DEMONETISATION: A MASTER STROKE

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DEMONETISATIONSATION
A MASTER STROKE
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What is demonetization???
How Demonetization Boosts Cashless Economy??
EFFECTS ON BLACK MARKITING???
EFFECTS ON NON-TAX PAYEE
FUNDING ON TERRORIST ACTIVITIES
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DEMONETISATION

• Demonetization refers to discontinuing of current
  currency units and replacing those currency units
  with new currency units.
• It is a major decision and it impacts all the
  citizens of the country because overnight all the
  money you have become a piece of paper
• which becomes worth if you do not exchange it
  with new currency units or deposit it in the
  banks.

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How Demonetization Will Boost the Cashless
Economy ??

• Demonetization will help speed the transition of
  a predominantly cash economy to a cashless one,
  nandan nilekani, former chairman, unique
  identification authority of india.
• Only people need to know aadhar no. And with help
  of thumb impression and iris transaction possible
• Online transaction has increased over the period.
  Transactions have grown 20 times in six years to
  2016, a process likely to be greatly boosted by
  demonetization.
• Now payments through mobile phones linked to bank
  accounts through a unique number is done.

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Remove Black Money from the System

• It is a known fact that a parallel black money
  economy exists in india. However, what needs to
  be understood here is that only 6 of the total
  black money exists in the form of cash.
• 12 black money destroyed by demonetization i.e
  about 4 lakhcrores pf black money had been
  destroyed.
• The balance is in the form of benami properties
  and gold. Interestingly, there has been a major
  surge in the import of gold since 9/11.
• Bad debts and disproportionate assets acquired
  through corrupt means by absconders like vijay
  malaya and lalit modi are far from being
  recovered.

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Reduce Corruption

• The most effective way to curb corruption is not
  by attacking the demand side of it, but the
  supply side of corruption.
• The biggest reason for corruption to multiply in
  our country is the requirement of funding of
  political parties. The same indirectly,
  pressurizes the executive also to become corrupt.
• The big corporate houses are free to support
  political parties by paying in tax exempted money
  as party funds. Naturally, they would then demand
  favors from the government in return, ushering in
  corruption.
• Secondly, the big black money-hoarders would have
  already devised means to convert their black
  money into white and the new Rs 2000 notes would
  only facilitate fresh hoarding.
• Ulterior Motives of Government being Highlighted
  by Opposition

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TAX PAYMENT

• Only 1 of indias population pay income tax,
  according to income tax department data.
• It is boon for honest tax payee and ban for
  dishonest one.
• Most of the businessmen who have been hiding some
  income are ready to pay advance tax as current
  year's income. Tax payers who have been hiding
  some income can come forward to declare income
  and pay tax on the same.

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STOP TERROR FUNDING!!!

• It is a well known fact that the terrorists do
  not deal in cash, but invariably their funding is
  done through electronic transfers.
• The terror organisations utilise hawala route,
  mainly through fake/ shell companies operating
  abroad to draw funds.
• Demonetisation of the currency is an effective
  step to stop terror funding.
• Terrorist from other countries comes to india and
  create blast though use of black money .
• Thus, unless we have more stringent means to
  monitor electronic banking and tackle black money
  stashed in tax heavens, we will not be able to
  stop funding of terror outfits.
• There is a un charter on preventive steps against
  terror funding that could be adopted.
  Demonetisation of the currency is an effective
  step to stop terror funding.

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TACKLE MENACE OF FAKE CURRENCY

• The quantum of counterfeit currency in the system
  is a miniscule 0.028 of the total currency in
  circulation.
• Moreover, there is no guarantee that the
  counterfeits of the new currency cannot be
  prepared. In fact, a counterfeit of Rs 2000 has
  been already recovered in Bangalore two days ago.
• This massive exercise to print new currency at a
  colossal cost to fish out just 0.028 of
  counterfeit currency that can again be printed
  appears to be counterproductive.

