Demonetistion Impact after 2 years - Knowledge Share

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Demonetistion Impact after 2 years

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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 economysuffers 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











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