ONE YEAR AFTER NOTES BAN
AFTER BANNING OF NOTES BY PM MODI WHAT HAS CHANGED AND WHAT HAS NOT NOT CHANGED IN REALITY
HIGHLIGHTS
1. Last year 86% of currency is invalidated by PM Modi.
2.It is necessary to combat graft and terrorism said by PM Modi.
3.In banking system most of the money has returned.
The benefits is more than the short term cost of his move. In circulation he has invalidated 86 percent of currency,it is essential to combat graft and terrorism said by PM Modi funded with cash or counterfeit bills.
For PM Modi re-election in 2019 is a biggest blow,is that growth has slowed to levels last seen during predecessor's administration.For massive corruption scandals and a policy paralysis the previous government was criticized,helping Mr Modi sweep to power in 2014 with the biggest mandate in three decades.
Through demonetization the process of curbing black money and corruption does not begin or end said by Sonal Varma,chief India economist at Nomura Holding Inc.in Singapore,using the local term for cash stashed away to avoid taxes."Black money is held not just in cash but also real estate and gold."
To optimize the number of digitalization and and boosting the number of tax payers PM Modi has expand his objectives.
Banning on 500- and 1,000- rupee notes was needed as these high -value bills helped enemies from across the border run their operations said by PM Modi. Through June 30 the detection of counterfeit currency increased in the 12 months, it was still just 0.08 percent of total currency in circulation compared with 0.07 percent the previous year.From counterfeiters the Reserve Bank of India has not been able to protect its new quotes, as fake version of the 2,000- rupee note announced November 8,2016 have been detected.
BLACK MONEY
As in last year the cash was banned ,the government 's counsel said the Supreme Court that about a third of the Rs.15.44 lakh crore of bills invalidated would not be deposited into the banks,implying that the Indians would rather forfeit this money rather than risk detection.Yet ,99 percent of the notes have been returned.
All cash withdrawn almost has been adapted into a rise in bank deposits,one can ask question that to what extent demonetization has really been active in wiping out black money ,said by Arjen van Dijkhuizen senior economist with ABN Amro Bank NV in Amsterdam through email.
TAX EVASION
About demonetization widening the tax base is probably where analysts are most optimistic. It will scrutinize the bank deposits that have flowed into banks since the cash ban to detect any tax evaders as said by the government.Ease pressure on public finance in a nation where less than 5 percent file tax returns is a success.
The task changed the public's perception of what government can ,and will do to root out corruption,as said by Shailesh Kumar, senior economist for Asia at Eurasia Group. Many people believe that India's biggest problem is corruption ,so PM Modi was rewarded for it,as he was seen on the issue of corruption.
This venture seemed to have paid off in the main or important state of Uttar Pradesh,where PM Modi's BJP [Bhartiya Janta Party] swept elections in March.Yet, in Modi's home state of Gujarat growth has since slowed and there are rumblings of dissatisfaction going into elections. People are still cote for the BJP ,and the party has said that it will mark November 8 -the anniversary of the decision - as anti black money day every year.
The potential long term gains are more concrete and visible than from short term currency operations,but that does not mean that there are not any as said by Dijkhuizen.
DIGITIZATION
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