Demonetization
Will Demonetization solve the issues ? Is it really worth to demonetize currencies, what will be demonetization effects on common people ?.
I have listed four advantages, it will bring to common man's life.
I have listed four advantages, it will bring to common man's life.
Well we all are aware about what is going on, in our country these days. ATM's not working at par, Bank employees are overloaded with work; people are standing in queue day and night, some are happy and some are sad. Some carrying their water bottle and lunch with them, just to get their money exchanged at Bank counter.
And we all know why?
500 and 1000 rupees currency banned (demonetized) by Indian Government or rather we can say MODI Government AKA "MODI SARKAR".
It all started on 8th November, 2016 @ 8 pm. When our respected Prime Minister Shri. Narendra Modi announced that after 12 o’clock from today 500 and 1000 rupees note will not be a legal tender. And soon after an announcement, people started queuing up at ATM centers, at petrol pumps and some at ration shops to fill up the stocks for the next 6 months suspecting that things are going to turn nasty.
Some of us are supporting this move of Modi Sarkar, whereas as some of us opposing it. We have also witnessed that some political parties have strongly opposed this move. It includes almost all the opposition parties in the parliament. Though we all are still in dilemma about what lies in future.
Let us see 4 major advantages; this move will bring to common man.
1) Hit on Terrorist Activities :-
Historically India has been a victim of terror, be it 26/11 Mumbai Terror Attack where almost 166 persons died and around 293 were injured including Indian and foreigners both. 12th March 1993 Mumbai Serial Bomb blast where 256 people died and more than 600 were injured or be it Delhi Serial Bomb blast which took place in October 2005, Jaipur Blast 2008, Mumbai Train Blast 2006. Whenever we recall these memories, our eyes flood with tears.
With this move of the government, it has ensured that terror funding is broken down completely. Any activity needs financial support and if that is withdrawn, the rest collapses with ease. Now the funds available with terrorist organizations are mere piece of paper. It’s wise to fight terrorism at the back end rather than on front end.
It should be “Financial War” NOT a “World War”.
2) Low Lending rate:-
People are queuing up at bank branches to deposit their money, which is of course NOT “Black Money”. It could be their monthly savings for emergencies or money kept for day to day transactions, but this figure is huge. It could be between 6 to 8 lac crore. And as per simple demand and supply rule, more the money with the bank, more they can lend and simply lend at a lower rate. As supply will exceed demand for money.
The most important event in common people’s life is buying a home and it will certainly come true with this move, more importantly they don’t need to pay in black-white percentage. All other loans will also get cheaper and eventually inflation will come under control. Well this is not going to happen overnight. It will take time but it will happen. We just need to be more patient.
3) More employment opportunities :-
Surprised!! How? Let me elaborate, too many scams have spoiled India’s global image, due to which international investors were reluctant to see India as an investor’s paradise, but with this action it will restore it.
Hence more money will flow to India in near future. More money = more investment. More investment will create more job opportunities for youngsters. This move has sent a strong message in the world that India is no more tolerant towards scams and black money.
4) Improved Infrastructure facilities & benefits to common man :-
People tend to avoid paying tax and create black money. In simple words, “Black Money” is unaccounted money, something which has no records. Source cannot be detected. This step will close almost all loopholes in tax evasion process and eventually government will have more money to spend on infrastructure and will be able to provide various govt. schemes benefits to the account holders. Before arriving at this decision, our Prime Minister started a scheme “Jan-dhan yojana” under which less privileged people brought into mainstream by opening their bank account. Financial inclusion of these people ensured that they have access to banking and other financial services. And this is how unbanked and unaccounted money came into economy to give it more boosts.
Lastly this is a courageous decision made by Modi Sarkar. In spite of allegations and chaos, people are patiently standing in queues for their own money, keeping in mind that this pain is going to reward them in near Future.
Lastly this is a courageous decision made by Modi Sarkar. In spite of allegations and chaos, people are patiently standing in queues for their own money, keeping in mind that this pain is going to reward them in near Future.
Very true !!��
ReplyDeleteYes it is....Thank you !
