Negative Impact Of Demonetisation On Indian Economy

Negative Impact Of Demonetisation On Indian Economy. Some economists, such as Soumya Kanti Ghosh the chief economic advisor of India’s largest bank, the State Bank of India, backed this concept. In an article published in the Business Standard newspaper on November 14, 2016, Ghosh estimated that “roughly around ₹4.5 lakh crore of (demonetised) money could disappear from the system”. “On a lighter note, we hope that a large number of such notes are not burned, contributing to the Delhi haze,” Ghosh said in the article.

Such hopes are Blow out very soon.

Major Negative Impact Of Demonetisation On Indian Economy On The Poor:

Negative Impact On Poor People
Negative Impact On Poor People

Describing Demonetisation as a nudge toward digital payments, which is how the policy is justified by many people today, was an after-thought although the original policy announcement did talk about reducing the amount of cash in circulation in the Indian economy.

The amount of cash in circulation is directly proportional to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways.

Although The poor have to bear the brunt of this. It has a direct effect on the purchasing power of the poor and the middle class. This creates problems for an honest person in buying property. The misuse of cash has led to an artificial increase in the cost of goods and services like houses, land, higher education, health care and so on”, the Prime Minister speech on November 8, 2016, said.

One of the factors that lead to the tax windfall of the State:

Although Demonetisation was not the only policy change that has affected tax collections in India. In July 2017, the Goods and Services Tax (GST) has implemented.

Moreover In September 2019, the government announced a significant reduction in Corporation Tax rates; Which led to a sharp fall indirect tax collections. Even the economists anticipated the long-term effects of corporate tax cuts. Which led to a sharp fall in GDP and hence tax collections across the board.

Especially With these caveats in place, a look at the central government’s gross tax collection vis-a-vis its budgeted targets. They are the best measure of whether the government’s tax collection expectations have been met; they haven’t improved much since Demonetisation.

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