Black money is money generated via tax evasion which is generally in cash and not traceable.
Actual demonetization process :
Step 1 : Convert all the black money to white by charging people a specific rate of tax, and depositing all of it in banks. (Leads to huge deposits in banks)
Step 2 : Banning big currency notes of 500 and 1000 only leaving small currency notes.
Step 3 : Demolishing most of the taxes and implementing one tax that would be on bank transactions.
1. Only small notes would prevail in the economy which would lead to people not keeping huge amounts of cash as it would be practically difficult keeping such large amts of cash. High value tranactions in cash becomes impractical. (Tranactions through bank shall be charged to tax, leading to adequate funds for government. Daily amount of RTGS transaction in india is 2.5 lakh crores( on RBI’s site) imagine when cash pools up and tax is charged to it what the amount would be.)
2. Most of the transactions taking place through bank, transactions are traceable unlike when done in cash.
3. Terrorists funding shall be easily stopped as they would either need big lots of cash or bank account (traceable) for transaction.
4. Fall in fake currency to a great extent as printing of small currency becomes non viable.
5. Great boost to GDP of economy.
6. Ease of taxation as maximum taxes are aboliahed leading to no tax evasion which further leads to stopping of generation of black money.
7. Corruption decreased by great extent as most transactions are via cash.
8. Great fall in rates of interest charged by banks to public.
9. Commodities, facilities become cheaper as taxes on them are abolished.
Actual scenario : Introduction of new currency notes corrupts the whole idea of abolishing black money. I agree to the fact that somewhere a good amount of black money will be destroyed in one stroke, but introduction of new notes would make generation and keeping of black money in future easy and handy, as people will keep making black money in same ways as they did earlier (Tax evasion, Bribes etc.)
Do not fool yourself by the idea that black money generation stops in future or completely abolished as people having them have enough measures to displace there money(not all but a good portion of it can be saved by every individual.)
If this theory is correct which being an average commerce student appears correct to me :
Q1. All efforts and problems faced by general public which they are willingly accepting to do, to see a better future are all waste?
Q2. What about the impact/damage on our economy which happens to stand kinda still due to non availability of cash in these days?
Disclaimer : I do not support any political party and all the above said views are only my personal opinions, general information and for a common man’s understanding also only true to best of my knowledge.
#involve in conversations not debates.