Tag Archives: corruption

How Demonetization will benefit Indian Economy in the Long Run

Demonetization was introduced with the objective of curbing black money, terror financing and counterfeit currency.

Demonetization was introduced with the objective of curbing black money, terror financing and counterfeit currency. No one knows the exact measure of our black economy but as per certain estimates the black economy is large as 3 times our GDP imposing an immense drain on our resources. All over the world the countries that have experimented with demonetization of high denomination currency have met with varying degrees of success. But in none of the countries a measure of this magnitude had been introduced as was the case with India where almost 85% of currency was rendered illegal with a single stroke. This move came at a time when the government had initiated several measures in the preceding months to curb black money including the Black Money Bill, Real Estate (Regulation and Development) Act, 2016, Income disclosure scheme etc.

Although the move might impact the economy negatively in the very short run owing to liquidity crunch and excessive dependence on cash transactions in real estate, jewellery, retail, logistics, consumer durables, cement and some segments in MSMEs which may get deferred, but in the long run the benefits are going to far exceed the costs.

Firstly, there are significant costs to cash economy and cashless economy would help to eliminate those costs. Hard currency transactions involve the cost of time and shoe-leather cost involved in approaching the bank or ATM to withdraw cash. Also there are significant costs of printing currency, logistics involved in maintaining currency chests that can be avoided with greater use of digital transactions. Moreover cash transactions are anonymous while digital transactions ensure greater accountability and transparency.

Secondly, this move will severely dent terror financing which thrives on counterfeit currency and high denomination notes. Greater transparency in transactions will deter smuggling of arms.

Thirdly, it will boost tax revenues of the government as the black and unaccounted income gets converted to white. It is a shocking fact that in a country with 1.2 billion population, only 24 lakh persons declared their annual income to be above Rs. 10 lakhs. There is serious under-reporting of income to evade taxes causing significant loss to the exchequer.

Fourthly, going cashless will improve financial inclusion in remote areas where bank branches are far and unviable. The move has shifted behaviour of the people to move towards cashless transactions.

Demonetization is also expected to reducing liability of the RBI. It is expected approximately Rs. 5 Lakh Crore may come to the government in the form of extinguished RBI Liability, Taxes and Penalties, an amount that is enough to meet entire Fiscal Deficit for a year. Recent figures released suggest that only Rs. 1 to 2 lakh crore may actually come to the government from the money not drawn back into the system. However the final estimates would only be known after penalties on unaccounted income are realized by the Income tax department.

More importantly, in the long run, policy rates are expected to come down as bank deposits increase and NPAs decline which would further boost overall investment in the economy. Also higher tax revenues arising from better compliance would offer scope to reduce rates over the long term which will boost consumption demand.

Although there are immense opportunities for economy to grow in the long-run from demonetization, few threats remain in the short-run. The liquidity crunch caused by demonetization will negatively impact sectors with high level cash transactions. Also there will be added costs of replacement of currency. Moreover it will be a big challenge to turn the society cashless where more than 50% population is not well versed with card transactions and mobile wallets and do not possess smart phones or internet.

The Government is however making all efforts to ease the liquidity crunch and encouraging cashless transactions. The central government started the “Lucky Grahak Yojana” and “Digi Dhan Vyapar Yojana” to incentivize digital transactions so that the e-payments are adopted by the poor as well. The government also launched the digital payments BHIM app (Bharat Interface for Money)- after Babasaheb Dr Bhimrao Ambedkar, to support Aadhar-based transactions using fingerprint. To make the demonetization move a success, efforts on the digital India campaign also need to be intensified.

Overall demonetization is a progressive step shaped by the right idea, intention and initiative and like any other shock will have negative impact in the short run but will be instrumental in a positive transformation of the economy in the long run.

Crony wealth is just 3% of GDP in Modi raj while it was 18% in UPA regime.

According to The Economist’s index of crony capitalism study there is sharp decline in Crony capitalism in India. Crony capitalism was 18 percent of GDP in 2008 but currently it is just 3% of GDP.

“Encouragingly, India seems to be cleaning up its act. In 2008 crony wealth reached 18 percent of its GDP, putting it on a par with Russia. Today it stands at 3 percent of its GDP, a level similar to Australia,” the study revealed.

According to the study Russia is the worst crony-capitalist country and Germany is the cleanest country.

