DeMo was primarily a macroeconomic disruptive policy.yes,it was meant to attack black money,but that in itself is also an economic move..Such a macro policy will have many purposes,many objectives and many effects.Let's just put out the most visible benefits:Appreciate it mate, I have been suggesting this to take place in Pakistan for years, but always get the excuse that majority of people are illiterate so how are they going to do banking with out cash. People will always find excuses not to do something if its going to cause some inconvenience even if it has huge benefits in the long run.
1)formalisation of economy,less cash and more digital transactions,more money in formal banking system
2)directly attack black money and it's hoarders,and prevent tax evasion
3)deal a blow to terror funding,insurgency funding and other criminal activities.
lets take 1).
https://www.bloombergquint.com/mark...-lead-to-a-shift-towards-financial-assets.amp
At the time of demonetisation, senior bankers like the State Bank of India Ltd.’s Arundhati Bhattachraya told BloombergQuint thatsystem. The actual proportion has surprised everyone. Nearly 60 percent of demonetisation deposits have stayed with banks, RBI Deputy Governor S.S. Mundra told BloombergQuint in an interview last week. Aggregate deposits of scheduled commercial banks stood at Rs 106.5 lakh crore as of July 7, 2017, compared to Rs 96.2 lakh crore as of July 8, 2016, according to RBI data.
Data suggests that mutual funds have been among the beneficiaries. Mutual fund assets stood at Rs 18.96 lakh crore as of June-end, compared to Rs 16.28 lakh crore at the end of October 2016 before demonetisation was announced. That works out to an average increase of about Rs 33,500 crore each month over the eight month period. In contrast, the pace of monthly additions during the eight months between October 2015 and June 2016 stood at just over Rs 7,000 crore.
this clearly shows that bank deposits have not disappeared after demo,as many thought would happen
the value of cash that is in the economy has been reduced.
It was 16.45 trillion in end of march 16',now it is 13.1 trillion at end of march '17.Plus,as everyone must know that percentage of cash in high denominations was 86%.now it is 72%
digital transactions have increased,Economic survey and RBI data shows that.
So the first objective seems to be a success,of course we will have to wait and see how durable this success is
2)black money:the contentious part.
first,an article:http://www.opindia.com/2017/06/why-any-claim-that-demonetisation-was-a-failure-is-totally-misplaced/
now,some facts.after Demo,there was a slew of ED,CBI and IT raids all over the country.everyone knows this
During the period of demonetisation from November 9 last year to January 10 this year, "The total undisclosed income admitted was more than Rs 5,400 crore"
this is just the immediate period of DeMo,not even accounting the 8 months that have passed since then
Operation clean money:
http://pib.nic.in/newsite/PrintRelease.aspx?relid=169407Ii. About 18 lakh persons whose cash transactions did not appear in line with their tax profile were identified and approached through email/sms.
ii. More than 9.27 lakh responses were received giving information on 13.33 lakh accounts involving cash deposits of around Rs.2.89 lakh crore. Out of this record number of 5.27 lakh responses were received in the first 12 days of the operation.
iii. Advance data analytics tools were deployed which further identified 5.56 lakhs new cases and about 1 lakh those cases in which either partial or no response was received in the earlier phase. Besides, about 200 high risk clusters of persons were identified for appropriate action.
more on clean money:
More than 60,000 persons, including 1300 high risk persons, have been identified for investigation into claims of excessive cash sales during the demonetisation period. More than 6000 transactions of high value property purchase and 6600 cases of outward remittances shall be subjected to detailed investigations. All the cases where no response is received shall also be subjected to detailed enquiries. Government has already taken extensive enforcement action including search and seizure and surveys largely based on the information received during the demonetisation period. More than 2,362 search, seizure and survey actions have been conducted by ITD during 9th November 2016 to 28th February 2017, leading to seizure of valuables worth more than Rs.818 crore, which include cash of Rs.622 crore, and detection of un-disclosed income of more than Rs.9,334 crore. More than 400 cases have been referred by ITD to the Enforcement Directorate and the CBI. Surveys have been conducted in more than 3400 cases by Assessment Units.
http://www.incometaxindia.gov.in/Lists/Press Releases/Attachments/615/Press-Release-Operation-clean-money-14-04-2017.pdf
now on shell companies,almost 3 lakh companies are under the radar of authorities.1 lakh companies which were dormant have been struck off.37,00 companies have been identified
http://www.livemint.com/Politics/r6...ack-money-govt-steps-up-scrutiny-of-shel.html
http://economictimes.indiatimes.com...s-identified-pm-modi/articleshow/59402192.cms
those were the numbers on july 1,and have only increased since then
Last month, the authorities ordered nearly 200,000 shell companies to be shut down, and the aide said the government is examining hundreds of thousands more.
The Serious Fraud Investigation Office is creating a database of shell companies, and has so far identified 114,269 as front firms. The database contains details of those involved in the shell company ‘eco-system’, from those who set up the companies to the beneficiaries of laundered money and the professional mediators who bring the operators and beneficiaries together, the government note said.
http://www.livemint.com/Politics/r6...ack-money-govt-steps-up-scrutiny-of-shel.html
a look at how a lot of these companies operate,with some houses having tens of shell companies:http://www.livemint.com/Money/cwZv5...-are-used-in-black-money-creation-launde.html
this has been in the works since a long time:http://www.opindia.com/2017/04/mass...ndering-shell-companies-in-100s-of-locations/
and stock exchanges are not left behind!
http://www.livemint.com/Money/f6HZz...showcause-notice-to-suspected-shell-comp.html
and there's this:
suspicious transactions report,that banks have to file with RBI have increased hugely.almost 1.7 trillion ruppes worth of transactions have been flagged.
Last edited: