling inflation has also reduced demand rates causing somewhat fall in price of consumer goods and products helping common people.
3. Increase in number of Tax payers: After witnessing demonetization, a rather transparent and direct tax payment is observed and with it rise in number of tax payers too. People are afraid to keep their money at home because of the uncertainty demonetization caused.
4. Reduced fake currencies: As we know, a huge amount of fake currency was circulating in market. Figuratively, Rupees 44.2 crore and 51.3 crore were seized in 2015 and 2016 respectively. After demonetization,even with the release of new counterfeit notes, fake currencies has shown some serious fall amounting Rupees 16 crore.
5. Lowered interest rates: People applying for home loans are benefited because of reduced interest rates. Availability of cash in bank helped in reduction of interest rate.
1. Black money returned?
Well this is the question of the year. Has this been able to meet the agenda of its enactment? To a certain level black money kept in terms of cash has returned in white money. But many people don’t keep blackmoney in terms of cash, rather keep them in form of assets like home, property,jewelry. All 1000 notes have returned back in form of 2000 notes depicting the failure of this motive.
2. Affected trade and small scale business
People whose mode of trade is nothing but cash, and small scale businesses have suffered from serious loss. Unavailability of cash made their business slow down. People with agricultural backgrounds faced the similar circumstances.
According to a survey held by CMIE, many people were unemployed affected by this step.
After demonetization an observant loss of consumption is found that affected the country by slowing down of economy.