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EFFECT ON GDP

• ICICI bank chief Chandan Kochhar had
  announced that the demonetisation has helped in
  decreasing inflamation.
• There are many types of financial transactions
  that are not considered as an economic activity.
  As a result of demonetisation, the ambit of
  economic activity will grow and add to the GDP

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BENEFIT OF ONLINE TRANSCTIONS

• Easier assessibity to market product
• Cheaper rates
• Chances of fraud/fake currency reduced
• Easy record keeping
• Better offers

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POSITIVE IMPACTS OF DEMONETISATION ON INDIAN
ECONOMY

• Absence of intermediate denominations like Rs 500
  and Rs 1000 will reduce the utility of Rs 2000.
  Effectively, this will make Rs 2000 less useful
  as a transaction currency though it can be a
  store value denomination
• Demonetization is not a big disaster like global
  banking sector crisis of 2007 but at the same
  time, it will act as a liquidity shock that
  disturbs economic activities
• Liquidity crunch (short term effect) liquidity
  shock means people are not able to get sufficient
  volume of popular denomination especially Rs 500.
   This currency unit is the favorable denomination
  in daily life
• Impact on black money Only a small portion of
  black money is actually stored in the form of
  cash. Usually, black income is kept in the form
  of physical assets like gold, land, buildings
  etc. Hence the amount of black money countered by
  demonetization depend upon the amount of black
  money held in the form of cash and it will be
  smaller than expected.
• Impact on counterfeit currency the real impact
  will be on counterfeit/fake currency as its
  circulation will be checked after this exercise
• Demonetization as a cleaning exercise may produce
  several good things in the economy. The
  unmeasurable benefits of having more transparency
  and reduced volume of black money activities can
  be pointed as long term benefits. 

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DEMONETIZATION EFFECT ON ASSEMBLY ELECTION

• After demonetization, BJP gained significantly in
  local elections by polls in Maharashtra,
  Gujarat, Rajasthan MP. Among the losers will be
  SP BSP . Congress will be a non-player may end
  up with duck.BJP will win overwhelmingly.
• Although the political forces have routed their
  anger at the NDA government, the NDA had given
  their poll agenda before the Assembly elections
  in 2014, BJP may have already gathered the trust
  of the people with its demonetisation move.
• "It will definitely have some impact on free flow
  of money in elections but I don't think it will
  curb the whole menace. We all know that in Uttar
  Pradesh and Punjab elections, money plays a big
  role. There will be some control after the
  decision, told Quraishi ,Former Chief Election
  Commissioner.

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Effects of demonization

• Inflation decrease this is the reduction in cost
  of petrol diesel and conumer goods which has
  already happened
• RBI economy increases .Results in a stronger
  economy and attracts foreign investment
• Reduction in real estate prices and interests in
  house loans
• Fake notes are much controlled and circulation is
  less
• Terrorists don't get funded by fake notes
• Makes the economy stronger to withstand any
  economic recession
• Black money is reduced not removed there still a
  few loop holes in the law and our banking sector
  I believe.

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How transaction will simplyfy
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Conclusion

• The recent announcement of mr. Arun jaitley that
  the proceeds of tax collected during the
  demonetization drive will be used for the welfare
  of the poor is a welcome measure .
• The demonetization is definitely a good step,
  however, the planning and execution of the
  exercise is seriously flawed.
• It is sure to have some positive affects at least
  in the short and medium terms. However, I
  sincerely hope that the gruelling exercise is
  over soon and life comes back to normal for
  common people like us.
• The advantages are much dominating and it will be
  in the long term interest of our country
  comfortably outweighing the disadvantages.
• Government need to take all the necessary steps
  so as to ensure that there will be a smooth flow
  of currency exchanges.
• It would turn into chaos if government takes no
  necessary steps to circulate money correctly. It
  will make a massive change in our economy.
• We congratulate the entire government and those
  hidden brains of our democracy who brought this
  decision.
• Overall, demonetization is a bold step towards
  good governance and transparency.

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Thank you
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