Demonetizing Rs 500 and 1,000 notes will lead to decrease in purchases, profits, investment, income

By Hemantkumar Shah*
The decision to demonetize Rs 500 and Rs 1,000 notes from currency is a macho decision by the government which will have no positive impact on Indian economy.
(1) In 1978, a similar decision was taken by the Morarji Desai government. But the black money volume increased. It did not reduce. A same result will be there this time, too.
(2) In 1978, hardly 10% of people were using these notes. At present, almost all people use these notes. So they will be harassed for exchange.
(3) Poor people will be exploited, as they mostly don't have bank accounts. Private people will get undue benefits from exchanges.
(4) Recently more than Rs 60,000 crore black money was unearthed under the income tax (IT) scheme. No positive impact has been seen in the short run. Nothing will happen in the long run.
(5) As a result of this decision, perhaps another Rs. 50,000 crore will be destroyed by people. It will hardly have any positive impact on income, employment, prices and investment.
(6) It may trigger depression in the economy, already reeling under the same, as unaccounted money is used for buying goods and services. This will stop and my lead to decreased purchases, profits, investment, employment and income in general, and on the short run it may lead to depression.
(7) After 1978, black money increased. It values at present more than Rs 30 lakh crore. It will not be reduced or deleted. Even if it is reduced, it will be of negligible degree.
(8) It will trigger more corruption, which is one of the most effective sources of black money. Those who give cash to banks will be asked for explanations, which will increase corruption. It seems it is election funding programme for the rulers.
It is a bogus, directionless and totally political decision.
*Economist, based in Ahmedabad



How Nirav Modi, Mehul Choksi, collaborators in Vibrant Gujarat 2017, fleeced state jewellery customers

Memories Never Die! Gujarat carnage took place took place with complete connivance of state govt

Mainstream media is not willing to reveal that racial hatred is used to divide people and destroy society

UN goal to end poverty: India's welfare schemes are not a complete or sustainable solution

Gujarat's Ghogha-Dahej ferry service reportedly in danger due to problems in dredging

For Modi, early election is a political compulsion, his story is different from that of Vajpayee

Love in the time of WhatsApp: Breaking the barriers of caste and distance in "modern" India

No to guns? War is profitable business; no one would like to take on military-industrial complex

Banks are easy targets for tapping huge funds, as influential politicians care little for irregularities

Official rainfall data don't match the huge shortfall of 4.29 MAF in Narmada dam, as peddled by SSNNL