I am not an economist, but since the news of demonetizing of currencies of 500 and 1000 has come, I have been reading about it to understand it better. After all the pros and cons of this ban, here is why it is a master stroke.
First, we will talk about the cons.
– Around 80% of the currencies in India are in form of 500 and 1000 rupee notes right now. Sudden ban on these notes is surely going to shatter the economy. Imagine, 80% of the currency in the market is worthless right now.
– Only currencies with lower value than 500 will be used for day-today transactions for a while. We will have only 20% of the physical currency for day-today use. This will cause huge shortage of 100 or 50 rupees notes in the market.
– Those who have planned marriage or functions in coming two to three months are going to face big cash trouble!
– Those who don’t have a bank account yet will have to open accounts immediately within next 50 days to convert their old 500 or 1000 notes. And will banks be able to manage a huge number of people coming to open bank accounts?
– To convert 500-1000 rupee notes, you’ll have to deposit them into bank accounts or post offices before 30th December. Daily limit of which is 4000 rupees until 24th November. Will banks be able to manage long queues?
These are the trouble we are going to face in coming time. But it will bring Achche Din after-all. Here are all the pros of the ban.
This is not an impulsive decision taken by the government. It is a well thought move made by Modi government to curb black money and give a tough fight to terrorism. Here is how.
– All the fake notes that have been imported from neighbor countries to feed terrorists in India will be vanished. No more support to terrorists.
– Lakhs of crores worth of black money will be worthless in next 50 days! All black money in form of 500-1000 notes will just be a worthless pieces of papers in coming days. They can neither be deposited in banks nor be invested in gold or real estate or any other form of investments.
– Modi government is emphasizing on plastic money (credit-debit cards) and e-transactions since came into power. Now, people will actually have to start using digital transactions.
– Second thing Modi has been emphasizing on is ‘opening bank accounts’. He is asking everyone to open bank accounts. And now to convert 500-1000 notes, people will have to open bank accounts.
– Bank accounts, e-transactions, cheques or plastic money transactions will bring transparency in transactions.
This step is a step forward in the direction of Digital India along with a step to fight terrorism and curb black money. Ek teer, kahin nishaane.
Modi government has already recovered around 1,25,000 crores worth of black money since they’ve come in power. Modi government’s income declaration scheme solely exposed 65,000 crores worth of black money.
Don’t blame me for tough decisions on black money after September 30.
– Narendra Modi (2 September 2016)
Modi had warned all the corrupts to come forward and declare their black money in advance. We cannot feel sorry for them now.
I don’t know how feasible it is going to be too convert all existing 500-1000 notes in such a short period of time. But at this moment, I am optimistic about the future India holds. Even if they have to extend the deadline, this is not undoable. This is absolutely doable.
This decision is surely going to be troublemaker for all of us in coming time. But the pain will be temporary. Impact of this decision is surely going to make a dent. This decision of Modi government is a historic and very brave decision. We all must support this historic decision.