Russia has been ranked the worst crony-capitalist country, followed by Malaysia, Philippines, Singapore, Ukraine, Mexico, Indonesia and Turkey above India. India has been ranked 9th followed by Taiwan and China that are ranked 10th and 11th.

The magazine’s index of crony capitalists is based on a study by Ruchir Sharma of Morgan Stanley Investment Management and Aditi Gandhi and Michael Walton of Delhi’s Centre for Policy Research.


Yet another setback for Congress. The High court ordered to demolish Adarsh building.

It seems nothing is working in favour of the Congress Party.

The Bombay High court ordered to demolish the Adarsh Cooperative Housing Society building. The High Court has also ordered to investigate the role of Politicians and officers in this scam.

This is yet another setback for Congress just after Agusta Westland scam and loosing two governments in Arunachal Pradesh and Uttarakhand.

The high court also gave 12-week time to Maharashtra government to appeal in Supreme Court against the order.

Former Maharashtra CM Ashok Chavan said “I don’t want to react on the court judgement.”.

Election 2014 – Why Narendra Modi is a real leader ?

If the upcoming Lok Sabha election in 2014 witnesses a shift of power, then there is an inevitable situation of Modi being in the supremacy.

The elections in 2014 are anticipated almost like how we anticipated Harry Potter series one after another just hoping in each book, Lord Voldemort would be destroyed. Right now we are hoping the ills of our country to be destroyed.

The hypocrite politicians play mind games with their voters like a lover ready to quit the relationship. But the power of the media is such, that even naive villagers know that they are facing the consequences of several levels of manipulation, several levels of immorality and corruption.

We certainly need a statesman who would work relentlessly for the next step, next expansion, and next generation. Who always has a next step in mind! Popularity is no degree to graduate in the election. We have matured as a nation and identify with truth that politicians are not meant to be treated like Gods. They are meant to be treated as equals with an influence and authority to serve the nation to suit the common man’s necessities. It is always the effort that matters to common people. Someone reigns, but someone else’s labors are appreciated.

Who is a real leader? A leader is fearless with zero nonsense tolerance. He walks straight with a mind of his own. His charisma engages the media worldwide. Other field giants are in awe with him. He has the sorcerers’ talent to transform a fall into a rise. Most importantly, he is attached to the soil of the nation like music to musicians, like mother to son. What else you want in a politician? A leader? A Prime Minister? It is for you judge who has the resonance to withhold the head of our nation high enough for now we have to aim higher and globally shine.

Larger-than-life politicians have larger-than-life strengths and larger-than-life weaknesses. Politicians don’t like to couter objectionable realities. But times have changed; we as a country now seek politicians to man up to their acts and consequences. We seek a rational approach to running the country. We seek accountability. We seek abolition of bogus promises. We seek reality. We want to know the reality better, however bitter.

Suddenly, everyone is bothered that a main opposition party names Hindu Ideologue as candidate for Prime Minister if it wins 2014. Aren’t we a Hindu mainstream nation? The regard for religion adds upon their character. I agree that rigid beliefs trouble the reverence for secularism. Mr Modi said at a rally of ex-serviceman in Haryana that politicians should learn a lesson in secularism from the Indian armed forces. If one is following his religion, it does not mean he is disregarding secularism.
I really do not believe he is a polarized figure, although he is positively attracting negativities. I choose to think that there is another Iron Man of India in the offing, waiting to be acknowledged. Definitely, he is required to influence more people including women where his fan following is rather less.

I really do not like to take sides but I can’t help myself from counting particulars Modi has time-honored. With focused governance, market loving policies and enviable urban infrastructure, Modi allures all those who want their state to possess flourishing growth rates, for that matter every Indian who sees a flamboyant future for India. Modi’s work profile speaks volumes about his credibility, obviously every politician has a stained reputation somewhere in their past. But as said, let bygones be bygones, we have held enough grudges, and where has it led the nation? Here!

Although the Aam Aadmi Party has gained some commendable popularity well enough considering the fact that it is a newer party. If the upcoming Lok Sabha election in 2014 witnesses a shift of power, then there is an inevitable situation of Modi being in the supremacy. But better let our countrymen decide. Encourage every youth in your neighborhood to get an election card and vote for their choice. And women, know the Power of 49!