From Curtailing terrorism, Benefitting economy to Unearthing black money, Here is #DeMoWins
New Delhi, November 7: Commonly known as "Notebandi" or NoteBan, Prime Minister Narendra Modi took the decision to curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism by announcing the demonetization of all Rs.500 and Rs.1000 banknotes of the Mahatma Gandhi Series on 8th November 2016.
The demonetization showed the Multi-dimensional positive effect on the economy such as a large amount of black money was unearthed and also it was a conclusive blow to the terrorism and Naxalism. Due to this step, the financial system of India was cleaned. The jobs for poor were increased because of the proper formalization. Tax compliance increased. Demonetization led in the growth of digital payments.
Multiple Benefits to Economy: Due to demonetization the lending rates of loans got cheaper by 100 basis points (by 1%). Real Estates prices were declined significantly. After demonetization, the revenues of Urban Local Bodies (ULBs) were increased by 3 times on an average. In Uttar Pradesh, it was up by 4 times, while in Madhya Pradesh and Gujarat it was increased by 5 times.
The Gross Financial Saving of households which were static at 10 percent of Gross National Disposable Income (GNDI) for years has been increased by about 1 percent to reach 11.8 percent. Also the Gross Savings like deposits, shares, debentures, provident and insurance funds have increased from 9 percent to 13.3 percent of GNDI. The Mutual Funds assets under management saw a whopping growth to an all-time high Rs.20.4 trillion by the end of September 2017.
Conclusive blow to anti-social activities: The Anti-social activities like terrorism and Naxalism were affected by the step of demonetization. The incidents of stone pelting were decreased by 75 percent from previous year. Incidents of Left-wing Extremism were down by more than 20 percent. About 7.62 lakh pieces of counterfeit currency of were detected.
Increase in Digital Payments: The Digital Transactions were increased by 58 percent from 87 crores in August 2016 to 138 crore in August 2017. Since the use of Point of Sale (POS) machine was started there were 15 lakh machines in use but within one year more than 13 lakh machines were added.
Debit card transactions: The Debit card transactions were increased in the period of Demonetization. The transactions in terms of value were increased by 48 percent. In August 2016 it the transactions amounted to Rs.18, 370 crores but in August 2017 the Transactions increased to a Rs.35,413 crore. While in terms of volume, the Transaction in August 2016 was of Rs. 13.05 crore and in August 2017 it was Rs.26.55 crore which resulted in the growth of 50 percent within a period of one year.
Immediate Payment Service transactions: The Immediate Payment Service (IMPS) transactions were increased by 59 percent in terms of value. From Rs.26, 849 in August 2016 to Rs.65,149 crore in August 2017. While in terms of Volume, there was an increase of 55 percent in the transaction. From Rs.3.39 crore, in August 2016 the transactions increased to Rs.7.57 crore in August 2017.
Mobile wallet Transactions: The Mobile wallet Transactions also saw the significant growth. The transactions in terms of value were increased by 58 percent. In August 2016 it the transactions amounted to Rs.3, 074 crores but in August 2017 the Transactions increased to Rs.7, 262 crores. While in terms of volume, the transactions in August 2016 was of Rs. 7.07 crore and in August 2017 it was Rs.22.54 crore which resulted in the growth of 69 percent within a period of one year.
Ensured better Jobs for poor: The Payment of wages act was amended and due to which direct payment in bank accounts was enabled. About 50 Lakh new bank accounts were opened which allowed cashless transactions of wages. Over one crore additional employees enrolled with EPFO. For social security and health benefits, more than 1.2 crores were registered with Employees' State Insurance Corporation (ESIC).
Efforts to clean Indian Financial System: The Indian Financial system had many loopholes which were filled by the demonetization as 2.24 Lakh Shell companies were struck off. Each company had more than 100 bank accounts and one company had 2,134 bank accounts. According to the government records, a company with the balance of Rs.63.60 lakh into the account deposited 18.23 crore and later withdrew 18.68 crores during demonetization.
Post demonetization, 35,000 shell companies were owning 58,000 bank accounts which deposited and withdrew Rs.17, 000 crores. Also, a company which had a negative balance on 8th November 2016 deposited and withdrew Rs.2,484 crore.
Highest ever black money unearthed: one of the major, basic and the positive point of the demonetization was that it exhumed the Black money which was hidden into the Indian Market.
The suspicious cases in which the cash deposits were not matching the tax profile were reported to 17.73 lakh. Still, 23.22 lakh bank accounts which amount to Rs.3.68 lakh crore are under suspicion. The Banks and Financial institutions reported more than 4.7 lakh additional suspicious transactions. Post demonetization, Rs. 16,000 crore is unreported to the bank.
Also a number of Rs.29, 213 crores undisclosed income were detected and benaami assets worth Rs. 1626 crore were seized. About 33 percent of the total cash in the country is being deposited by the 0.00011 percent of the population. The value of highest denomination notes (HDN) was estimated at Rs. 12 Lakh crore. But without Demonetisation, the HDN would have been 18 lakh crore in today’s date.
The high denomination notes have been brought down by about 6 lakh crore, which is 50 percent of the current value of HDN notes in the circulation and also which helped in curtailing the corruption and funding of terrorism.