The Prime Minister and Finance Minister have taken a bold
step to strike against corruption; they have demonetized existing versions of Rs. 500 and Rs. 1000 currency notes. The only way to use them now is to deposit them in your bank and subject the amount to scrutiny by the Income Tax Dept. This is the first major step against
wide-spread corruption that I have seen in the last couple of decades. Some of
those who deal in real estate, precious metals and jewellery, along with corrupt
officials and politicians are going to be among the losers.
Photograph by Sarvagnya from Wikimedia Commons, published
under GNU Free Documentation License, Version 1.2
It has been pointed out that banks will face a lot of
additional work. There will be some chaos and even, perhaps, some slowdown of
our economic growth. I believe this is all worth suffering through. Those below
the poverty line are, hopefully, not going to suffer much; surely, they have no
hoard of five hundred rupee notes! Those above the poverty line should be
willing to pay some price for the nation carrying out a surgical strike against
corruption!
This action should, ideally, increase peoples’ willingness
to use banks and credit/debit cards for an increasing number of transactions,
but the Government must encourage this tendency. A strike has been made on existing black
money, but there is no point in allowing future accumulation of black money in
two-thousand rupee notes!
One step the Government could take is to withdraw tax on
services provided by banks to retail customers. Credit and debit card
transactions should also be free of service tax. All business transaction above
a certain limit should be only through banking channels. These long-term
measures are essential.
Demonetization is like the Delhi Govt. spraying water
on the streets! It controls dust for an hour; do they have enough water to bring down
all the pollution of Delhi day after day?
1 comment:
I would like to know as to what are the Pros & Cons of Demonetisation and also as to whether it was a success. There is no firm statement by anybody or any party as to what are the actual figures. All statements have remained qualitative. If you can highlight the facts before demonetisation VS facts after the same, it would be instructive.
S.Nagaraj.
Retired S.O.(F), Department Of Atomic and Nuclear Physics,
T.I.F.R.
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