SO MUCH CAN HAPPEN IN THIRTY DAYS!
Social Media is today dotted with tongue-in-cheek comments on how much can happen in one month – and how 30 days can change the way we live! Exactly a month ago, Prime Minister Narendra Modi announced strict measures announcing the withdrawal of the Rs 500 and 1000 notes from the economy. This ‘Demonetisation’ that was initiated was aimed at eliminating fake currency, give a blow to terror funding and bring in control the hawala transactions in the economy. The core slogan that has been floating around is – “India Defeats Black Money.”
Where are we now? One month after this Demonetisation Tsunami hit the daily lives of the citizens, what is the state of affairs in the economy? A quick analysis could give us an idea about the following:
- Major announcements regarding the demonetisation process were made on November 8, 2016.
- Modifications followed on November 17, then 25th and subsequently at various steps, the government announced various measures.
- The latest announcements, at the time of publishing this article, have come from Arun Jaitely in the form of incentives to go digital in transactions. These are:
- Buying monthly seasonal tickets in the suburban railway networks through digital mode will get a discount of 0.75 per cent.
- This will start from the Mumbai suburban railways and will start from January 1, 2017.
- There will be 5 per cent discount if an individual pays through the digital mode for catering or retiring rooms at railway stations
- People buying petrol and diesel through the digital methods will get 0.75 percent
- People who pay general insurance premiums online will get a 10% discount and people paying life insurance will get a discount of 8%
- Around 1 lakh villages of the population over 10,000 will be selected and provided with POS (point of sale) machines.
- If you pay digitally at national highways and use Smart Cards and RFID facilities at toll plazas, then you would be entitled to a 10 percent
- In addition to all these, the government has also announced that no service tax will be charged on transactions through the debit/credit cards, provided these are below Rs 2000.
Some of the declared effects of this entire process of demonetisation are:
- About Rs 4 lakh crores has been injected into the financial system
- The RBI has to plug back a total of Rs 14.48 lakh crores that had gone out of circulation
- As per the RBI declarations, Rs 11.5 lakh crores of the illegal tender was deposited by the people in banks, till December 6, 2016.
- The analysis shows that approximately 65% of the money taken out of circulation remains to be replaced.
- As per reports, about Rs 1.5 lakh crores had been released into the system till on November 25.
- The RBI has officially stated that only Rs 4 lakh crore is back into the system.
- Meaning thereby that the RBI is releasing only a third of the cash that is being deposited back into the system in the form of illegal tender of Rs 500 and Rs 1,000 denomination notes.
- This implies that though the printing of new currency started two months ago, in September, the paucity of cash in India may take a while to go.
- The purchasing power of the people has been However, it is expected that this kind of a disruption in the system would be short lived and business activity would gain momentum as the high-value banknotes gradually get replaced, and black marketers end their operations.
- It is broadly said that the current socio-economic disruption was an essential step in the country’s drive towards making its economy stronger and resulting in a higher GDP.
The current demonetisation is unprecedented and historic . Notifications and updates are coming in daily . While we are trying our best to bring you the most accurate and updated Information on this subject it is a possibility that by the time we relay the information it might have been changed. Please verify from the official site of RBI before taking any action (https://www.rbi.org.in/) We will not be held liable for any discrepancy in the information.