Indian government banned 500 and 1,000 rupee notes last week in an effort to flush black money out of the economy and we started a debate on it. Whether it is good and bold decision or bad decision or whether it is a conspiracy or just a illusion to cover up the real motive.
Being a neutral person I am not against it or not praising it. I just wanted to know how much effective it will be and how it will strengthen the Indian economy to become the developed world.
I am reading lot of overpraise WhatsApp messages on internet and a complaining news headline in the bulletin and news channels. Like a every coin has a two sides some good stuff is happening and bad too, but the vital question is how much good and the bad stuff will affect us and are we ready for it?
Yes it’s true that not only the poor villagers, farmers are desperate for new currency notes but urban peoples are suffering too, and this is not a headline of a newspaper but it is my recent real time experience. One of my old friend was wondering for food yesterday since his family went for a wedding ceremony out of town. All ATM were closed due to cash shortage. Credit cards were not working at Hotels due to some technical reasons. I have witnessed lot more than that and of course most of common public experienced much suffering waiting in the long queue without having lunch and water in the burning afternoon.
Let’s not talk about that most of the news channels are already showing that. Coming to the Vital Question, So I have done some calculations to just give you an idea how much % it will be effective and how much % people will suffer from it. First the bright side of the coin, well it is very good initiative to tackle the fake currency, and a dark economy which is governed by lot of criminal activities. Now the effective scale as this move is being advertised by government and social media as a way to bring the “BLACK MONEY” in the mainstream economy.
So how much black money will be flowing in the mainstream economy, let’s find out. Although most of us aware of the fact that most truly rich people don’t keep their wealth in the form of cash, but in the form of real estate, gold, deposit in foreign bank, converted into foreign currency and offshore investments. Still I am not going to talk about them who are listed in Forbes or Panama list. (Which by the way I have found out 850 peoples)
I am assuming peoples live in 10 richest state of India have the most (black or white doesn’t matter) money. Those states include Delhi, Goa, Chandigarh, Sikkim, Haryana, Maharashtra, Puducherry, A&N Island, Gujrat and Tamilnadu. Total population of all this 10 state is approximately 29, 8640,469 (Pretty big number compare to 850) Now we will calculate the %. Total population of India is around 1,332,541,971. Upon calculating we get 22.41% peoples in India having big bucks. (Which by the way is my assumption, real % is very shocking which is 6.3788 e-7 %) hence here is the conclusion the truly rich peoples will be largely unhurt, it the poor, middle class who will be hurt the most. Pretty negative picture, isn’t it,? But wait as I said I am not against this demonetisation policy, I will say something is better than nothing but no need to create hype about it. Some good things happening, like Banks are in business which is good for circulation of the (Common man’s) money in the economy hence banking system will get boost, some money will go to government in the form of taxes and penalties.
These consecutive effects are really sufficient for overall GDP growth and to prevent all malpractices with the money. No it is not, so what is really solved nearly all the eco-social problem of the country. Well to prosperous any country its GDP should increase. And how GDP really increase, by producing goods and services in a country for that we need more and more production and service industries so that more and more employment should be created. And the other way is those working peoples should work efficiently. More and more farmers should get efficient farming opportunities and positive environment same for the industry and service sectors. When GDP will increase non employment will decrease, people will get more and more money hence the socio-economical issues will lower and the malpractices with money and the wrong attitude of storing more and more money will change.
By just demonetising the old money and introducing the high value new currency will not solve the all issues instead people will get the chance to collect and store the new high value money which will ultimately create the same situation which was there from the beginning. Most of the people don’t get the idea that government can’t produce the new money by their own; they are just circulating the existing money. Money will be generated if and only if government will provide the working opportunities and environment for all. But government is failing those entire attempt instead of setting new Indian Government or Public sectors they introduced FDP in every sectors. Instead of providing farmers their basic needs for greater production they introduced Digital India campaign which ultimately boosts the foreign eCommerce. Instead of taking strict action against those people who have foreign bank accounts and offshore investment (Panama) they introduced this demonetisation policy. All this gives me the feeling of watching a magic show, magician on the stage creates an illusion to hide his tricks, and we simply enjoy the show.
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