1. Why is this scheme?
The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.
This move will certainly address the corruption issues at root level. Suppose, the guy that lives next door to you has 50 lacs in 500 or 1000 denominations. The money is dead and can only be utilized illegally. When govt. came with Black Money declaration scheme, this guy did not disclose his income as he had to pay almost half of his this money as penalty. So, he waited till the dust settled. Now, The Govt. of India came with the plan which will make his 50 lacs worth nothing but the dust. Now, he has two options,
Option 1: Submit the money with the bank and ring the door bell of Income Tax Department personally.
Option 2: Cry as hard as possible.
It’s a long term shot for the prosperous and corruption free India.
What would be the consequences of this move?
1. Stock Market would crash – People without having a clear idea about the situation would try to save their fortunes and would start pulling out their money from the stocks that are going to be hit by this storm.
2. People with huge piles of paper currency are going to lose their calm – The day will start with Trade unions and other such unions coming together to protest and do marches.
3. Money’ll be sucked out of the market. – In coming weeks or months, there would be so much decline in trade and commerce.
4. Decline in the GDP – Initially, the GDP of India would see a decline but this is going to be temporary.
5. Lots of Millionaire would become Chillionaires. – Next Door Sharmaji, who used to mock you about his affluence, might become speechless from tomorrow onwards.
On the positive side.
6. Funding of terrorist would be banned – At last, this is going to be a huge step against Combating Home grown terrorism as well as terrorism from across the border. Pakistan prints Indian currency and circulates them via Nepal and Dubai in order to fuel his terrorism campaign. This will end from midnight. Some Big terrorists would see a huge decline in their net worth.
7. No more tax evasion – No more Hawala and other money laundering scams.
8. No dead money – It’s better to burn that buried cash or deposit it with Bank as you don’t have a third choice.
9. Increase in usage of plastic currency – Credit and Debit card transaction would see sharp increase in usage. People would have to resort to plastic currency as it’ll a while for the new currency notes to be available easily.
10. Demand for chartered Accountants would touch the sky – Firms and institutions would hunt for smart CAs. You already know what I mean.
11. The Black money would be turned to dust – You do not need to buy toilet paper anymore. If you’re sitting on Black Money and can not declare it with the bank, use it as toilet paper.
12 . After an year or so, the economy will be back on track with robust and sound future. Economy could have grown without this move but that would have been a hollow one that could have been shattered by s slight blow.
13. Long term GDP growth rate will be much higher than current rate.
How this ban is affecting villagers in India?
Based on the consumption surveys of the National Sample Survey Office (NSSO), 75% of villagers in India have a monthly income of less than Rs 5,000 with an average household size of five would also mean an income of Rs.33 per person per day in the rural areas
In my opinion, Answer is simple “NO”. In rural areas, you will hardly get people having 500 or 1000 notes in wallet.
In rural areas, you will hardly get people having 500 or 1000 notes in wallet. They all have cash in hand for day to day expenditures and whatever savings they have, that’s already deposited in bank.
How the ban on Rs 500 and Rs 1000 notes will make India a truly Digital:
About 10–15% public is going to know how to use online payments rather than offline payments.
It will make India digital . People will gain knowledge and will know the power of digitization.
How the ban on Rs 500 and Rs 1000 notes will affect the Startup culture:
Most of the eCommerce companies, digital start-ups and citizens of the country are happy about this move taken by the government to combat black money. Celebrities and founders of digital companies took to social media to express their support.
People will choose online payment rather that offline payment in these 50 days so they will definitely go to online for their needs.
Valuation of startups like Flipkart, Amazon and other eCommerce will increase too high.
Online wallet startups like Paytm, Freecharge and mobikwik is going to be hit.
Startups will get more funding because the more customer they will serve the more funding they will get.