Importance of 500-1000 currency demonetization in India

By | December 13, 2016

Recovery of black money was one of the key points in the election manifesto of the BJP-led NDA alliance for the Parliament election for the year 2011. This point won the party the hearts of the commoners of the country and eventually, the party formed the government with a whopping majority in its favor. In line with this point, on 8th November, Prime Minister Narendra Modi announced that the currency notes of INR 500 and 1000 shall go for demonetization with the stroke of the midnight the same day. This has been the most discussed topic in the country for the span of the last month. Even though the call for demonetization has triggered adverse reactions among a certain portion of the population, the mass has appreciated this step. In the opinion of the experts, this is going to be a pain for forthcoming gain. These experts are of the opinion that this move will prove historical and the first step towards a corruption-free India.

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importance of demonetization
An attempt to put end to financial corruption

Financial corruption shatters down the economic, social as well as the political stability of a country. As per reports, the financial corruption major involved the currency notes of bigger denominations. Hence, the outcome of demonetization of Rs 500 and 1000 currency notes is expected to put an end to such practices. People, who had hoarded money from malicious practices, would have to deposit the older notes to the banks that will bring the entire fund to the notice of the Income Tax department and enforcement directorate.

An effective way to fight the peril of fake currency notes

In the last few years, terrorists from the neighboring countries had been consistent to wreck the financial stability of India by introducing fake currency notes to the market. These evil forces mainly used to forge the currency notes of Rs. 500 and Rs. 1000 and the introduction of the new series currency notes have put an end to such practices. As per the reports generated in last one month’s time after demonetization, the peril of fake currency note has been overcome. This had strengthened the economy of the country.

Demonetization will expose those entities that have non-complied with the prevailing tax rules

It is an open secret that every year the Government has to lose revenues in several thousand cores for a few dishonest entities, deliberately refraining from tax payment. The adverse effect of this activity falls on the honest taxpayers who are the majority. As the outcome of the demonetization, entities that had created a fund out of such black money will have to deposit or exchange the currency notes from the bank. As per the prevailing practices, a bank account holder compulsorily needs to provide the bank their AADHAR card number. In addition, if any individual or organization is depositing over 2500000 INR, needs to disclose the sources of generation of the fund. As the AADHAR number is unique and it enable the bank and the Income Tax department to link all the accounts having the same registered AADHAR number, if any party is trying to escape the situation by depositing the entire fund in more than one account, it will be easier for the IT department to track such measures. As per reports, since the demonetization, the IT departments have issued a show-cause notice to a very high count of suspected individuals, just within a period of 30 days.

The government will improve the figure of the collected revenues

As per the clause of the demonetization, there is provision to impose up to 200% penalty from such entities that would try to legalize their fund of black money. This will bring a significant amount of money in the hands of the government. As the government revenue increases, it will strengthen the national economy. It is expected that as the revenue increases, the government will enhance the allotment on social security and development projects.

A move towards a cashless economic framework

Cash transactions were another tool for unscrupulous parties to refrain from paying the necessary taxes and duties. The call for demonetization will make the Indian economy to embrace the plastic money to a higher extent. This will bring more transactions in the market under the supervision of the government.

Even if the call of demonetization has created some sorts of troubles in the course of daily life, you cannot overrule the point that it is just about a pain to incur gain. This call for demonetization is the most important reformative step that has been taken since independence. It is expected that in due course of time it will bring manifold holistic and sustainable benefits to the nation.

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