Demonetisation Impact! Economy functioning with 5 Lakh Crore less cash

Had demonetisation not happened, the economy would have been running with Rs 5 lakh crore more cash that it is currently functioning. If not for demonetisation, currency in circulation by May 2017 would have been Rs 19.25 lakh crore. Whereas in reality, currency in the economy at the end of April was Rs 14.2. This has to be one of the most important of impacts of the historic move by Prime Minister Modi on the 8th of November last year.

Here are some other major benefits of demonetisation!!!

The number of people who have filed self-assessment forms for the financial year 2016-17 grew by 23.8 per cent. 91 lakh new assesses joined the tax base in FY 2016-17 whereas generally the rise in this number used to be 20 to 25 lakh.

Before demonetisation roughly 1 lakh new pan cards were issued every day. Now the number of new PAN cards issued every day averages between 2-3 lakhs.

Digitisation was a huge advantage of demonetisation. In FY 2016-17, there were a total of 300 crore digital transactions.The usage of mobile wallets like PayTM, SBI Buddy, FreeCharge is already worth more than Rs 200 crore per day. In the five months since its launch, 2 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 transactions rose too usage figures have gone up significantly post demonetisation. In 2015-16, the total number of debit card transactions was 117 crores, which had an aggregate transactional value of Rs 1.58 crores. In 2016-17, there were 240 crore debit card transactions with a total value of Rs 3.3 lakh crore.

Between January 2015 and October 2016, the RBI reduced interest rates by 175 basis points even though, on an average, banks passed on only about 50 basis point rate cut to the consumer. Banks did however reduce the Marginal Cost of Fund Based Lending Rates (MCLR) by around 100 basis points post demonetisation.

Before demonetisation, interest rates for individual borrowers hovered at around 9.3%; after it came down to 8.2%.

The number of active contributors under the Employee Provident Fund (EPF) scheme has gone up from 3.7 crores before demonetisation to 4.5 crores by March 2017.

In November 2015, major urban local bodies collected Rs 1,000 crores, while in November 2016, they collected Rs 3,500 crores, which is a stunning increase of 245%

Before demonetisation, cashless payment at toll plazas of National Highways Authority of India was roughly 3% of total NHAI toll collections. Cashless transactions have now gone up to 15% of the total toll collected by NHAI.

Cashless payment at petrol/diesel outlets before demonetisation was roughly Rs 4,500 crore. After demonetisation, this figure jumped to Rs 12,000 crore. In percentage terms, cashless payments at petrol pumps has gone by from 9% to more than 20%.

Before demonetisation, roughly 50% of all bookings done with the Indian Railways were done online through the IRCTC website. Post demonetisation, 68% of the total railway tickets have been booked online.

These are only some of the benefits of demonetisation. The impact of the move on black money hoarders has been tremendous in both the short and long term. Many suffered immediately after, while others will in the coming days because the government now has data regarding the deposits made by individuals and companies to match them to their respective tax profiles. In conclusion, demonetisation was a tremendous success! And only a true nationalist like Narendra Modi who didn’t care for its repercussions on his own political career could have taken it.

Source: http://indiatoday.intoday.in/story/narendra-modi-demonetisation-income-tax-revenue-digital-economy/1/962380.html

Vinayak Jain