Effect of Demonitisation
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This document discusses the effects of India's 2016 demonetization initiative. It begins with an overview and definitions of demonetization. It then discusses the historical precedents of demonetization in other countries. The document outlines the reasons given by the Indian government for demonetization, including reducing black money, fake currency, and pushing for digital transactions. It notes both positive impacts like increased tax collections but also pitfalls like unpreparedness and negative effects on small businesses and jobs. It questions whether demonetization actually achieved its goals of curbing black money and corruption.
Effect of Demonitisation
- 1. Effect of Demonetization Dr. Tushar Chaudhari, Assistant professor, Seth Kesarimal Porwal College, Kamptee
- 2. OVERVIEW Demonetization History Reasons Positive impact Pitfall Analysis Conclusion
- 3. DEMONETIZATION Demonetization is the act of stripping a currency unit of its status as legal tender It is the process of ceasing to produce and circulate particular forms of currency
- 4. COUNTRIES WHO HAVE DONE THIS BEFORE GHANA ZIMBAWE AUSTRALIA NEWZEALAND USA EUROPIAN UNION SINGAPORE NORWAY UK INDIA
- 11. INDIAN CONTEXT
- 13. INDIAN CONTEXT
- 15. Pradhan Mantri Jan Dhan Yojana (25.98cr Bank accounts) Income Declaration Scheme (Rs.65,250cr disclosed) Demonetization
- 19. REASONS FOR DEMONETIZATION Cash less transaction Revenue for government project
- 20. REASONS FOR DEMONETIZATION Politically motivated Reduce NPA of nationalized bank
- 22. POSITIVE IMPACT (SOCIAL) Moist Hit stone-pelting in J&K Corrupts burning cash
- 23. POSITIVE IMPACT (ECONOMIC) record recoveries of house tax Electricity companies making huge record recoveries Huge opportunities for mobile wallets Property prices come down by 25%
- 24. PITFALLS
- 25. STRUCTURAL unpreparedness Information may have leaked insufficient infrastructure Root of the problem is untouched ATM were not in coordination with new currency.
- 26. OTHER Future Planning by marketers Lots of chaos trouble in arranging family programs Economic activity takes bearing
- 28. BLACK MONEY Only 3 % to 7 % of black money is in form of cash. 11.55 lakh crore have been deposited just before demonetization day. It was estimated that 70 lac crore black money will be recovered but only 4 lac crore has been recovered. (0.5% of GDP) Others form of black money in terms of real estate, gold, politician money, deposit in foreign bank are still not been evaluated.
- 29. CORRUPTED MONEY AND TERRORISM Public servant will not face enquiry without prior permission of government.(anti Grift Law) Diluting FCRA Act. Participatory notes Fake currency :- no data have been published yet.
- 30. DIGITIZATION Demonetization and digitalization are separate concept. Not enough infrastructure for digitization POS machine have been imported from china. Maximum ATM & Debit card are in with foreign collaboration, hence profit will go to foreign company. ATM were not in tune with new currency.
- 31. ECONOMY TOTAL EXPENDITURE (1,28,440 CRORE) 61,500 15,000 16,800 35,140 Rs. in Crore Cost to enterprise Cost of people queing up Cost to center, RBI cost to bank
- 33. INDUSTRY Small business, Entertainment , luxury items • Has come down • Hard time to cope Bank • Suffer lot of problems • Deposited with RBI1.5 Crore • Rate of deposit come down • Defaultation increases FDI • Will likely to increase E-commerce • Most increased
- 34. SOCIAL IMPACT Job Loss Construction workers MNERGA hires falls by 23% Toll Tax loss 1,238 Crore Death issues