We all remember the days when we were in shock and agony when the Government announced the ban on notes of 1000 and 500. Well, today marks the 2nd Anniversary of that bold move. The experience with such a measure was not all cheers at the beginning, but is it still the same is the question. Read on to find out.
Out of the blue :
The internal system of the country’s economy is a subject widely unknown to its citizens. The government with expert advice took a very bold and a harsh step of ‘Demonetization’. The eminent members of the government claim that the system was not moving ahead into darkness and it surely needed a massive shake. The objective was clearly stated. Cash deposited in the bank was not the goal, instead it was to unearth the untaxed income. A mere deposit in the bank accounts would not make the Black money -White, but paying the tax by percentage makes it into white.
The Reserve Bank of India has warned of serious repercussions after this ‘Surgical Demonetisation’. They suggested for a ‘Slow Demonetisation’. Even though they agreed for the move, they wanted it to be a gradual process. The Government then intervenes. They gave us the facts about weeding of fake currency and curbing terrorist finances, which needed a surgical removal.
Inclusion of many tax evaders into the system and under observation was the broader cause. The intention was to Maximize the Formalisation of our Economy, increasing the revenue, resources and tax collections. The crash in the Informal sector shook many illegal and immoral activities to the core.
Are we ‘out of the Blues’?
The sudden cash crunch which lasted for months gave the citizens a hard time. They were even deaths occurring during long queue hours. The effects of which were saddening but things have changed from there on.
To begin with, there was huge cash deposits in the banks leading to cash being undiscovered. In the mean time, digital banking was seeing a recognition. All of these were followed by offers and incentives by the government, encouraged more people to opt for digitalisation.
The introduction of GST, was a follow up move to ensure the small and medium businesses to register themselves in the system. To encourage the people to get into the system, many incentives, programs and discounts were offered by the government. The harshly effected small businesses are now getting benefitted. The number of Income Tax Filers has gone up tremendously (in millions). The IT Returns are their incentives.
Plummeting of digital transactions, new mobile wallets, new net banking gateways are seen reaching out to people in all walks of life. The ‘Digital India’ program has penetrated to the roots. A vegetable vendor in a small stall, a pani puri wala, a mini tiffin centre now having a Paytm QR Code in display show us the progress.
Critics and their woes :
The devastation has occurred, claimed businesses, even claimed lives, but it is over. The progress is awakening. The informal sector is not always the small and household enterprises, it also consists of criminal transactions (trafficking and hit listing). They were not brave enough to disclose their economic activities so they either burnt the money or surrendered to the law.
Sympathizing with the commoners is understandable, but criticizing the Formalisation is not. Encouraging unaccounted transactions is not an appropriate action expected from influential persons. Relief measures were followed up soon. If the income is legitimate, then there is no need to hide it. Having a small percentage of cash is recommended but hoarding it will be harshly dealt with.
Disclose Incomes, Pay Taxes, Reap Benefits, Question Authorities if otherwise. Duties before Rights!!!