There will be added replacement costs of currency. Increased cost of operating ATM s need to be refilled ‟ more often and also it will be a huge burden on banks. Moreover disruption of old currency units and printing of new currency will involve costs, which has to be borne by government and if costs are higher than the benefits then there is no use of demonetization VII. LONG - TERM IMPACTS OF DEMONETIZATION ON INDIAN ECONOMY POSITIVE IMPACTS Government revenue will boost up as more earnings will be declared. Collection of higher taxes will help in nation building like development of roads, infrastructure, transportation and many others. People who have opened Jan Dhan accounts under the Prime Minister Jan Dhan Yojna, can now deposit their cash under this sche me and this money can be used for implementation of national developmental projects which will demand more labor and other skilled manpower
which will give rise to employment opportunities. Cash in system will boost educational loans and business loans thus bringing more opportunities. Substantial increase in the demand of digital transactions, E - Wallets, usage of plastic money, online transactions using E - banking etc. NEGATIVE IMPACTS Demonetization itself will not fight black income. The most important policy should be tax administration where the tax authorities can monitor expenditure and matching it with income of the respective individuals. Professor Arun Kumar, Jawaharlal Nehru University, is of the view that demonetization is no silver bullet agai nst fake currency. Fresh printing and import of counterfeit currency will not stop with demonetization. Though Digitization may be a positive effect of demonetization, India to become cash less economy will take time. Bloomberg data shows the share of cash in the volume of consumer transactions is 98% and much of the cash transactions are in rural India. PwC Report showed that India s unbanked population still stood at 233 ‟ million, suggesting that much remains to be done before people can be on boarded on t o the digital bandwagon. VIII. CONCLUSION It may be right to say that demonetization will prove to be beneficial for Indian economy in long run. The impact of currency swap on country s tax structure would be felt in ‟
years to come. Government revenue will increase in the form of increased tax coll ection, bank deposits will increase leading to lower interest rates on loans, and government can channelize this increased revenue towards implementation of projects of National importance. Further the funding to illegal or unlawful activities which arise due to unaccounted cash flow will reduce. Government can now easily track unreported income resulting in reducing of corrupt practices and money laundering. But it is also to be noted that the ultimate objective of demonetization to flush out black money f rom the economy may not be achieved, until the actual people behind black money are targeted. Moreover, people have invested their
You've reached the end of your free preview.
Want to read all 22 pages?
- Fall '16
- demonetization, black money