भाइयों और बहनों It gives me immense pleasure to announce that:
All Black money found in Ganges
Terrorist gone underground as their funding stopped
Stone pelting stopped
India on digital money
All नकली note out of system
Corruption died its own death.
Before getting to the topic please go through the series of events unfolded between November 16 and August 17 – Courtsey Business Standard
http://wap.business-standard.com/article-amp/economy-policy/rbi-annual-report-99-of-demonetised-currency-back-into-the-system-117083000891_1.html
November 9-10, 2016: Banks and ATMs remain closed to prepare for changes needed in the system after demonetisation. Govt had announced that any bank deposits of more than Rs 2.5 lakh would face tax and penalty.
November 14, 2016: Govt extends deadline for accepting scrapped notes for public utility and fuel payments until November 24. Queues get longer at ATMs. Cash withdrawal limit for current account holders increased to Rs 50,000 a week. Charges on ATM transactions waived until December 30. Cash crunch continues. Parliament House ATMs also run dry.
November 16, 2016: SBI says it collected Rs 1,14,139 crore in deposits in 7 days.
November 21, 2016: Banks report exchange/deposits from November 10 to November 18 amounted to Rs 5,44,571 crore – Rs 33,006 crore exchanged and Rs 5,11,565 crore deposited. They also report that the public withdrew Rs 1,03,316 crore from their accounts either over the counter or through ATMs.
November 24, 2016: Govt withdraws exchange of old currency notes and extends deadline for exemptions until December 15 midnight.
November 26, 2016: Deposits in Jan Dhan accounts soar sharply by around Rs 27,200 crore to Rs 72,834.72 crore in just 14 days.
November 27, 2016: Rs 32,631 cr deposited in post offices since the announcement of the demonetisation decision.
November 28, 2016: RBI says banks have got about Rs 8.45 lakh crore worth of scrapped notes
December 7, 2016: RBI Governor Urjit Patel says demonetisation was not done in haste. Note ban impact on GDP growth estimated at only 15 bps. RBI says Rs 11.55 lakh crore, or 76 per cent of junked notes, have come back into the system
December 13, 2016: RBI Deputy Governor R Gandhi says banks had collected Rs 12.44 lakh crore worth of deposits in banned notes until December 10.
December 19, 2016: RBI says in the remaining days of the month one could make deposits in Rs 500 and Rs 1,000 notes in excess of Rs 5,000 but only once for every account.
January 18, 2017: Governor Patel fails to answer queries on deposited banknotes. He, however, confirms RBI injected Rs 9.2 lakh crore worth of new currency notes into the banking system to help replace the banknotes banned in November.
March 10, 2017: RBI’s Macroeconomic Impact of Demonetisation report says the precise estimate of currency returned to the banking system was not yet available as the reconciliation process was still on.
July 4, 2017: Supreme Court asks the government and RBI to consider granting a window to those who has not been able to exchange scrapped Rs 500 and Rs 1,000 notes for genuine reasons.
July 13, 2017: Governor Patel, appearing before the Finance Standing Committee of Parliament, says the notes deposited after demonetisation are still being counted
August 2, 2017: Finance Minister Arun Jaitley says RBI is in the process of counting scrapped currency notes and will come out with the final figures once the fake notes are weeded out.
August 11, 2017: Describing the impact of demonetisation on the Indian economy in the Economic Survey-II, Chief Economic Advisor Arvind Subramanian says there has been a 20 per cent reduction in cash in the economy.
August 12, 2017: A paper, ‘Demonetisation and Bank Deposit Growth’, says ‘unusual’ cash deposits in specific accounts that are usually less active is estimated at about Rs1.6-1.7 lakh crore.
August 15, 2017: In his Independence Day speech, PM Modi says demonetisation of old notes led to at least Rs 3 lakh crore of undeclared income coming into the banking system.
August 16, 2017: Congress accuses PM Modi of contrary stand on black money recovered. It says he first announced an additional Rs 3 lakh crore had been brought into the banking system, and then said about Rs 1,25,000 crore black money was recovered
August 27, 2017: Data put out by RBI on its website suggest that at least for the Rs 1,000 notes, almost 99% of the currency in circulation had come back into the banking system
August 29, 2017: Several members of a parliamentary panel seek re-drafting of the draft report on demonetisation as RBI is yet to provide some crucial details, including on the number of junked Rs 500/1000 notes.
I leave up to readers to perceive from the above sequence of events.
Just after RBI published their Annual Report on 30th August comments from different quarters started coming
“Some do not understand demonetization” is what our Finance Minister has to say, actually its a question and suspense for him and his inability to defend what he has not done. The one who confidently understood will never take the onus of pain suffered by only those having no black or white money. Few endorsements surely benefited e-wallet business and also ensured benefits in state election. There are certainly some positive outcome of demonetization like tax base rise, more accountability etc. but the cost which the nation has paid is huge. One percent loss of GDP itself amounts to 1.25 Lakhs Cr., which is a huge amount to fiddle with and is not one time. Some would not realize, but within the span of 3 months there is no estimate of domestic trade and production loss that we suffered.
While taking credit of increased tax base, an additional 93 lacks tax returns are filed is been reported whereas if we see the trend from last actual data available (FY2012-13) in which its evident that out of 5.3Cr returns only 1.7Cr were tax payers i.e. about 32 percent, keeping in mind the same trend only 30lakhs additional tax payer added which also includes natural growth of increase of tax base. Its not worth an addition at such a huge cost of demonetization. The better way to understand this is to look at Direct Tax to GDP ratio which in FY14-15 was 5.7% and in FY16-17 is 5.8%
The idea behind excess money received by banks resulting a healthy state of affairs when they are in position to lend it further but is one look at credit growth of banks which was at 60 years low in Nov16 went onto negative side by July17, this was primarily because of low capacity utilization, which was about 70% in that period resulting low investments, in nutshell not only un-organised sector but also the organised sector got a hit. The worst hit among all were the farmers. Agriculture, a sector which largely operates on cash, with farmers not being paid enough for vegetables and pulses they had grown. Many protested and several state governments waived payments on farm loans.
Less cash economy is a good thing to have but cannot be achieved through demonetization, it would require years to develop as a habit rather force and helplessness.
Counterfeit notes are all back in system and lets wait for this figure to come out from RBI, as what is the actual amount of counterfeit notes
I would not like to comment on corruption and patriotism attached to demonetization as this logic is beyond my imagination.
As far as our current government is concerned, it is unlikely anyone from government will admit it was a big mistake and will continue to put a positive spin on it, as it has been done since November16 and nothing is gonna change on this front as governments are not use to admitting mistakes.
To conclude, no relatively healthy economy has ever carried out demonetization.
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