A view by Mr.
Deepak Gupta.
40 Minutes
Speech!! Who knew it would bring a heavy storm for 2 days. There is a historical
reform in the economy of India by prohibiting 500 and 1000 notes effect from
Tuesday Midnight. The process of pretension seems to be a bold problem for
everyone now. Every single person is in the supporting side to the decision of
Modi Government. Entrepreneurs, commoners and majority of industry have shown
their overwhelming support knowing that this would cause a huge problem for
them to survive the attack.
Public talks are
now on top picks asking and giving opinions that this could have informed two
three days before. In fact, this would have beat the entire purpose and all
black money could have been circulated very well. A truth fact is that this is
going to impact the business man, commoners and can bring huge inflation or
deflation in financial institutions.
Unfavourable impacts on following factors
Rural Economy
This reform in
the economy of India can have a bad impact on the rural economy. Out of 10 lakh
banks from all over India, there are 6.8 lakh villages which have no bank in
their area. Some of them do not have slight knowledge of banking and about the recent
classification of India economy. Time may come that rural areas will be having
cashless transactions in their areas. Also, peoples who have 500 or 1000 notes
without a valid identification or document will face so many problems while
exchanging the money.
Black Money Holder
Government declaration
on India economy by the demonetization of 500 and 1000 notes has specifically
pointed to the black money holders to burst out their lies. So, once they get
caught through tax verification process then they may have to pay the double or
120% or 60% of the total illegal amount stored. With this move in play, black
money holders are now left with two options with them. One is that they must
declare the amount as their income or they circulate it through hospitals or
other places where the government has given certain time to exchange the notes.
They have only the first choice to deposit the money in the bank which in
further will notify the government about their undisclosed money from the
previous and is higher than the income rate. Even if they show it as normal
income then also they have to pay the tax as per the normal rate.
Fake Note Route
A convinced
source of media report says that Modi said in his talk about how terrorist get
their money. Enemies of the Nation across the border running their operations
using fake currency notes for years. Recent act by militant operating against
India has exchanged 500 Notes with $7.50 at current exchange rates. So, Modi's surgical
strikes on these groups have a mindset to withdraw these series of high-value
notes and introducing new notes.
Domestic/ House Hold Areas
Now this process
has an outlook that the move will break the flow of high-value notes from the
black money market. However, Broder view says that the impact points towards
the super-rich, black marketers and smugglers or hawala operators as they only
keep high denomination notes. Business of every single person has gone down to
the earth in two days. Every one of them has 500/1000 notes which they are now
standing in a long queue to deposit them.
Foreign accounts and Tax havens: Those who have their black money stored in the swiss banks,
offshore accounts, gold or properties in foreign parks are not going to affect
by this move of the government. Here a question arises that, how the government
is going to stop this?
Political Party Funds
Politicians and
their parties have lots of black money in their pockets and they use them
during election time. It is going to be very difficult for them to pass trucks
of money for their illegal use.
Favourable Impacts of this move
There are so
many fields which have favourable impacts on them after this move. Following
are some noticed fields
1. Banks
are expected a valid proof on every penny: The government has announced
that every single person needs to bring an official identification to deposit
the amount. Especially for them who has lots of cash to deposit in the bank. In
exchange note, the bank will give only Rs.4000 as an immediate amount to the
account holder and others will be credited to their account. This will increase
bank's deposits on a huge scale. In fact, it will increase the lending
activities
2. Jewellery
business welcomes this change of Indian economy. Gold price will rise so
the trust on the importance of gold will also rise rather than high-value
notes. Small variation will be there in this business but overall it is going
to be beneficial for it.
3. Despite all of this, positive impacts are
there in rural sector which cannot be neglected. Rural transactions take place
through currency notes and undocumented lending and borrowings which take the
rich landlord to the nearest bank in the city.
4.
Deflation in the economy could be widely impacted by this and this
will be witnessed in next six months.
5. Positive
Impacts on payment transactions and security will drive the card payment
across the INDIA and cash transaction will be very less. ATM’s are restricted
with withdrawals of 2000 amount per day and banks are limited to 10,000 per day
& 20,000 a week.
There are some
other practical problems are there with people like vendors, vegetable stock
owners, local grocers and other consumer stock owners. But this will be
temporary suffer which can bring huge changes in the future.
Sharing some tips to avoid mistakes through this
period:
1. The government has announced the time up
until 30th December to deposit your cash and get exchange notes. Also, those
who are not able to deposit them within this time will be able to do so up
until 31st March, 2017 as per the extended announcements.
2. Bank will keep every track of your money
and the income tax department too. So, make sure you deposit them by submitting
proper documents.
3. Wait for some time and then go for deposit.
Do not let your hard income money go on waste just because you were in a hurry
and did mistakes.
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