EFFECT OF DEMONETISATION AND DIGITAL INDIA INITIATIVE ON ECONOMY

EFFECT OF DEMONETISATION AND DIGITAL INDIA INITIATIVE ON ECONOMY

• April 2017

• Conference: National seminar on ‘Human Rights and Social Justice’ on April 13, 2017 at 10.00 am at Lipika, Visva-Bharati, Santiniketan
• At: Visva-Bharati, Santiniketan,West Bengal India
• • ABSTRACT
  • • The present communication highlights the recent sequence of events that occurred consequent to the demonetiation move by India’s Prime Minister, Narendra Modi who, declared that the two highest denomination currency notes of INR 500 and 1,000. These notes were banned to prevent the illegal financial transactions like Fake currency, Black money, Corruption and Money laundering which has been in India for many years. The move sucked out about 86 percent of the Rs. 15.44 lakh crores cash in circulation. This resulted in a cash crunch causing a lot of inconvenience to public. The move sent ripples across political circles and the media has been extensively reporting on the issue National Print media, TV channels were mostly engaged in covering the issue. Many leading international newspapers have given their opinions on whether the decision to demonetize currency was a 'masterstroke' or a 'policy failure’. Many welcome the government's decisions to demonetize the currency notes in circulation in the economy as bold and revolutionary as in a single master stroke, the government has attempted to tackle all three malaises currently plaguing the economy—a parallel economy, counterfeit currency in circulation and terror financing. On the other hand, critics argue that it has struck a body blow on economic activity in India. India aims to create a cleaner, more transparent economy via digitalization that will lead to an improved climate for foreign investment, boost economic growth, and ultimately propel the country to the next chapter of its emerging markets. The long-term impact will be a paradigm shift to the digital economy. The biggest hindrance to a digital economy is there being a huge in formation asymmetry between financial services providers and the consumers. Present Government had launched a major drive for financial inclusion in terms of opening Jan Dhan accounts, giving a statutory basis for Aadhaar, implementation of Directs Benefits Transfer, introduction of RuPay Cards and Voluntary Disclosure Scheme for unaccounted money. Post demonetization scenario suggest positive impact of demonetization on GDP, tax collection, income tax benefits and growth of economy contrary to the criticism of noted economists and negative impact on real estate. Narendra Modi has cleared his big political test on demonetization, one of the key factors in this round of polls, in grand style in the past assembly elections in five states particularly the largest state of UP. Poll outcome will silent his rivals, who have been projecting the ‘disastrous effects’ of demonetisation on all walks of life and larger economy. Pros and cons of Digital India initiative, cashless economy, financial inclusion etc. leading to social justice are discussed in the paper at length. Keywords: Demonetisation, black money, terrorism,cashless economy, Digital India