Dissecting Demonetisation

For Modi haters, demonetization was a disaster, and this parliamentary report is a life saver. 

This is their AHA moment. Let them continue to enjoy their moment, for Modi hasn’t really been giving them many reasons to rejoice lately. The success of Doklam stand-off with China and Triple Talaq verdict has not gone well with Modi haters. 

For Modi bhakths, Demonetisation was a great success.  

Let us admit it – Something of this grand a scale has never been attempted anywhere in the world to have the outcome correctly predicted. Everything that has been “predicted” by economists and intelligentsia have been assumptions without the benefit of any empirical data to support such predictions.

For some practical people like Mr. Porinju, CEO of Equity Intelligence India Ltd, who is referred to as the "Small Cap Czar' by Economics Times, demonetization has been 100% success. 

 

I tend to agree with them more than with the left liberal media executives.

I think the most important and undeniable (but not so obvious) outcome of Demonetisation is the increased transparency that it forcefully brought into the system. 

The following are the results of this transparency.

•  Scrutiny of suspected 18 Lakh accounts
•  Cash deposit of 2.89 Lakh crore under investigation.
• Advanced data analytics tools have identified 5.56 lakh new suspected accounts
• 4.7 Lakh suspicious transactions detected.
• Undisclosed income of 29,213 Crores detected and admitted
• Black money worth 16,000 Crore did not return to the system
• 21% reduction in currency circulation
• 1 Lakh companies have been struck-off register
• 37,000 shell companies involved in Hawala transaction identified
• 163 companies listed on exchange banned from trading
• 56 Lakh new tax payers added compared to previous year.
• Personal income-tax under self-assessment grew 34% compared to previous year

Personally, I am just glad that the money returned is less than the demonetized amount, as it was equally probable that more money than what was demonetized could have turned up, which would have caused a great deal of embarrassment to the RBI. My faith in the balance sheet of RBI stands reinforced.
 

Anti-Benami rule, GST and linking of Adhaar – PAN card etc, will ensure   increased tax collection, which will inturn increase public spending, which will surely act as great economic stimuli in the coming years.

India is undoubtedly moving in the right direction.