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

'Modi govt's assault on dissent': Foreign funds of top finance NGO blocked

By Rajiv Shah  In a surprise move, the Ministry of Home Affairs, Government of India, has cancelled the foreign funding license of the well-known advocacy group, Centre for Financial Accountability (CFA), known for critically examining India's finance and banking sectors from human rights and environmental angle.

Misleading ads 'manipulate, seduce, lure' to market unhealthy harmful food

By Our Representative  The Nutrition Advocacy in Public Interest (NAPI) in its new report “50 Shades of Food Advertising” has sought to expose how seductive, luring, manipulative or deceptive these advertisements can be. Consequences of such advertising are increased intake of unhealthy food products that is associated with obesity and diabetes, it says. 

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

'Failure of governance': India, China account for 54% pollution-related deaths globally

By Vikas Parsaram Meshram*   A recent report jointly prepared by UNICEF and the independent research organization Health Effects Institute has been released, and the statistics within it are alarming. It states that in 2021, air pollution caused the deaths of 2.1 million Indians, including 169,000 children who hadn't yet fully experienced life. These figures are indeed distressing and raise questions about why there hasn't been more serious effort in this direction, putting policymakers to shame. 

August 9 to be observed as Corporates Quit India day: Top farmers' group

By Our Representative A recent general body meeting of the Samyukt Kisan Morcha (SKM), the top farmers' organisation, stated hat "there is no need for any illusion of change in the pro-corporate policies of the BJP-NDA government" following the recent elections in which BJP failed to achieve even simple majority. It insisted,  Prime Minister Narendra Modi "is hell bent" to continue 'business as usual' policies.

Over 3.8 billion animals at risk: India on crossroad in animal welfare practices

By Rupali Soni*  In a collaborative effort, the India Animal Fund and Dasra have unveiled their report , "Our Shared Future | Securing Animal Welfare, Human Wellbeing, and Sustainability in India." This landscape report provides a thorough overview of animal welfare and underscores its indispensable role within India's socio-economic and ecological frameworks. It also illustrates how animal welfare is intricately intertwined with public health, labor welfare, and climate resilience.

Belgian report alleges MNC Etex responsible for asbestos pollution in Madhya Pradesh town Kymore: COP's Geneva meet

By Our Representative A comprehensive Belgian report has held MNC Etex , into construction business and one of the richest, responsible for asbestos pollution in Kymore, an industrial town in in Katni district of Madhya Pradesh. The report provides evidence from the ground on how Kymore’s dust even today is “annoying… it creeps into your clothes, you have to cough it”, saying “It can be deadly.”

Women's emancipated under Mao: Girl completed primary school, began working in farm collective

By Harsh Thakor*  The book “New Women in New China”, a collection of articles projecting dramatic transformation -- political and economic -- in the status of Chinese women after liberation, originally published in 1972, and reprinted in 2023 by the Foreign Languages Press, Beijing, encompasses the period between 1949 and 1972, seeking to give justice to the subject of women’s emancipation in China after the 1949 revolution.