The Founder of Jan Ki Baat, Pradip Bhandari, conversed with the Member of State Finance Commission of Haryana, Tilak Chandna, to get a nuanced information on Demonetization. Mr Chandna, as a financial expert, clarified a bunch of complexities around the issue. Dismissing the idea that demonetization would choke the Indian economy, he said this was an exaggerated consequence. Black money is primarily of two types, when geographically categorized: one which is stashed abroad, in Swiss banks etc. The other kind is within our domestic quarters and it is this which the demonetization drive targets. The shadowed economy cultivated by transactions in black money has to be slowed down and then, cut off from its roots. To be simple: any accumulation of money where relavent taxes are not paid is classified as black, illegal income. Demonetization, as a scheme given power so suddenly, also has the potential to weed out any future possibilities of hoarding and hogging money since it has, albeit dramatically, instilled a sense of fear amongst the dishonest. Those who were in habit of dealing in cash through illegal activities would now shrink away from black money, instead choosing to keep accounts now. The real estate sector and political funds were two areas which witnessed an unchecked flow of money. Though this cannot be fully stopped, novel measures of transparency have been proposed to ensure a balanced economic structure. Demonetization would obviously encourage a good buoyancy in the tax collection and an increased governmental revenue. A bold, historically as well as economically, move on the PMs part should be praised.
The PM of India, Narendra Modi, announced on the 8th of November, his governments decision to demonetize the higher-denomination currency. The old ?500 and ?1000 notes were banned throughout India from morning of 9th November, with the citizens being allowed to either deposit their old notes in banks or get them exchanged, until the new ?500 and ?2000 notes come out. Such a move intended to renew the economic market place and rid the country of the black money it had accumulated till date.
The extra mile that the government has to walk to ensure maximum impact of its policy is the flipside of the situation. Soothing anxieties and the paraphernalia that has generated post-demonetization will be one of its primary task, now. How it chooses to conduct its management of public sentiments remains to be seen.