Prime Minister Narendra Modi's demonetisation decision is widely being regarded as one of the most landmark economic decisions in the India history. With the country still coming to grips with the outcomes of this decision, people have strongly raised their voices both in favour and against this decision. Resultantly, many myths have also started floating in the country which is making things worse. From the point of view of the students, this is an extremely important topic and needs to be studied in detail since the future examinations can have questions in connection to this move. To help you out, we are presenting before you all the information you need about demonetisation.
1.Though there is no official confirmation about this fact but it is believed that this move by PM Modi came after Arthakranti Sansthan suggested this to him in a meeting. The idea was put forward by Anil Bokil, a critical member of the NGO. Arthakranti Sansthan is essentially an economic advisory body made up of several Chartered Accountants and Engineers. According to their proposal of recalling and scraping high denomination currencies of 1000, 500 and 100 would help in combating Black Money menace, Price Rise, Fiscal Deficit, GDP, Ranson, GDP, Corruption and Inflation.
2. India is majorly a cash-based economy and close to 98% of the total transactions by volume and 65% transactions by value are done in cash which makes it extremely difficult for the government to keep a track of all these transactions.
3.This is not the first time that the decision of demonetization has been taken in the country. This has been done twice earlier also. But this time its impact is huge because of the increased circulation of higher denomination notes in the economy.
4. Though this move is expected to root out the black money held in cash at hand, it does nothing to curb black money held in the form of gold, property and dollars. Resultantly, it is not correct to assume that this move will cleanse the entire economy in a matter of a few days.
5.It must be noted that before this monumental, the government had been running a voluntary income disclosure scheme, allowing people to inform the authorities about their undisclosed wealth and convert it into legitimate money by paying 45% tax on it. Hence, to blame the government for not giving a way out to the guilty people would be harsh on the government.
November 21, 2016
Apart from well verified facts, there are many myths about demonetisation doing rounds in the online world as well as in the market. We will bust those myths in our next blog! Keep reading Brainbuxa for more.