Prime Minister Narendra Modi’s demonetization move has given the economy a Rs 5 lakh-crore advantage, a high-level internal assessment report of the government on the drive has found.
The key benefits of Prime Minister Narendra Modi’s demonetization include widening of the tax base, boost to digital economy, growing bank deposits, burgeoning EPFs and strengthening of the teetering housing sector.
- FROM BLACK TO WHITE
According to the findings the amount of cash stashed away by citizens has come down. The situation is advantageous to the country since hoarding of cash delivers no value to India’s economic growth. De-mon drove the excess cash circulating outside into banks. In absolute terms, cash stock has fallen from Rs 17.1 lakh crore to Rs 15.1 lakh crore — a reduction of Rs 2 lakh crore. Without de-mon, it would have topped Rs 22 lakh crore, that is, increased by Rs 4.9 lakh crore. Likewise, cash with the public fell by Rs 2.1 lakh crore. Had not de-mon intervened, cash with the public would have risen by Rs 6.6 lakh crore. Because of de-mon, as the cash with the public came down dramatically, the people’s deposits in the banks went up equally dramatically — from Rs 97 lakh crore to Rs 114.2 lakh crore.
- WAR AGAINST TERROR
PM Modi had said the demonetization action was needed to fight corruption and fraud and cut off financing for attacks by terrorists who target India. And the latest intelligence reports have endorsed that de-mon has broken the backbone of terrorist activities targeted at India. SPEECH
- BOOST TO TAX REVENUES
Contrary to the widespread view, de-mon has been a success in bringing into tax account the unmonitored roaming cash amounting to some Rs 3.35 lakh crore — a large part of which is under a tax probe. De-mon has raised the individual tax base by 20 per cent, advance tax collections for 2017-18 by 42 per cent and self-assessment tax (paid now for last year) by 34 per cent. Both in bringing substantial black money of the past into account and in ensuring better tax compliance, de-mon has been a success. It also estimates that because of the note ban, India’s net personal income tax revenue could double over the next couple of years. The study also found that before demonetisation close to one lakh new PAN cards were issued every day. Now the number of new PAN cards issued daily averages between 2-3 lakh.
- MORE AFFORDABLE HOUSING
The impact of drawing money from the public and quarantining it in banks has crashed land prices in different parts of the country. The impact of this is clearly visible in the realty and housing sector, where asset price rise in land had stagnated the housing sector since at least 2012. The Confederation of Real Estate Developers’ Associations of India (CREDAI) said that in the long run de-mon would help organized developers procure land at more appropriate rates as such land will not be competing with buyers who were channeling their black money into land buying and holding. CREDAI said TYPE TEXT “This will help in construction of more affordable houses and achieve the Housing For All objective by 2022.” The housing market has recovered despite disruption by the new real estate law and GST. This huge correction in the realty sector too has gone virtually unnoticed as the debate got reduced to merely the number of notes returned.
- FROM CASH TO DIGITAL ECONOMY
One of the big advantages of demonetization has been the move to a more formal digital economy. The financial year 2016-17 saw a total of 300 crore digital transactions. If the rate seen in the first few weeks of FY 2017-18 continues, then the government estimates that there will be more than 2,500 crore digital transactions this fiscal. The usage of mobile wallets like PayTM, SBI Buddy, FreeCharge, etc, is already worth more than Rs 200 crore per day. In the five months since its launch, two crore people have downloaded the BHIM app. The BHIM and UPI payment gateways are already averaging a daily transactional value of Rs 140 crore per day. Debit card usage too has taken off significantly post note ban. In 2015-16, the total number of debit card transactions was 117 Crores which rose to Rs. 240 Crore in 2016-17.
Prime Minister Narendra Modi launched a risky revolution against tax evasion, bribery, counterfeiting and terror finance while also making India a cashless society with demonetization. While he has been criticized and hounded for this decision but the PM has taken a daring decision in the interest of the country, which will change the lives of the future generation bringing India at par with developed nations.