The Reserve Bank of India (RBI) has declared that the currency notes banned on 8 November 2016, most of them were deposited in the bank. The study shows that almost 99 percent of the demonetised money has returned to the banks. The intention of achieving success to extinguish black money has become totally unsuccessful.
Rs 15.28 lack crore or ninety-nine percent of 15.44 lakh crore has been deposited to the banks, which shows clearly that only Rs. 41 crore is not deposited to the banks. In brief, only 0.01 percent of the black money has been extinguished.
The Effect on The Economy
The effect on the economy is exceptionally worst. After the announcement of the notes of 500 and 1000 rupees of the Mahatma Gandhi Series, the Indian economy faced a dark shadow in the entire economy and showed a great setback in the economic output.
The instant impact on Indian economy was clearly observed upon the liquidity stocks as well as other financial sections. Following are the main impacts:
- Currency crunch in the entire Indian economy
- Production is hampered
- Employment issues
- Growth of industries
- Tax revenue
- Check on counterfeit currency
- Countering of black money
- Reduced interest rate
- Loss of growth drive
- Market consumption was affected
How Money Laundering Took Place
The calculation of black money should be more than which came to the calculation. The detected black money is less than that of the calculated amount. The individuals exchanged money from the bank legally. But, after that, the black money was laundered illegally. The government is failed to prevent laundering money.
The demonetisation was not an instant action that was imposed upon the people. The government first inspired to create bank accounts (Jan Dhan) to the people of all classes. But, apart from depositing personal money to the accounts, the individuals deposited money of the people having black money with a huge commission. That hamper. The companies showed that their business has been increased many times.
A large amount has been laundered in this narrow channel widely in the open day light. Nobody has to do a little thing in this regard. The data from Prowess, a database management company in India shows that the purchasing power of individuals has fallen down effectively, but the sales of some companies have been increased significantly. How is it possible? It is really ridiculous!
The tax defaulters paid taxes through this hoarded cash, the tourist companies used to take the banned cash within the same period with an extra charge and some of them returned to their clients.
Some unfair money has been laundered by the way or purchasing real estate property as well as gold.
The Dream of Building Future India
The step taken by the current government Modi was realistic and artistic. But the matter of fact is that for making it successful, the total structure of the system should be rearranged. Unless the individuals are helpful to make it successful, no government can remove success against corruption.
However, there are some long-term benefits of demonetisation. The entire money is now under the calculation of the government, the taxpayers have been increased and unfair money launders are identified. Maybe, the artistic vision is not successful for the time being, the long-term benefit is still in the dream to be envisioned.