How demonetisation will help India in long run
The thought that government must take some firm steps to curb the ever increasing real estate prices must have crossed your mind, isn’t it? But have you ever thought about how the real estate prices can be lowered and stabilized on a firm ground for a long term? We blame governments for not handling the terrorism iron-handedly, but can we suggest some solid ways of tackling this problem? The media reporting about hoarding of endless money by some politicians do agitate us, but do we really know how to punish such politicians and demotivate others from doing so? We only have vague solutions for such problems but no substantial support to back them.
But probably after a very deep thought , our Prime Minister Mr. Narendra Modi has found a solution of these problems i.e. demonetization. I am not lauding my support for the demonetization as a die-hard fan of Narendra Modi. I am an apolitical person who hates to stand in line to withdraw cash or deposit the hard-earned money like any next person. I understand that this decision has affected both the wealthy and needy alike and not only the corrupt But the long-term benefits that I can foresee prompts me to take its side.
The historical date of November 8th, 2016, which has brought a new vision for the common man, will bear significant fruits only in the coming future and not spontaneously. But what could be the best favorable outcomes of this move for the common man can be discussed in detail.
Abolition of Fake currency
The first thing that demonetization will tackle is fake currency. In any country, only the larger denominations of currency accounts for the major fake currency. In case of India, rupee 500 and 1000 notes were circulating as fake currency. With a sudden ban on any type of transactions using these notes, this fake currency received a sudden death.
Check in terrorism
With the death of fake currency terrorism related activities have also got a thud, as this counterfeit money constituted the major part of any terrorism related funding. In Kashmir, its effect is more apparent. There is no stone pelting or heavy bomb blasting on security forces following demonetization.
Help in Fighting Corruption
Tackling corruption is one of the dominant reasons highlighted behind the demonetization move. With demonetization, the cash crunch increases, which incapacitates corrupts from offering unaccounted money in the cash form. The current cash crunch in India will bring the corruption to its lowest level at least for some time, if not forever.
Inflation under Control
With current demonetization, there is low availability of money in the market . This unavailability of cash in the market will ultimately reduce the demand for goods and services and it will periphrastically limit the inflation. This control of inflation will also indirectly lower the prices of gold, petrol etc.
Appreciation of Rupee Value
With the control in cash flow, more and more money will flow towards the banking system of the country. As per information shared buy RBI Deputy Governor Mr. R. Gandhi Rs. 12.40 lakh crore have been deposited in the banks till December 10. It is a well-established fact, the more the money flows under the banking system, the more the value of the currency increases. The strengthening of value of currency has some direct benefits for any country like reduction in the import rates, international trading benefits etc. Moreover, the money flow in the banks can be used efficiently to plan fiscal budget of the country and can be allocated towards defense, rural development, railways and road transportation, poverty alleviation etc.
Real Estate Prices in Check
Affordable homes and land seems to be a possible future outcome of this demonetization. In realty market, more than 50 percent is black money. It is the sector where major black money is invested very logically. With demonetization, the liquidity flow has got a huge uppercut in the market. This is going to reduce the demand of property and gold in the market, which will eventually lower the prices of property in the real estate market. It is also anticipated that excess of money flow in the banks after demonetization can lead to tax reduction and lower loan EMIs. Higher loan EMIs are charged by banks to increase their income and to tackle the cash crunch faced by banks. But with abundant cash in banks, it can lower the bank loan EMIs and interest rates in favor of the general public. All the missions like Make in India, Digital India, Swacha Bharat Abhiyan etc. can get a boost with this cash flow in banks.
Digital India and Cashless Economy
Digitalising any country and moving it towards cashless economy are considered as the two solid pillars of strengthening an economy. There are two major benefits of moving towards cashless economy: (a) Cash operations costs which accounts for nearly Rs 21,000 crore to the RBI and other commercial banks can be limited to a greater extent with cashless economy. (b) The cash crunch created by demonetization makes it difficult for the tax evaders to hide their income and ultimately increases government’s income. This demonetization move will force the refraining and ignorant public to explore all the benefits of digital transaction method. Even the ‘thele waalas’ are now becoming aware about how to digitally channelize their transactions.
Control on Household expenses
The fear of ‘cashlessness’ is not allowing families to spend much. This fear is leading them to learn the new ways to live. They are learning to live comfortably even by spending only a fraction of their expenditure, which they were used to spend entirely before demonetization. Most of the families have experienced a reduction in their household expenses following demonetization.
QUICK RECAP
Quick list about what is going to surely happen after demonetization:
- Abolition of fake currency.
- New strong currency will be brought into circulation quickly.
- Funding of terrorism will get a hit.
- Higher tax collection in current fiscal year.
- Reduction of corruption and black money.
- More use of Jan Dhan account will be seen.
Although, demonetization has taken everyone by surprise (the planning of which will always be debated), but the benefits associated with it will definitely help the common men to realize his dream. Standing in a queue for a while is the best option we have for a promised better future. Government is tightening its grip for turning its fist into an iron-fist, so we must all help it in its endeavor. Remember, tides are turning for sure.