DeleteWell written Pranay!!
ReplyDeleteThank you !
DeleteTrue and very encouraging. Thank you as this share will allow us to have a broader thinking and definitely a growth mentality :)
ReplyDeleteThank you.. Shilpi for your kind words and yes we are growing as an individual and as a country.Growth is inevitable now.
DeleteNicely represented !!!👏
ReplyDeleteThank you. Your words will encourage me to write more and present complex topics in easy way to reach more people
DeleteWow...very well written Pranay
ReplyDeleteThank you Rakesh
DeleteVery well explained Pranay, in addition it will help govt to get down it deficits and increase liquidity in market
ReplyDeleteYes, absolutely Rakesh.
DeletePranay. Good article. Keep it up..
ReplyDeletedemonetized also crack down so called their vote bank on whom opposition relay on
Thank you, Right... political revolution is also needed in this country
DeleteNicely written pranay... Explanations are very good.
ReplyDeleteThank you Gaurav.
DeleteVery well written n explained Pranay..would like to read more..
ReplyDeleteThank you Anjum and yes I will keep writing more on different topics.
DeleteVikram kamble
ReplyDeleteNice Pranay good effort to help common people to understand what's happening
Thank you Vikram,
DeleteYes people are confused, hope my little effort reaches more people. Because if something new is to be built, we have to demolish the old first.
Very well written Pranay and nicely explained....
ReplyDeleteThank you Varun.
DeleteSorry to say but al l dis are myths..
ReplyDelete1) Terrorist activities- it wont curb terrorits activities, cz dey r more smart dan a common man, dey vl have to juz make a phone cal to sum influential persons and dey vl get deir money converted, recently a raid at a house in mumbai wer 2 suspected terorist
Lived, 4 ₹2000 notes were found, so the process has already started
2)low lending rate- yeah true increase in savings vl decrease d interest rate, but right now der is an economic slowdown, and most companies r facing debt, low interest rate vl have an impact but a minimal
3) more employment- already many foreign investore have withdrawn deir money from markets due to d havoc created, gdp is going to fall by 2%, and is not going to recover untill 5 years according to my projections,
U must read some articles from newspaper instead of watching those crappy news channel
D most imp of all is der is around 10% of black money circulated in d economy, obviously rich people are not mas to keep al deir black money in cash, dey have already stashed in deir cash in swiss accounts wich no1 can touch, bought flats, invested in firms and elsewhere, among dat 10% of black money in cash form, only 4-6% of cash vl be recovered, that is just a little bit more of what bill gates earns annually:p it is not at all worth for some 2-3 positive outcomes, to d hardships wich common man is facing right now, people are dying in ques, farmers don't have market to sell deir goods because of low purchasing power of people right now,
Dis recovery of black money vl be for a short time, corruption is eternal in india, and dis demonitisation vl do nothing to stop corruption, people vl again find new ways to do corruption, as dey have found ways to covert deir black.money into white, if u wud be aware der are multiple ways and many are doint it with 80:20 ratio:p
Thank you for your advice Siddhesh. First of all, let me tell you, I don't follow news channels much. This article is not written with their influence. I hope you have not written this under someone's influence too.
DeletePoint
1) I don't know , if you will agree or not, finance is base for any activity. Nobody runs without finance, be it non-profit organizations, companies or political parties and what happens when finance is cut down suddenly, we see a slowdown in economic activities. By taking this step, government has stopped providing them blood and without blood hardly anyone survives.
500 and 1000 rupee currency accounts for 84% of total value floated in market, which is demonetized already and ratio of 2000 rupee note is issued in less percentage compared to 84 %, having same value. Let me tell you, this is temporary adjustment. For more information, read "Arthkranti" proposal. Slowly we are moving towards cashless economy and this is the future, where every penny will be tracked and currencies having high value will be scrapped. So this will certainly affect terrorist because even to light a fire, we need to buy matchbox.
