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~~“Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly are today.” – Mahatma Gandhi
In the simple terms Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit. This is in flood gates in every platform of media whether social, print, electronic because it is the latest initiative taken by the BJP government and is the initiative and the step to minimize the injury caused to the Indian democracy and its citizen by the corruption trending in India. Corruption is menace to the society. It act like a slow poison to the economy which is dissolving every aspect. And this step is much needed from very long time as this tumor is killing the society.
As we already know that this is not the first time when the currency has been demonetized in India. This strategy before was adopted by the Reserve Bank of India in 1946 which ban Rs 1000 and Rs 10000 notes to deal in market. After demonetizing, the introduction of Rs 5000 note was introduced in the year of 1954 which also cannot survive in market for longer time and further demonetized again in 1978.
This action will help the government as government is focused to create a barrier to those who actually does not disclose their real asset and are utilizing money which are in the name of Indian citizen and are buying properties in the countries where laws are not that much strict. Also the involved individuals used the black money by investing money in the companies and in the institution available in various countries. The initiative of the government to attack the corruption will hard to the people who are in possession of the black money and by banning 500and 1000 notes will reduce the circulation of illegitimate money in economy. According to the economist the notes which have high value make it much easier for black money to move around the country.
The decision of government of demonetization would make it extremely for the law breaker and the corrupted to carry out tax evasion financial crime and money laundering and if higher money of demonetization notes will escape from economy the corrupt individual and companies have higher risk for detection especially to those who are committing tax fraud from very long time and this will disrupts business vision and models completely. The application likewise depends vigorously on Indian authorities truly handing over on the guarantee to make it simple for individuals to transform their old currency into smaller denominations. After this, the administration plans to reintroduce a new Rs 500-category note, with constrained circulation. The real issue which revolves around this is the implementation process. It in itself is a difficult task. India being one of the largest developing countries has a very slow democratic system. Policy making is half success unless its implementation is in effect. In a country where only 3%(approximately) of its population is tax payer this will further lower the burden on the government and those who were bearing the tax burden due to inefficiency in the implementation of tax policy.But in the instant case to make this demonetization successful Narendra Modi & his government is planning to carry out massive operation over the next few months , as millions of Indian citizen would make an attempt to exchange their old notes.The government would ensure that the citizens of India are not troubled while in the process for changing their currency to the new one. This would surely give a headache to public authorities as this could lead to increase in the burden on the public officers and could even require more employees to carry out the process related work throughout India.This step would send some clear signals to those in possession of black money that the new government won’t let them sit comfortably and they can’t run away from their liabilities now. The government earlier this year had given the ultimatum to those with possession of black money and they were already given an opportunity to disclose their actual assets and they can keep fifty percent of it and the rest fifty percent would go to the government.Earlier this year the government had recovered thousands of crores of black money which showed the impact of the new leadership on its democracy. After this process of demonetization the Indian government has just confirmed that it won’t let corruption in any way to hamper it development and progress in future. Also it will give mark to the election to be held in Uttar Pradesh and in Punjab . In between the demonetization has taken place also because the Modi has promised that he will bring all black money back during his parliamentary election in the year of 2014 . Also it will give good signal to the investor who are willing to invest in the country from very long time but cannot due to some uncertainties or has not faith due to the corruption happening in India . And only those companies will trade or will be willing to trade who are least corrupt after this action and lead to more foreign investment too.
But on other instance The idea of demonetization is good but it has to be taken into consideration that most of the black money is kept in the form of land, buildings or gold or kept abroad. What is in cash constitutes only 4% of the total amount of black money on which taxes are not being paid. Out of this, a lot of money is in circulation in everyday transaction like if someone is building a house; the bill is not paid through banks for sand, bricks etc. This money goes into the other systems though it has been drawn from bank. These things will come under control with this step.
Small farmers, sellers, merchants, daily wage labourers and traders are suffering because of lack of proper planning, intelligence and foresight such as recalibration of ATM machines. There was need to pile up enough 100 Rupee notes and other smaller denomination notes in the market before taking this step. It is being said by critics that this step was taken only to bolster the image of the Prime Minister as he has been unable to deliver on GDP growth, inflation and bringing the black money from abroad.
The success of this policy as of now cannot be scaled as it totally depends upon implementation process but what one can be sure about is that this step would bring an huge amount of undisclosed assets into picture which could further be used by the government to fight against the main issues such as poverty and lack of good healthcare system. So far, it can be said that this is a historical step and should be supported by all. One should look at the bigger picture which will definitely fetch results in the long term. This is what the people have been asking for a long time which has finally happened.
The government has initiated a war against corruption and black money but this must be treated as a beginning and further steps should be taken to stop generation of black money and the need to do so. Only then will this decision of demonetising high denomination currency hold the significance the government has intended it to.
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