Benefits on 500 or 1000 Rupees Banned

Benefits on 500 or 1000 Rupees Banned

 “The fight for justice against corruption is never easy. It never has been and never will be. It exacts a toll on our self, our families, our friends, and especially our children. In the end, I believe, as in my case, the price we pay is well worth holding on to our dignity”.

                                                           ~ Frank Serpico

On the evening of 8th November 2016, at 8 pm Prime Minister Narendra Modi made an unbelievable speech on national television which opened the floodgates of Facebook and Instagram post and WhatsApp jokes before making way for more serious discussions about the issue.

All currency notes of denominations Rs. 500 and Rs. 1000 had lost their legal sanction from midnight of 8th November. While currency notes of Rs. 500 will be re-issued as a new one, but Rs. 1000 currency notes will be completely be drained away with this announcement. In addition to it, technologically advanced currency notes of denomination Rs. 500 and Rs. 2000 will be introduced in limited numbers from November 10. However, all notes in lower denomination will remain unaffected.

After this announcement all we see is the long queue outside every bank and every people look confused about what they will do and some are unable to understand what is going on they only know that they have a specific amount which they have get exchange and even at mid night we have seen that there were many people outside ATM trying to deposit there 500 and 1000 denomination note in the Cash Deposit Machine and withdrawing it from ATM. But the biggest question that was arising in every one mine was what’s next. But one satisfaction that was there in the mind of every one was although we will face some trouble in short run but in coming days i.e. in long run it will have many good and positive effects on the individual as well as for the economy as a whole.

Some of the benefits of this step are:-

1.    Uprooting the parallel moving economy:- The primarily benefit of this step is to curb black money from the economy as they will be blocked as the owners of that black money will not be in a position to deposit the same in the banks as if they will deposit they will come in the eyes of income tax. This move is also beneficial as there is a large circulation of the counterfeit currency in our economy and many mal practices take place and will curtail towards the funding towards the anti-social activities like terrorism, espionage, smuggling, etc. This move will cut the frequency of movement of these counterfeit currencies for atlest some time. We can see the effect from the very first day as the holder of black money was throwing there black money in the river like Ganga and Yamuna and some are burning there black money. It has been observed that there is a great downfall in the terrorist activities in Kashmir valley and counterfeit of currency notes.

2.    IMPACT OVER THE SUPPLY OF MONEY IN SHORT TERM AND IN LONG TERM: – As the old 500 and 1000 note become scrap and new currency of 500 and 2000 will take quite a lot of time to get in circulation in a short run and black money will not enter into the market so which will reduce the supply of black money permanently and when the money get into circulation than there will be no problem.

3.    IMPACT OVER BANK: – Since 500 and 1000 note are now not been considered as a legal tender but it can get deposited and exchange in the bank up to a certain extent. This will lead to more and more deposits in current and the saving account of the person. Now government will have full eye upon all the transaction. This in turn leads to more liquidity position of the bank which may enhance the lending power to the customer.

4.    Impact over Price: – One of the major impacts of this demonetization will be seen over the products whose price increased because of demand. The impact is seen mainly over major categories i.e.; Consumer goods and Real Estate.

  Real Estate and Property prices in this sector can experience a fall, especially in case for the sales of properties because in this sector major transaction take place with cash rather than bank transfer or cheque transaction.

Demand of the consumer goods are expected to fall as for some time till they don’t have enough cash or change their payment method to cheque or card payment.

5. INCREASE IN ONLINE TRANSACTION OR ALTERNATIVE PAYMENT MODE: -As with the withdrawal of currency note from the economy cashless transaction will increase which in turn lead to modernization which is most important to expand the economy government is taking more and more initiative towards promotion of cashless economy i.e. doing payment through debit card and credit card or promoting online payment like paytm, freecharge, etc.

6.    Impact on black money hoarders: – The main focus behind this historical decision is to curb black money. A recent study had pegged India’s black market economy at over Rs 30 lakhs crore or about 20 percent of total GDP. This is much vast than the GDP of countries like Thailand and Argentina. This decision will in turn lead to great impact over the Black Money holder.

7. IMPACT OVER THE POLITICAL PARTY: – Recently in 2017 there will be election in five states demonetization has great shock over political parties. Especially, in large states like Punjab and Uttar Pradesh, a cash donation has a huge impact over “election management” this is really a great move by the Prime Minister Mr. Narendra Modi. As big parties invest crore during election which they have horde with themselves as a black money.

Therefore all the issues which are arising by these politicians are only because of their black money has gone waste and election is near and they don’t have white cash in their hand.

Author: This blog is written by  Ms. Ayushi Mehrotra, student of Bharati Vidyapeeth Deemed University New Law College, Pune, a passionate blogger & intern at  Aapka Consultant.

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