EXISTING 500 AND
1000 DENOMINATION CURRENCY NOTES ARE INVALID FROM TODAY
The success ratio of Income Declaration Scheme is only 20%,
so what should be the next logical step to bring back the black money into the
system?
In the evening of 08/11/2016, PM Narendra Modi announced
that 500 and 1000 rupee currency notes will cease to be legal from midnight.
Way back, Modi announced about Income Declaration Scheme and
after increasing the deadline repeatedly, he has suddenly announced the stoppage
of use of the 500 and 1000 rupee currency notes. The Income Declaration Scheme
was a way to keep atleast 50% of the capital with you and also, it had another
extra facility that you won’t have tax raid for the announced money. But now,
chance of even the 50% is gone, all the existing 500 and 1000 notes are just a
piece of paper from today. Anyone trying to deposit the money in bank and
post-office have to follow certain guidelines.
Who is going to benefit the most?
Banks- Savings will increase as people will rush to convert
the hard cash to deposit into bank account, thus will lift the national
savings. More money power. All these facilities will be passed on to the common
man, interest rate, inflation, everything will happen for the good of the
economy.
ATM owners- Higher transactions, thereby higher commissions.
Who is going to suffer the most?
Ecommerce sites, Bars, Restaurants, Malls, etc where high
value transactions occur everyday
The common people, no one is going to accept the notes, how
to buy goods, pay bills, etc. Very few people are tech-savvy. But this problem
will be there only for 2-3 days or a week, and things will ease out soon.
Effect: The stock market opened deep red, and made a low of
8002 and then went on to make a high of 8476, around 6% up from day low. The effect
was so powerful that even the win of Donald Trumph in the US Elections didn’t affect
the Indian market, which was believed to be bad for the international economy.
Personally, I appreciate the step because it will only
benefit India both in the longer run and for the greater population.
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