I
Sir,
Centre’s decision of scrapping the currency notes of 500 and 1,000 denomination is aptly termed as a revolutionary step. Even Supreme Court upheld the objectivity behind such move and refused to stay government’s decision of demonetisation. While EU stated that this will strengthen Indian economy and spur growth, global economic analysts and financial services are suggesting other nations to take a cue from it like the Swiss financial services, UBS Group’s advisory to Australia. It’s outcome would indeed have multi-pronged benefits for the economy. In India, only 3% (approx) citizens pay tax, demonetisation have tendencies to improve tax compliance by bringing people in the formal banking system neutralizing black and unaccounted money in the country to an extent. Counterfeit money printed and pumped by Pakistan and circulating within Indian boundaries funds terrorist activities. Maoist activities will suffer a setback as police claimed that they have hundreds of crores in cash concealed. Naxals reportedly have 7,000 crore stashed in the Bastar region. Their businesses likely to blown out with this single strike.
One of the key takeaways is it will boost the ailing Banks, which collectively bear an insurmountable non-performing asset (NPA) onus of Rs. 4L crore. Demonetisation will be an act of capital infusion to such ailing banks through two ways. Firstly, through encouraged investment in their shares in stock market. Shares of public sector banks (PSBs) already started surging up on the Nifty PSU Bank Index. Secondly, this would benefit banks through an increase in deposits as predicted by Moody’s. NPA has always been tabled as the reason by banks for the failure of transmission of policy rate cuts by central bank into the bank lending rates. Thus, once banks regain health, lowered lending rates and enhanced interest rates on saving and fixed deposits can be expected.
Without disregarding the short-term inconveniences being faced by common people and a temporary stagnancy in economy, such a bold and decisive step has the potential to bring more transactions under tax net, both direct and indirect taxes would move up, more digital transactions will take place and reduction in parallel economy will increase the size of formal economy as more people will disclose income and pay taxes. Short term remedial measures like swift calibration of ATMs and more cash supply should be taken care of immediately.
Yours etc….
Sachin Sharma
Kote Nerojal
II
Sir,
The stringent step taken by the PM, Narendra Modi, is a step to find out stashed money. It observed a total secrecy. It was a step taken to end black money, corruption, bribery and dowry etc. There are some problems but they can be adjusted. The terrorism would soon vanish in oblivion. The surgical attack by the PM would definitely be fruitful. There is a heavy loss to black marketeers.
Yours etc…
Medansh Thusoo
Jodhamal Public School Jammu
III
Sir,
We have been witnessing arguments and counter arguments on demonetisation, keeping the average Indian guessing about the impact. Debates have been raging on with audio-visual media going full blast on the implications of the same with some favouring and some against the move. Although in this din, we keep hearing voices of wisdom and sanity-voices that come from the common man not withstanding the fact that this very common man keeps standing in long queues.
I was taken back my memory lane by some of the voices on the television who kept arguing against the demonetisation. Was not it the same group of people who kept talking of this very policy two three years back in the name of corruption free India.? How come does this policy become bad now. I am also drawn to the thoughts expressed by various financial experts on this issue during that time. I am surprised that this issue has now been hi-jacked by the politicians owing allegiance to different political parties. It is the politicians who are deciding on a policy issue with pure financial connotations. The common people would have been relieved by listening to financial experts than to politicians whose interest we all are aware of. But the bottomline remains that the commonman is willing to sacrifice his today for an India which he dreams of. The politicians or the media won’t deter him in pursuing his dream. The decision taken by Modi Govt in this regard will streamline the economy of our country and would also discourage hoarding black money.
Yours etc….
S.N. Raina, Jammu
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