2) Secondly, Stock market is outcome of economy and not the economy itself. it just reflects whatever is happening in our economy. Some temporary havoc is there as people are panic. Once they understand long lasting benefits of this step, it will rise high.Eventually moving up and down is nature of Stock market. To create new things, we need to clean the place first. And we are in process.
3) Hardship is always going to be there, if something good to be done. There is nothing called easy decision. I feel you sound too negative on India, when you said...Corruption is eternal in India. Corruption is just a behavior of human beings, which can be changed with some therapies like demonetization. This is not the end, this is just the beginning. Trap is open. Be aware !
You seem to be a big follower of modi i guess, this is why u are not focussing on the economic hardships that india is going to face because of dis demonetisation move, its not just they have to be qued outsidr banks, but many have lost jobs, u know our india has a big so called unorganised sector? After agriculture it is the construction sector which provides largest employment, people working are daily wage labourers, they are not provided security for their job, so when u talk about real estate prices going down, construction sector is going to take a hit, and who will provide employment to dem?
DeleteDon't feel offended when i said that u follow news channel, i said it because u in your article have only mentioned the positive points, der is always always other side of d coin brother, wich is more negative acc to me dan positive
Myth# 1: A large amount of black money will be eradicated
DeleteThe value of the old Rs 500 and Rs 1,000 in circulation as of November 8 was around Rs 14.5 lakh crore, or over $200 billion. Many estimates agree that approximately 40 per cent of this -- over $80 billion is black money, which will likely be wiped out of the system and the rest, ie $120 billion will be converted by the millions standing in queues.
India's GDP is $2,000 billion. The amount of black money flow is said to be about 40 per cent or a total of $800 billion per year. But the stock of black money accumulated over the years and parked (apart from small amount in cash) in gold, gems, foreign bank accounts, land and other assets is perhaps 10 times that or equivalent of $8,000 billion.
Wiping out $80 billion (which is a little more than Bill Gates' net worth and only one percent of the black money in the economy) is hardly worth the inconvenience to Indians and foreign tourists who came for "Incredible India" and encountered indelible India instead.
Myth#2: The rich will be brought to heel and the common man will gain.
As of now only the common man is standing in queue. The rich will suffer but since most of their wealth is parked in gems, gold, land and foreign bank accounts, they will save most of their wealth. In any case the rich are neither dying in hospitals, nor sacrificing their daily wages while going hungry or dying while waiting in serpentine queues.
Myth#3: This will wipe out black money in the future
The newly printed Rs 500 and Rs 2,000 notes will be the new black money. We have just heard of a government employee caught with Rs 34,000 as his daily bribe in West Bengal. All accepted because it was given in usable new Rs 2,000 notes. The cycle begins again. As the phrase in Hindi goes, you can't straighten a dog's tail.
Myth#4: Counterfeit money will be curtailed.
Isn't it the government's job to ensure that notes are secure from mass counterfeiting? If they didn't do this well enough, they should just print new notes which are more difficult to copy and phase out the old ones over a period of time. Why subject the common man to such inconvenience? In any case the old Rs 100 is also subject to counterfeiting, and this is not being changed.
Myth#5: This move will encourage a cashless and therefore more accountable/traceable economy
DeleteMost of India lives in the villages. The vast majority of them use neither banks nor ATMs which are too far away for them to access. Here cash is the only medium and will be for a long time. Rome wasn't built in a day.
Even in urban India -- how many labour or domestic or lower middle class citizens have debit or credit cards?
Myth#6: GDP growth will go up.
How will this happen when sales are down, crop sowing is impacted and transportation of goods is at an all time low?
Myth#7 The government says Rs 25,000 every week against crop loan is allowed.
Firstly a small percentage of farmers actually avail and get sanctioned crop loans. Those who do would like to take the full crop loan at one go which is their entitlement rather than take it on a piece meal of Rs 25,000 per week
Farmers also complain that while exchanging or withdrawing from their bank accounts they get only Rs 2,000 notes which are no use for their sundry expenses are. No one is willing to change for smaller denominations.
