Introduction:
- Is Demonetization truly a revolutionary change in Indian Economy?
- Well, dark clouds are still hovering and it’s not a child’s play to clean up the murky tax evasion procedures. Parallel economy is not something which can be stopped with one master stroke! Neither it’s feasible to incorporate 360° digital transactions, owing to the bulk percentage of rural coverage. But yes, it was undoubtedly a hard blow to money launderers who never ever thought that all their foul plays will become futile and all their savings would turn zero. Cashless transactions are undeniably the most effective procedure to put an end to unaccounted transactions in the long run.
Demonetization – The Current Scenario
- Approximately cash deposits of 2.89 Lakh Crore are undergoing investigation, though it hasn’t yielded much result. Who does this wealth belong to? Well, let the investigation go on.
- 5.56 suspected transactions have been detected by advanced economic analyst tools.
- Detection of undisclosed income of INR 29,213 Crore.
- Scrutiny of 18 Lacs suspected accounts across the nation.
- 20% - 25% reduction in currency circulation.
- Reasons, why Demonetization is good?
- Approximately 56 new taxpayers were added within a month.
- No of Returns filed increased to 24.7% as compared to 9.9% in the previous year
- Advance tax collections of Personal Income Tax grew at 41.79% over same period of last year
- Personal Income Tax under Self-Assessment Tax grew at 34.25% over same period last year
- Cleansing India’s Financial System
- Transactions of more than 3 lakh suspected companies under the surveillance.
- Around 450 companies were blacklisted and 800 untraceable companies to be further enlisted as fraudulent organizations.
- More than 400 suspicious transactions identified and market value of properties attached found to be more than Rs 800 crore
- Deposits in the banking system increased to Rs 3 lakh crore and nevertheless it will help to reduce fiscal deficits.
- Additional liquidity helped reduce interest rates by 100 basic points.
- Digital payments increased by 56% from 71.27 crore transactions in October 2016 to 111.45 crore transaction in May 2017. This growth percentage is predicted to undergo a steep rise.
- Approximately, more than 1 crore workers added to EPF and ESIC system post-demonetization.
- Bank accounts opened for about 50 lakh workers to get their wages credited directly to their accounts. Not any sort of daily wages in lieu of inked fingerprints anymore.
- The demonetization program has been assessed with regards to its transient expenses and long-haul picks up. Here and now misfortunes incorporate loss of welfare for the low-wage individuals and a decrease in GDP development. On the long haul increase side, an extensive number of advantages are distinguished which will show up with time.
- The spread of cashless transactions, development of the formal economy, enlistment of new salary citizens, connecting or bookkeeping physical resource speculation to PAN, purifying of the real estate development, conscience about avoiding black income transactions, etc., are supposed to be the major long-term gain. These require extra or strong arrangement measures by the administration too.
Increase in money related reserve funds:
- At present, over half of the family unit investment funds are in physical investment funds like gold and land. A huge part of these is in black money. Presently with the low reward in the land and gold property, wise individuals may think of investing in budgetary structures like bank stores, shared assets and so on.
Conclusion:
- Well, demonetization has been claimed as a complete fiasco by the oppositions, and truly there are still quite uncertainties about the feasibility of long- term benefits. But being honest taxpayers and humble citizens, we should have some patience to witness the pitfalls and beneficiary effects in upcoming years. Demonetization impacts are still in a very nascent phase.