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
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