Many of the people don't know the whole story behind the demonetization in India, for that we will do a quick survey.The note of 500 and 1000 rupees get banded by the government of India on 8th of November 2016 at 20:15 IST (14:45 UTC).
First we will speculate the reason behind the demonetization.
20 Things Modi Achieved For India Through Demonetization.
- Maoists hit
No stone-pelting in J&K
Yes, you heard it right!!!
Since demonetization, incident of stone-pelting on armed forces has not been reported. The citizens of Kashmir have lauded this bold move by the NDA government, as first time in decades; the valley has remained peaceful for 5 consecutive days.
Burning schools stopped in J&K
Education gives the ability to think, question and analyse to a person, which helps them differentiate between the right and wrong. The separatists and religious hard-liners would never want this to happen- people were hired to do violent acts, burn schools and spread fear amongst the people of Kashmir. With their hoarded, ill-gotten wealth turning into trash they have been left motionless. School burning incidents have stopped and just a day before, approx. 54,000 students appeared for their exams.
Corrupts burning cash
Honest citizens are ready to do their bit for the country (to face hassles of currency exchange) and face this move with patience, as they know this bold move will make India- a world power. The corrupt people, who had stashed un-accounted cash in huge amounts, are spending their nights, burning their cash.
- Arhar dal crashes to Rs.80/kg in UP
With demonetization fear has gripped the black-marketers hoarding grains and pulses in their granaries. As government has promised more action in the coming days, stocks of arhar dal has increased in the market, and prices have crashed. According to a report, Arhar dal is being sold at Rs.80 per kilo, (down from Rs.120-Rs.130) in U.P.
- Kirana shops/Panwalas installing debit card machines
Demonetization has only instilled better sense in people. Going cashless, is one such example. People have started installing debit card machines and Paytm for cashless transactions, thus improving transparency in market- Kirana shops, Panwalas, Sherbet sellers, auto rickshaws etc. are examples where such cashless transactions are being done.
People have realized the benefits of having a cashless economy and like the government, the citizens too, are working towards the betterment of the country.
- Municipalities making record recoveries of house tax
For years, the municipalities were running behind people to pay their arrears on house tax, but in vain. Post demonetization, defaulters are paying their pending taxes, increasing cash coffers of the municipal corporations. The municipalities have made record recoveries of house tax this year, all thanks to the bold move of demonetizing larger bills.
- Electricity companies making huge record recoveries of past arrears
Like Municipalities, electricity providers are making huge recoveries of past arrears. The government has allowed acceptance
People can deposit old currency notes at many (public service providers) places, as electricity provider offices fall in that list, people are paying off their arrears with the demonetized currency notes.
Medicine shops making big sales
As medicines and drugs fall under essential commodities list, one can use demonetized currency notes at medicine shops. People are flocking medicine shops and stocking up on medicines, in a bid to get rid of their old currency notes.
Delhi Metro smart cards sales increase
One could expect less traffic in Delhi for a few months, as people have bought season tickets with their old currency. The air quality in Delhi has worsened, breaking the record of poor air quality in years; with lessened traffic one can expect some respite.
- Many businessmen recovering past dues as old as 4 years and getting advance for new orders
Many business men deliberately don’t make early payments, and continue doing business on credit. By doing so, they infuse the profits in their production cycle to double their profits- and most of it is in cash. The demonetization move has forced them to get rid of their hoarded black money. Now, they are not only paying their dues with interest, but are also making advance payments.
- Huge opportunities for mobile wallets
Digitization is the way to future. Post demonetization steep rise in the use of mobile wallets have been reported. The private sector online payments have reported a significant rise in the usage patterns by their users. Oxygen Wallet witnessed increase in the load money transactions by up to 40-45 per cent by the first half on Wednesday, and India’s largest mobile payments platform Paytm also recorded 435 per cent increase in traffic on its platform, with add money transactions increasing by 1000 per cent.
In India most of the transactions are done through cash. According to various data released: less than 5% of all payments happen electronically. The ratio of cash to gross domestic product is one of the highest in the world—12.42% in 2014, compared with 9.47% in China or 4% in Brazil. The number of currency notes in circulation is also far higher than in other large economies; India had 76.47 billion currency notes in circulation in 2012-13 compared with 34.5 billion in the US
If we manage to tap even half of the cash transactions, then India’s GDP will reach to new highs.
