Many of us must be remembering the India Shining Campaign initiated by Late Shri.Pramod Mahajan which leads a massive defeat of NDA-BJP in 2005 assembly elections. The shock was so major that even after defeat of 2005, it took 10 years for BJP lead NDA to recover from fake promotion of India Shining.
Now, again in returning to power and spending almost 2.5 years when no remarkable milestone was achieved either in Infrastructure, Social & Economic Development and policy & reforms ,the Govt. played a cruel game of demonetization of old currency notes thereby haulting the growth engine of the country.
I will elaborate few points before actually dealing with present fiasco.
I will elaborate few points before actually dealing with present fiasco.
1.The privatatisation of Profit making PSU was initiated in NDA regime in 1999 and Companies like Maruti Suzuki, Hindalco Balco Nalco, IPCL, BSNL was fully disturbed so that either they came to eventually loss making or privatized or sold to Big Indian Corporates who again made them fully profit making entities.
2.The NPA of banks was raised from all time high in last two and half years to 6 trillion for just top 10 business houses like Essar Ambani Jindal etc leading a economic disaster and forcing the Govt To take the step of demonetization to save the banks.
3. Just within 10 days the banks started writing off the loans of corporates from the money deposited by common public.
4.The zoll of toll which is legal loot Centre of common public and financing the political parties had been again started after 20 days break.The MSRDC constructed Mumbai Pune Expressway was made privatized in 1995-2000 duration. The step of privatization of roads and bridges and installation of toll booths lead maximum corruption and there is absolutely no control of any authority on recovery of toll especially in Maharashtra. In many studies the IIMs have submitted report to Govt that the fuel consumption at toll plaza due to traffic congestion have more cost than the one is claimed to be recovred by toll-mafias.
5.The black money which is parked in Swiss bank or other foreign banks outside the country will not at all get affected due to this demonetization drive,which is mainly of big fishes which needs to be caught on urgent basis.
Now, I will deal with the present demonetisation and its postive and negative impacts on economy as well as on development of Infrastructure and employement.
The major job making sector in India are respectively 1.Agriculture 2. Construction 3.Small & Medium Scale Industries
4.Govt 5.IT &;ITES
6.Heavy Industries.
The agriculture sector will be worst affected due to this. As many of have good production in kharif season due to sufficient rain, resulting balancing prise in Markets. However, the markets were not able to purchase the grains because of non-availiablity of cash. And the rates are also slashed more than 70%. Dont be happy. This would not ease the inflation in same proportion. But neither the Govt nor merchants will help the real farmer for this loss. Again for sowing the Rabbi crops, due to non-availiability of funds either in form of cash or loan , the yeild will be far lessor. This would lead a massive loss in yeild of income of farmer, which is always a legal white income.
The situation in construction Industry will be in to-to as of agriculture Industry. with economic slowdown already the construction major has laid-off 14 thousand employees.
Let us assume that IT and IT enabled services will not much affect as most of them use plastic money. Also the effect on SME will be elaborated only after crunch of cash in market, let us go with fundamental economic of the Cash Reserve Ration and total cash in higher denominations
The major job making sector in India are respectively 1.Agriculture 2. Construction 3.Small & Medium Scale Industries
4.Govt 5.IT &;ITES
6.Heavy Industries.
The agriculture sector will be worst affected due to this. As many of have good production in kharif season due to sufficient rain, resulting balancing prise in Markets. However, the markets were not able to purchase the grains because of non-availiablity of cash. And the rates are also slashed more than 70%. Dont be happy. This would not ease the inflation in same proportion. But neither the Govt nor merchants will help the real farmer for this loss. Again for sowing the Rabbi crops, due to non-availiability of funds either in form of cash or loan , the yeild will be far lessor. This would lead a massive loss in yeild of income of farmer, which is always a legal white income.
The situation in construction Industry will be in to-to as of agriculture Industry. with economic slowdown already the construction major has laid-off 14 thousand employees.
Let us assume that IT and IT enabled services will not much affect as most of them use plastic money. Also the effect on SME will be elaborated only after crunch of cash in market, let us go with fundamental economic of the Cash Reserve Ration and total cash in higher denominations
The main reason given by the government for demonetising high denomination notes was to curb black money. Various estimates have been made of the quantum of the money that is not expected to be deposited in banks – ranging from Rs 3 lakh crore to Rs 5 lakh crore.
But if one goes by the deposit trends so far and the projections, the black money expected to be purged may be much less. The Narendra Modi government may thus be in for a shock.
On Tuesday (November 29), in a reply in the Rajya Sabha, minister of state for finance Arjun Ram Meghwal said that there were 17,165 million pieces of Rs 500 notes and 6,858 million pieces of Rs 1000 notes in circulation on November 8, the day Modi made the announcement of demonetising the two high denomination notes. The total amount of high denomination currency circulating in the system on that day was, thus, Rs 15.44 lakh crore (Rs 8.58 lakh crore in Rs 500 notes and Rs 6.86 lakh crore in Rs 1,000).
On November 28, the Reserve Bank of India announced that Rs 8.45 lakh crore (Rs 8,44,962 crore) in the banned high denomination notes had been deposited in the banks between November 10 and November 27. Banks were closed on November 9.
This was the value of banned notes deposited in the banks in 18 days, out of the 50 days that the government has permitted bank customers to do so. Note, this amount has been deposited despite the huge queues outside banks deterring many people from putting money into their accounts.
Further, all commercial banks in India have to maintain a portion of their deposits with the RBI, known as the cash reserve ratio (CRR). The RBI uses this to manage liquidity in the system.
On November 8, the total amount of actual cash with the RBI as CRR was Rs 4.06 lakh crore (Rs 4,06,900 crore), according to the weekly bulletin of the central bank. This is cash, sent mostly in large currency notes, according to bankers, by the banks on any incremental deposit that they have, thus adding to their CRR deposit held with the RBI.
Additionally, banks retain money with themselves to manage day-to-day affair and to provide money on demand to customers. According to the RBI, the average cash-to-deposit ratio of banks in India is 4.69. If four percentage points from this goes as CRR to RBI, amounting to Rs 4.06 lakh crore (on November 8), the cash with banks would average around Rs 70,000 crore. This would include all denominations, of course.
So, if we take the money deposited in 20 days and add the November 8 CRR to it, that amounts to Rs 12.50 lakh crore. If we further add a portion of the cash-in-hand on November 8, say Rs 50,000 crore, the total amount of money which is not with public in old notes is Rs 13 lakh crore.
There are still 30 days left to deposit the banned currency notes. At the rate at which money is being deposited, it stands to reason that Rs 2 lakh crore or more would come into the system until December 30, thus throwing to the winds all calculation by the government of tackling black money.
Either the black money is not in high denomination notes or those who have such money may already have put it back into the banking system.
