Demonetistion Impact after 2 years

DEMONETISATION

Impact of Demonetisation in Indian Economy

In 2016 Rs. 500 and Rs.1000 notes rendered invalid .

Two years completed after demonetisation of high value currency (ie;500 rs,1000rs)

India –cash dominated economy: suffers from many challenges.

Cash has anonymity,its owner not known to the system. Therefore it prevent formalisation of economy. Cash invades taxes result is India’s taxation system both in Direct & Indirect Tax is very narrow. Cash goes to directly opposite to the digital trend of financial transactions. So transaction takes place outside the banking system & it compulsion process to handle, it encourages black money.

(Arun Jately)

Opposition terms demonetisation move as “Ill Fated”.

Confication of currency not the objective of demonetisation , instead decision was taken to assure formal economy & may hold the economy to paid tax.

•  Number of people falling Income Tax return increased

  
   3.8 Crore in  May 2014 -------->6.86 Crore in 2018

• Deposit in bank ended anonymity.
• Personal Income Tax collections higher in 2018-19 till 31   October 2018(compared to previous year by 20.2%)
• Corporate tax collections 19.5% higher

.Demonetisation Effects

•    Fillip to government digital transaction initiative.
•   UPI transaction grew from Rs.0.5 billion in October,2016 to Rs 598 billion in September ,2018.
•  According to Jaitley share of indigenous payment system UPI & Rupay Card reached 65% of payment through Credit & Debit cards.
• Value of BHIM transaction went up significantly post demonetisation.
• BHIM currently using 1.25Crore million people .
•   Value of BHIM transaction grew from Rs 0.02 billion in    September 2016 to Rs.70.6 billion in September 2018.
• Money flow to Banks : Mutual Funds increases
• According to World Bank report :Country growth

                                               7.3% in 2018-2019

                                               7.5% in 2019-2020

•     But not created that much growth in job sector.

India fast moving towards becoming a Cashless Economy.

Government urged people to move towards cashless economy.

Demonetisation Impact on Economic Growth(2016-2017)

•      GDP growth rate 8.1% in 2015-16 decreases 7.11% in 2016-17 informal sector run mostly on cash affected  more.
•     Demonetisation put a question mark on small scale industries.
•     RBI Report  : Detection of Fake Currency decreases after Demonetisation(Rs 500 & Rs.1000 decreased 5.9% & 5.6% respectively).

Growth in digital transactions

National electronic fund transfer

September 2016: Rs 9,88,000 crore

September 2017: Rs 14,182,000 crore

September 2018: Rs 18,015,000 crore

Mobile banking transactions

2016:Rs 1,04,300 Crore

2017:Rs 186,200 Crore