Myth#8: All inconveniences will be over in 50 days and 'acchhe din' will manifest
This is the biggest myth of all. Fifty days is merely the time available for converting the old notes into new. As of now there are many markets that are accepting the old notes due to lack of alternatives. This writer is acquainted with the flower and vegetable mandi markets where not accepting the old notes would lead to having to throw away the produce as there would be no demand or much less demand. Instead, they accept old notes and hope these can be converted. Similarly, many shops accept the old notes provided you purchase the full value of the Rs 500 or Rs 1,000 tendered.
The old currency therefore is still being circulated and we don't know how long it will continue. Saumitra Chaudhuri, a former member of the Planning Commission says that replacing the old Rs 500 notes with the new ones will take over seven months. Until then (or thereabouts) we need a medium to trade and these will likely be the old notes. The sad news is that we will no longer be able to exchange them at the banks.
When Europe wanted to change over to the euro, individual countries gave its citizens two comfortable years to make the transition, and this ensured a smooth transition. Chanakya wrote in the Arthashastra that a government should be predictable -- not make arbitrary moves like this which leave its citizens in a lurch with no clue as to when stability will return.
Sometimes it is more important to do things the right way, than to merely do what we feel is right. Can the government be bold enough to stand up and say it has made a mistake and rectify it rather than continue to defend the indefensible?
All those myths mentioned are from a well know economist, its because of sum ppl in india who have created a very jolly view about demonisation is my prob, because it not dat positive nd ppl must know d truth, u shud also agree dat al dat havoc wich u said are to be faced wen a good thing is done, were common man responsible for having black money? So why dey hsve to suffer who have always dealt in white and still are waiting in ques, der r hell lot of measures dat govt could have taken before implementing dis move, still der are ATM's widout cash, y is it so, cz dey neva planned properly, nd d burden is to be faced by common man
DeleteNd pranay i literally laughed wen u said india is going to go cashless, dude for 50-60 years developed countries are trying to become cashless but dey hsve not achieved it, how can u accept d economy to be cashless when 30% of our population is still under BPL, large population of people who are still illiterate, ohh dont go by statistics of govt census nd tell me that so much % of people are literate in india, because acc to govt only people who can read and write are comsidered to be literate, der is big diff between being able to read write and wat it takes to be cashless eceonomy
Delete60% of india's population still resided in rural areas, wer availability of banks are still not availabe, nd wereva dey are dey situation in main cities, Cashless is a good word to say but u have no idea wat it takes to be cashless
DeleteCorruption is eternal to india, i vl say it again, cz people must be ashamed of demselves, nd y backdown from saying it, v are nd it is a reality, y not lokpal and lokayukta have not been setup in every state, does it take so much time, demonitisation is a move by govt to curb corruption right? Then y not take other measures wich were more safe dan dis demoitisation, m not against dis move, but m against d way it has come, also not so happy wid people who have so positive view about it
I respect your opinion, you have all right to not to be happy with people who have so positive view. I am not a Modi follower nor a BJP supporter. I understand and I am aware about pain, people are going through. As I have already mentioned, this was not an easy decision at all.
DeleteI wrote about four major benefits of this move. I am glad that you agreed ("m not against dis move, but m against d way it has come, also not so happy wid people who have so positive view about it").
Decision has already been taken. WE just need to be more patient. :)
Very Bad and unconstitutional move by Prime minister of the country...Its not that I have loads of black money but look at the hardships we face ....
ReplyDeleteSectors affected
Agriculture, Tourism, Auto industry , Hospitality ...Drop in economy for 2 years ..domestic recession in next 6 months ...
It's a constitutional move of the government. And yes all the sectors will be affected in short run, but all sectors will grow, once everything is settled down.
DeleteNo country in the world is cashless.... Countries like Sweden, Denmark, Germany, United kingdom , USA and many more have paper currency till date ... So people the point of saying going cashless is out of question??
ReplyDeleteWhy is the whole Central government of a country is Dependant on one person?? What about the liberty of other ministers to work ? What is the finance minster for ? Just to respond in Parliament and give interviews to News channels??
