Page 28 - Banking Finance JANUARY 2017

ARTICLE

tions, gambling, drugs, murdering of whistle blowers it will be better to thrive in the mainstream economy
thereby making life difficult for the ordinary citizens. with pride, honour and peace of mind.
 Fake currency was freely flowing into financing of ter-  Black money and corruption go hand in hand. Each sup-
rorists and naxalists making the government to spend ports the other. If black money generation can be shat-
heavily on encountering them. tered then corruption will also be shattered to a great
extent although it cannot be totally eliminated.
 A situation had developed in the country since indepen-
dence and more so since liberalization that honest tax-  The greatest gain has been in terms of peace restored
paying and law abiding citizens were sidelined, to areas affected by terrorism and naxalsim. With fake
marginalized and made insignificant and those with notes being rendered totally worthless the terrorists and
black money, corruption money were getting predomi- naxalists have no incentive to carry on their jobs and have
nance over them and also becoming opinion makers and to resort to other legal ways to survive. So also crimes,
decision makers of the country. This was the greatest murders for gains, extortions, hawala trades have come
danger to the future of the country. down to a great extent in all parts of country.
 Jewellery and real estate businesses which were the
The pain caused by demonetization darling of the people are now finding it difficult to find

 A disruption of this magnitude is bound to create dis- customers.
turbances and hardships to a large section of the popu-  Tax compliance will improve substantially leading to
lation. The section of the population which suffered the increased revenues for the government and may also
greatest pain was the lower strata of society and those result in reduced tax rates in the future.
belonging to the informal sector. While the situation
 The government will have more revenues due to greater
was quickly resolved in metro and urban areas in the
tax compliance and this could lead to greater social
shortest possible time the same was not the case in rural spending on health care, sanitation, primary and second-
areas due to logistical and connectivity issues.
ary education , water supply ,rural electrification, roads,
 The hardships faced by the people were sought to be transport and communications etc .These are bound to
resolved through pumping fresh currency of lower de- generate employment and the multiplier effect will be
nomination notes and it is being targeted to resolve the growth of further downstream and related industries.
same by end of Dec 16 or latest by the middle of Jan 17.
 The growth in GDP of the country is bound to be de- Should we stop with mere demonetiza-
pressed in the quarters of Dec 16 and Mar 17.
tion ?
 The hardships are not insurmountable and permanent
 If the government stops with mere demonetization and
in nature. It is only that there is a time lag in the reso-
does not take any follow up measures then it would
lution process.
amount gross injustice to the crores of people who bore
the pain. It is therefore the duty of the government to
The gain caused by demonetization give to the people of this country the long term gain that

 The greatest gain of demonetization is that the hidden it had assured as compensation for the short term pain.
wealth has come into in the formal mainstream  A big push should be given to cashless economy through
economy. Of about 14.50 lakh crore of SBNs about the digital medium. This is the most opportune time to
12.44 lakh crore have come to the banking system .This
push people away from the black economy. They should
will be available for lending to the productive segments be forced to adopt the cashless mode whether they like
of the economy. it or not and they should not have any other alternatives.

 The black economy of the country has been completely  Adoption of the digital medium should be on a mission
shattered. A fear of psychosis has been created that in
mode on a national level. The younger generation, the
future it will be worthless to generate black money and schools and colleges, media and those who are familiar

28 | 2017 | JANUARY | BANKING FINANCE

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