Banks plush with funds.Rs.3 lakh crore banked in 4 days!!! Cost of funds reduced for bank
As people are depositing their old currency notes, banks have reported huge surge in their cash coffers. According to a report, banks have cumulatively collected more than Rs.3 Lakh Crore in just 4 days. In the coming days the amount is only going to increase. This will bring down the interest rates for loans. Many have already slashed their interest rates.
- Laborers paid Dihadi for standing in queues
If you have visited any bank, or been in a queue to exchange your old currency notes, one could only see either the middle class or the poor. The rich have found their way to the new currency, sans standing in queues. Businessmen are using their laborers to get their money exchanged and for that they are being lured with fat commissions.
- All property deals involving black money in jeopardy. Bayana in jeopardy
Bayana- An Indian term used to denote the token money given to the landlord to informally freeze negotiations on a particular property, after the initial terms and conditions have been formalized. Such payments are done in cash, and not documented. Property deals involving black money have been hit hard; the builders (construction) lobby are one of the largest hoarders of black money. One may witness a slowdown in the realty market, but in future they wouldn’t get involved in such activities.
- Property prices come down by 25%
With the black money being driven out from the market, the prices of unsold units will witness a slump in prices, the property prices are expected to come down by 25%.
- Democracy deepened. All castes/creeds standing in same queue.
Demonetization has brought all of us in one big frame. People are standing in queues and helping each other irrespective of ones’ caste or creed. The real essence of democracy is being witnessed.
- Fake currency rackets hit
A recent study commissioned by the NIA showed that 250 in every 10 lakh notes in circulation in India are fake, with FICN (Fake Indian Currency Notes) bearing a face value of Rs 400 crore in circulation at any given point in time. (Reported by TOI) The study stated that FICN worth Rs 70 crore was being infused into the Indian market every year. The fake currency racketeers have been left with trash, and with high security features in the new Indian currency notes; making a counterfeit is impossible.
- Political parties spends in Punjab/UP hit
Come elections, and you could witness money being showered on voters. With demonetization, political parties with black money wouldn’t be able to woo voters.
We can hope, there will be fair voting in the upcoming state election of Punjab and UP
- Drug peddlers in Punjab hit
The only state to have suffered the drugs menace is Punjab. The drug peddlers have run back into their rat holes post demonetization. The drugs business is the most important, in a shadow economy. The drugs business has completely stopped in the state, as transactions were done only in cash.
Now, who was the man who came up with idea of demonetization and suggested P.M Modi for demonetization ??
This is the part of demonetization in 2016 which most of the people don't know. the man behind the idea of demonetization.
Anil Bokil of Arthkranti, a Pune based financial think tank is the man who reportedly suggested some of the key measure to contain the flow of black money in economy and banning the big currency notes was one of them. Bokil who reportedly had met PM Modi, a few months back to give a presentation on financial reforms and how to contain the flow of black money. He was given time of just nine minutes to finish his argument, but PM Modi reportedly found his arguments so interesting that he kept discussing for almost two hours.
These were the main recommendations by Bokil:
1. Except import duty, stop collection of money under 56 different taxes.
2. Ban big currency notes of Rs 1000, Rs 500 and even Rs 100.
3. All transactions should take place via bank with help of cheque, Demand Draft and online.
4. Single banking system for revenue collection.
The reason Bokil reportedly gave behind these suggestions:
1. In India, an average transaction of Rs 2.7 lakh crore is seen daily which accounts to Rs 800 lakh crore in a year. But only 20 per cent transaction out of this happens via banks, rest all takes place via cash which can't be traced.
2. Country's 78 per cent population spends only Rs 20 a day. Therefore, they don't require bigger currency notes.
Is Narendra Modi’s currency ban the first in Indian history?
No this was not the first time he Indian government is not a novice when it comes to demonetization for it has already been implemented twice in the past.
.It was in 1934 that high denomination currency was first introduced in India. After only four years of Rs500 and Rs1000 in circulation, the RBI in an ambitious move introduced Rs10,000 notes in 1938 – the highest denomination ever printed in India till date. The first currency ban occurred in 1946 when the government withdrew Rs 1000 and Rs 10,000 from circulation. This move was of very little consequence to the Indian population as such a large sum of money was not accessible to most – high-value notes really were of high value. Rs1000 and Rs10,000 were, however, reintroduced in 1954 and Rs 5000 was introduced for the first time.
