debate on demonetisation in favour in english
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Currency demonetization increases deposit base and savings as individuals will deposit more and store less physical currency at home
: With currency demonetization, there will be a movement of currency from individuals to banks and Financial Institutions. The rise in deposit rates would put all of this money into circulation. The cost of funds will reduce for Banks/ FIs, and the overall lending rates for various trade, business and commerce activities would reduce.
With improved monetary transmission, there will be space for a far more liberal monetary policy, which would result in a further reduction of interest rates in the future. Most analysts are already projecting a lower repo rate in the coming months.
: Jan Dhan Yojana accounts have a very high number of dormant or unused accounts. These accounts have suddenly seen a spike in usage, and individuals who’ve had these will finally start using them and it might help them in inculcating banking habits.
: The Government will significantly benefit from the additional cash that is pushed into the economy. There will also be a much higher collection of income and other taxes by the Government.
More than short term benefits, there is an angle of long term GDP growth as well, which we should be able to observe over the next few years. This move could positively impact the GDP figures of our economy by around 2018.
A few might criticize this move at present, but it will bring multiple long-term benefits for the nation’s economic health. This entire exercise might be slightly discomforting, but demonetization will definitely have long-term benefits and implications.
: With currency demonetization, there will be a movement of currency from individuals to banks and Financial Institutions. The rise in deposit rates would put all of this money into circulation. The cost of funds will reduce for Banks/ FIs, and the overall lending rates for various trade, business and commerce activities would reduce.
With improved monetary transmission, there will be space for a far more liberal monetary policy, which would result in a further reduction of interest rates in the future. Most analysts are already projecting a lower repo rate in the coming months.
: Jan Dhan Yojana accounts have a very high number of dormant or unused accounts. These accounts have suddenly seen a spike in usage, and individuals who’ve had these will finally start using them and it might help them in inculcating banking habits.
: The Government will significantly benefit from the additional cash that is pushed into the economy. There will also be a much higher collection of income and other taxes by the Government.
More than short term benefits, there is an angle of long term GDP growth as well, which we should be able to observe over the next few years. This move could positively impact the GDP figures of our economy by around 2018.
A few might criticize this move at present, but it will bring multiple long-term benefits for the nation’s economic health. This entire exercise might be slightly discomforting, but demonetization will definitely have long-term benefits and implications.
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