India's Bold Move on Demonetizing 500/1000 Rs and its potential impacts - A POV
Kalilur Rahman
Director @ Novartis | IT Strategy, IT Management, Business Transformation
After a span of 36 years, we have a very surgical decision by the Indian PM, Government and RBI to get rid of 500 and 1000 rupees currencies with immediate effect at midnight of 8th Nov 2016. While America will be counting votes for the new presidents, many in India will be counting rupee Notes!. Whilst this is not a new concept by itself and has been done once in 1978 by the Morarji Desai Led Janata Government post emergency, the timing of this announcement is a very good one indeed. An article by The Hindu details out how this will eventuate and a commentary on steps to be undertaken.
Given the volume of non-banking transactions taking place in India, it is a perfect situation to put a control over black money and put some order into the system by limiting the control of the criminals and anti-social elements to a large extent. For a genuine taxpayer like me, it is a positive message to see that more people will be joining the bandwagon of legitimate financial transactions. This is essential for an economic spurt and removal of corruption and black money.
Mexico, Germany, Turkey, Argentina, Israel have all done it in the past and were able to do a pretty good job of it. An impact of this demonetization will be a situation where truckloads of money need to be transacted for non-banking transactions due to the control enforced. This was seen in the case of the Zimbabwe's inflation in the recent past where trillions of dollars were needed to buy a simple household need such as bread. A brilliant blog by Sriram published in July 2016 covers some of the brilliant aspects to be uncovered by a new currency. Another nice article to read about is the paper on black money by RBI and Finance Ministry.
While the impact to common citizens will be a nagging one for a short term, it is good to bite the bitter pill for the long-term cure. This is a welcome move. What do you think? An outlook on how devalued currency (like the invalid 1000 & 500 Rs) can be seen in this CCTV video.
Your comments are welcome!
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#1000Rs500RsBan #Demonetization #CurbCorruption #BanBlackMoney #SystemicChange
Note: Edited update on NGC technology as per RBI communique
Free lance ICT/ICN Consultant. Resume: wp.me/s1ZsI2-474 Publication: papaulsblog.wordpress.com
8 年Demonetisation is archaic as perils of Money going Virtual is bigger danger than Black Money, tacking it can eradicate Black Money also. Please see my paper in LinkedIn about Why and how Governments universally should use Money as a commodity to realise Inclusive Growth, Cashless Society, Tax free Regimes, Eradication of Corruption & Black Money, an idea first of its kind.
Associate Director at Virtusa Chennai
8 年Need to wait and watch to see how the demonetization effect is making a wave w.r.t to GDP
AMPH - Indian School of Business
8 年in another 3 month picture will be clear but i hope modi is able tackle ambani adani tata etc who have actually caused NPA to banks , and also these corporates are extremely intelligent to save transfer their black money as they get rules of economy modified as per their convenience , as if they owe ppl of country to their faults and extrapolated hyperinflated growth which is never seen to reach 80 percent of indians . time is not far when that 80 percent will be on roads for their share of growth and i dont think even govt or corprates will be able to handle it as there is growing frustation in them .
Technical Engineer
8 年I am not coming to say it's good or bad decision.just come to say it is mainly affected normal people and daily workers who don't earn more above 500 and 1000rs per day. At the same time the block money holder not put their money in under bed sheet or underground of their house. Block money's have been circulated in society which one is moving object not a static.
Chief Manager at ICICI Bank Ltd.
8 年Great Job by Hon'ble Indian PM. But Rs.2000 denomination should not have been introduced. Higher the denomination, easier it becomes to Manage it as Black Money.