Sunday, November 20, 2016

Demonetisation, an Economy Booster

Demonetisation, an Economy Booster

Now Banks are flooded with deposits. Their interest liabilities have gone up suddenly. Even if demonetisation receives 10 lakh crore, bank has to pay ₹ 40,000 CR as interest per annum. Banks will try to improve the Credit Deposit ratio, so that they land more and make more profit. The deposit interest rates and credit interest rates have to come down. Banks won't reject applications sponsored for common men's needs, which they generally used to do. However, banks have to be careful about the borrower like Malya.

IT Department will be able to increase the income of the govt as everything will come on books of accounts. If govt become rich, the tax liability over the citizens will come down. GST on some items may be less in future. Goods and services are likely to be cheaper. Prices may go down by 30% in some sectors, i.e. real estate, etc. Common men can dream for a house once again. It will go up again when the demand will be higher than the supply. Gold price must go down to the level of ₹2000/gm.

For a short while, the act may reduce the economic activities and employment, but as soon as the money flows into the economy, it will pick up the speed of development.

The fake currency will be out of the economy. The activities supported by the black money will stop. As all currency will come on board, people though face IT proceedings, but can venture new projects with their white money in the banks. They can borrow more through the banks. Banking sector is going to be revolutionised with this move.

As of now it is win win for both the Government and the people at large in the country. Let us use demonetisation as an opportunity for the development of the country. It is going to be an Economy Booster.

20 November 2016


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