Skip to main content

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

Comments

TRENDING

Banned? Indian ports 'received' 38 US plastic waste containers reexported from Indonesia

By Rajiv Shah
An Indonesia-based international environmental watchdog group has dug out what it has called “a global pollution shell game”, stating how officials in Indonesia approved re-exports of “illegal” US waste shipments containing plastics mainly to India, as also to other Asian countries -- Thailand, South Korea and Vietnam -- instead of returning them to the US “as promised.”

Gujarat refusal to observe Maulana Azad's birthday as Education Day 'discriminatory'

By Our Representative
The Gujarat government decision not to celebrate the National Education Day on !monday has gone controversial. Civil society organizations have particularly wondered whether the state government is shying away from the occasion, especially against the backdrop of "deteriorating" level of education in Gujarat.

Cops' 'inability' to deliver justice? Model Gujarat ranks 12th among 18 major states

By Rajiv Shah
A Tata Trusts study, released in Delhi on Thursday, has ranked “model” Gujarat 12th out of 18 major states it has analysed across India to “assess” the police's capacity to deliver justice. Several of the advanced states such as Tamil Nadu, Karnataka, Punjab, Haryana, Maharashtra, Andhra Pradesh and Telangana as well as some of the so-called Bimaru states such as Odisha, Jharkhand and Chhattisgarh are found to have ranked better than Gujarat.

People's pressure? GPCB mining cancellation 'notice' to top cement unit in Gujarat

By Sagar Rabari*
Environmental Clearance (EC) was given to Ultratech Cement Co Ltd for limestone mining in villages Talli and Bambhor of Talaja taluka in Bhavnagar district of Gujarat on January 5, 2017. EC was issued ignoring, overriding and undermining opposition from local farmers to mining activity in the area. The mining in these two villages covers an area of 193.3268 hectares (ha), while the entire project is spread over an area of 1,715.1311 ha.

Bullet train acquisition: Land holding worth Rs 1.5 crore, Gujarat govt 'offer' Rs 8 lakh

By RK Misra*
Foundation stones laid by Prime Minister Narendra Modi litter India’s cities, towns and villages, but there are few projects which he has pursued with such perseverance and tenacity as the Ahmedabad-Mumbai bullet train one. However, the overwhelming state power notwithstanding, the farmers, whose lands are being acquired for the Modi government’s dream project, have no plans to give up the fight.

Visually challenged lady seeks appointment with Gujarat CM, is 'unofficially' detained

By Pankti Jog*
It was a usual noon of November 10. I got a phone call on our Right to Information (RTI) helpline No 9924085000 from Ranjanben of Khambhat, narrating her “disgraceful” experience after she had requested for an appointment with Gujarat chief minister Vijay Rupani. She wanted to meet Rupani, on tour of the Khambhat area in Central Gujarat as part of his Janvikas Jumbesh (Campaign for Development).

NHRC notice to Gujarat chief secretary following silicosis deaths in Rajkot

By Our Representative
The National Human Rights Commission (NHRC) has asked the Gujarat chief secretary and the district magistrate, Rajkot, to respond to a complaint filed by health rights activist Jagdish Patel of the People's Training and Research Centre (PTRC), Vadodara, regarding the alleged death of Raju Prakash Parihar and two others reportedly because of silicosis, a fatal occupation disease, in Rajkot, one of Gujarat’s top cities.