Hello,
DeleteUpto 80 to 85 % developed countries are cashless. It will be real challenge for India to turn cashless completely but it will certainly reduce cash transactions to a greater extent.
If we question our ex Governor of RBI for its dedication towards USA and keeping his Green card of US then what about our present Governor? Ex employ of Reliance industries? How can we trust him being loyal to the country and work in the faith for the people of the country? its there in the RBI Act that the new signature on currency notes takes 6 months procedure so how come new governor's sign is there? He is in the office since September 2016 onwards??? Don't judge on the basic information provided on the radio or television regarding the above move? Its a shame and wrong and unconstitutional to deprive a common man to have access to his tax payed money from Bank? We are seeing a new form of Hitler in India.
ReplyDeleteIt was a constitutional step of the government
DeleteThis a deal made by the political party to stop the economy from going ahead. If you say with demonetization will eliminate all the black money, terrorist finance and solve our problems faced by lower class of the country then why was world's organisations Like IMF, world bank recommend to India from past 2 decades? Again when we know half of the rural polulation of the country don't have basis banking facility then how come you turn the whole system cashless??? Its meaningless? please come to basis problems solving things and don't trouble the common man... Our agriculture production is going down.. we need to fix that .. we need to see how we can regulate the wages and salaries paid to service class of the country in terms of real income. Companies are making profits but do they do the welfare of the society? how is the border security issues will be cleared? How can we promote and have governments of various countries open doors for Indians?
ReplyDeleteHello,
DeleteIt's not easy to take such a big step and No government or political party works against country. I am sure even all other parties want economy to grow and not to stop it's growth. Even illiterate people use mobile phones today, they are enough literate to use debit cards and mobile transactions. Compaigns will be used to make them more aware.
Every step by Modi Sarkar will be a step to hope and eventually a better tomorrow for all of us-common man...so I have complete trust on this govt. ..cuz if its not this den who.. N if not this action for eradicating black money then wat...it's very easy for these opposition parties to blame the govt. for every action..but did any one come forward to suggest or actively participate in this. Yes if defending this govt. means I m a Modi Bhakt..den be it. Yes I m a Modi Bhakt.
ReplyDeleteThank you Ajory for expressing your opinion.
DeleteGood and knowledgeable article Pranay, and an interesting debate between you and Siddhesh.
ReplyDeleteThank you for expressing your opinion Ketki
DeleteAgain people are taking side and talking about the political party ...What about the law and order and constitution? We are not here to discuss about political parties and their manifest??? Kindly understand the signals which goes to the Globe. Now the investors in US , UK, Australia are coming of thoughts what if there is change in government and other political party comes up with New currency notes???
ReplyDeleteIt was a constitutional step of the government. Even after so many days, law and order is in control that speaks for itself.
DeleteWe being out of India, know its effects. For every change or new development in the system has to be done in the constitutional way. Again can we need to ask ourself IS central Government of India is one person-sided or methodology? What about the RBI? Don't you is it fair to be work in fair means? Earlier there use to be news about fights between RBI and Finance Ministry. Now the RBI is working as PM or PMO? ...Its damaging to the Government machinery?
ReplyDeleteEvery point above by writer Siddhesh is correct and true. Please agree to it...
ReplyDeleteHello, that's his point of view. We may have different point of view and we should respect each other's opinion.
DeleteNice discussion and view of the people
ReplyDeleteThank you for your comment
DeleteOh my God!!! I don't understand why people can't look the whole picture....I am not against the present or supporting the ex government but these are the effects of the above move,
ReplyDeleteInternational tourists cancelling or keeping their plans on Hold for India.
Hospitality and tourism industry indicated negative growth for the last quarter...
Indian currency is not traded and valued in physical form in overseas market in UK , Australia & New Zealand.
I am investment banker based in Sydney..I have clients who have decided to withdraw their allocation from India in next 6 months...
I can't understand, why world is in panic due to demonetization in our country. Only industries in India, who deals in cash should be affected. Even the investors world wide want security for their money, which is almost lost in some scams. They should be happy to invest more as this is temporary phase and there are more long term benefits.
DeleteThanks