demonetisation phenomenon book review

Publisher:	bloomsbury publishing
Edition:	Paperback
Language:	English
No. of Pages:	272
Publish Date:	2017-10-10

About The Book

Confused about Demonetization? Not really sure what it was about? Do you have avague idea but are not sure about certain aspects?

Then this is the book for you.

Discover the answers to all your queries here, as we explore:

-Job prospects after demonetization

-What demonetization means for you as a layman

-Whether demonetization spells well for all economic classes

India’s infrastructural support f or a digital economy

-The reforms needed to support demonetization

-Its impact on sectors as different as retail, real estate, telecom and banking

The storm that swept away all your old currency may have settled down but thelandscape it has left behind is a changed one. Inspiring not just a backlash and intensedebates but new start-up opportunities, demonetization is still not ready to be relegatedto the trash can of history.

On 8 November 2016, the Government of India announced the demonetisation/ notebandi, of all ₹500 (US$7.80) and ₹1,000 (US$16) banknotes .

the government’s innovative capacity shone through. The government-backed payment app, BHIM, facilitated electronic transfers between bank accounts; users could enter their unique, 12-digit Aadhaar ID number to make payments. The easy-to-use system works on an ordinary flip phone — no internet-enabled smartphone required. In other words, it was an inclusive solution, and, if the service continues to improve, it stands a chance of scaling up to India’s large market.

Advantages of Demonetization

1. Getting fake currency out of circulation:Demonetization can also be used to get fake currency out of circulation in a country’s economy since such currencies cannot be deposited in banks and other financial institutions.
2. Controlling inflation: When inflation really gets out of hand, one solution can be to completely change the currency and to start afresh. With increase in cash available for government expenditure and reduced state borrowing, inflation will fall for the short term and thus prices of basic commodities will also fall.
3. Tax Collection: Money deposited in the bank during demonetization can be taxed especially if the affected parties were trying to evade taxation by keeping hard cash.
4. The move to digital currency: Some commentators argue that in the future, we will all be using digital currency, such as bitcoins. If this is true, then one advantage of demonetization is that it will help to propel us into the future.
5. Improved deposits and savings in financial institutions: Parallel economies make it difficult for banks and other financial institutions to raise deposits. Demonetization reduces the size of the parallel economy and boosts savings and deposits.
6. Stopping fraudsters: When a new currency is introduced, this can also be a great opportunity to halt the activities of fraudsters who had been making money illegally by counterfeiting coins and notes.
7. Reducing illegal activities: Money used to fund illegal activities such as terrorism and drug trafficking will be rendered useless. Hence, the government can use demonetization policy to trace money that has been made from illegal activities such as drug trafficking and theft since such individuals are faced with only two options: either deposit the money with the bank or be left with currency that has no value.
8. Growth in a country’s GDP: Due to low lending rates, improved revenue collection, and growth in savings and deposits, a country that has demonetized is likely to see an improvement in the growth of its GDP.
9. Introducing new bank note designs:Demonetization is also a good opportunity to redesign bank notes. This might involve making them more durable, for example. Several countries have switched from paper notes (which tore or got worn very quickly) to more durable plastic notes, which has made their monetary system more secure in several ways.
10. A measure of good governance practices: Some experts claim that demonetization policies improve the ease of doing business and is also a measure of good governance.
11. Good income management habits:People will opt to invest their money in properties such as real estate or deposit cash in banks to safeguard against some negative effects of demonetization.
12. Reduction of lending rates: Availability of cheap deposits in financial institutions means that people can borrow money at low interest rates

The biggest advantage of demonetization is that it helps the government to track people who are having large sums of unaccounted cash or cash on which no income tax has been paid because many people who earn black money keep that money as cash in their houses or in some secret place which is very difficult to find and when demonetization happens all that cash is of no value and such people have two options one is to deposit the money in bank accounts and pay taxes on such amount and second option is to let the value of that cash reduced to zero.

Since black money is used for illegal activities like terrorism funding, gambling, money laundering and also inflating the price of major assets classes like real estate, gold and due to demonetization all such activities will get reduced for some time and also it will take years for people to generate that amount of black money again and hence in a way it helps in putting an end this circle of people doing illegal activities to earn black money and using that black money to do more illegal activities.

Another benefit is that due to people disclosing their income by depositing money in their bank accounts government gets a good amount of tax revenue which can be used by the government towards the betterment of society by providing good infrastructure, hospitals, educational institutions, roads and many facilities for poor and needy sections of society.