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Editorial Notes

‘Demonetisation transformed mindsets’

While having a totally cashless society is a utopian ideal, the measures taken towards building a less-cash society will greatly reduce corruption.
By IT's Editorial Board
February 14, 2017

 

GS (M) Paper-2: “Government policies and interventions for development in various sectors and issues arising out of their design and implementation.”
GS (M) Paper-3: “Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.”

 

‘Demonetisation transformed mindsets’

Introduction:

Minister for urban development and information & broadcasting, Venkaiah Naidu, shares his thoughts in this article on the demonetization initiative by the government.

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Views on demonetization step:

The Government had repeatedly stressed that the decision to demonetise high value currency was not taken in isolation.

A series of important measures ranging from constituting an SIT headed by a former Supreme Court judge to trace black money stashed abroad to the Income Declaration Scheme preceded the game-changing decision as part of the war against black money, corruption and terror-funding.

What the facts say?

Even as re-monetisation is continuing at a fast pace and the objective of the Government to curb black money and corruption is making a huge positive impact among the masses, the blind critics of demonetisation are still not able to come to terms with the below telling facts. These are as follows:

  • A 38% increase in the filing of personal income tax returns post-demonetisation
  • Significant growth in both direct and indirect taxes
  • Integration of parallel economy with formal economy, and
  • Enlarged revenues to the coffers of the Centre and various State governments.

With more cash flowing into the banking system post demonetisation, the banks are now in a position to step up lending and reduce interest rates.

Cashless drive:

  • With India’s cash to GDP ratio at 12.2 per cent being higher than several other countries, including emerging economies, the drive towards a digital economy would benefit all — from government (prevent leakage of revenues) to individuals — because of the virtual nature of transactions.
  • It is important to note that the increase in revenues would enable the governments hike spending on social welfare and development schemes and give a huge fillip to economy-driving sectors such as housing.
  • While having a totally cashless society is a utopian ideal, the measures taken towards building a less-cash society will greatly reduce corruption.

Conclusion:

No doubt, people had to face hardship for a temporary period. However, the gains in the long run are expected to outweigh the short-term problems as the GDP clocks a growth of 7.1 per cent in 2017-18, the formal economy expands, digital transactions increase, and the twin menaces of black money and corruption are dealt a huge blow.

[Ref: Business Line]

 

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