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The 500 And 1000 Note Ban Has A Logical Reason Behind It And This Quora Answer Explains How

bySusri Sahu
9th November 2016
2 minute read
Currency Ban

It was already an exciting day with the US elections mongering every space of news there was when, our beloved Prime Minister, Narendra Modi decided to steal the thunder. In what can be called as a drastic makeover of the Indian economy, the PM called a ban on 500 and 1000 rupees notes, a few hours before midnight yesterday.

While most of the netizens flooded the feeds with memes and a few opinions here and there, the rest were just waiting in a long queue outside the nearest ATM. Apart from the direct consequences in raging a war against black money and corruption, there are other implications that are just too important to go unnoticed.

In a Quora thread, Awdhesh Singh, an IRS officer has shared his valuable inputs on how he thinks there couldn’t have been a better move against money laundering and how different sectors might behave in the premise. Read along.

Indian Currency
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This is a great step for curbing black money (acquired legally but tax not paid) and dirty money (acquired through illegal source) in India.

The move is so unexpected that people have no time at all to remove their black money and now this would become simply a waste of paper for them.

I can’t imagine any better move than this to eliminate black money from the country.

However, its immediate impact is likely to be very adverse on the stock market and the sectors like real estate where lot of black money is used. Its impact on the other sectors would be as following.

  1. The sale of gold and diamond jewellery would drastically decline. This means less foreign currency outgo and hence better balance of payment situation.
  2. Corruption would be reduced drastically.
  3. Credit card and other legal transactions would go up
  4. Taxes (Income Tax, Excise, Service tax and Sales Tax) would go up substantially since more transaction would be in white
  5. Criminal activities would reduce
  6. Use of illegal money in election would be reduced drastically
  7. Property rates would reduce drastically

There would, however, be a lot of chaos in first few days. Then everything would fall in its place.

 

Can’t imagine a better push for ‘Digital India’, to be honest. So, unless you’re a stock broker or a real estate agent you have nothing to worry. Just get your remaining notes exchanged soon!

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The content of this article has been taken from Quora with required permissions from the author.

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