THE ANCHORED BOAT FULL OF BLACK MONEY, SAILED INTO THE DEEP SEA OF INDIAN ECONOMY DUE TO DEMONETIZATION !!!

Arindam: Hello ! Viewers ! You are watching your favourite show, 'WINE WITH ARINDAM' at your favourite Royal Bengal TV (RBTV) Channel. Today, our hot topic is 'DEMONETIZATION.' We have with us, Mr. Roland Ryan, a renowned Economics professor of a reputed MBA College and a researcher on Economics. Mr. Brijmohan Bhadra, an analyst of Indian Economy and a reputed Senior Editor of a reputed daily newspaper. Mrs. Sulochona Sarbadhikary, a Chief Manager of a reputed PSU Bank. Thanks to all of you for coming to our studio. Please enjoy Bhetki Pathuri, Cauliflower Chilli Cutlet, Posto Bada with a special innovative chaatney known as 'Begun pora chaatney' which is made by mixing green chilli, pudina leaves and smoky burnt brinjal. With these food items, you are not allowed to drink water, but, premium quality Red Wine only. 

Roland: Wow! This Red Wine is nothing new to me. But, all these Bengali food items with this special spicy mixture of burnt brinjal is just awesome. 

Arindam: Was demonetization too spicy for Indian economy ?

Roland: In a hot nation like India, spicy foods are a necessity for the digestive system of humans. But, yes, to some extent, the entire demonetization process could have been more simplified and organized. There was a panic situation all over India on 9/11 of 2016. Bank Staffs were feeling as if they were facing a thunderstorm throughout the day in the office. The entire demonetization process had a huge impact on Indian Economy. 

Arindam: Was it a positive impact or just a negative one only ?

Brijmohan: Some of the cash which got deposited in the Banks during demonetization days were not all black money but emergency funds that the people kept in their house as a backup money. So, in their case, the first two weeks, that is, from 9/11/2016 to 23/11/2016, there were some problems regarding cash transactions. Even small businessmen also suffered a little bit in those 2 weeks. But, on the other hand, in these 2 weeks, many people of young generation installed several apps in their mobile handset to go for cashless transactions. That's a positive attitude shown by the young generation people of India. Now, let us assume that Mr. X is having black money and he kept all those money in denominations of Rs. 500 and Rs. 1000 in a secret place. If Mr. X deposits that amount of black money in his own bank accounts, then he will receive a letter from the Income Tax Department. Mr. X has a factory with a workforce of 50 employees. He distributed all his black money as a 1 year salary in advance to all the employees. For accepting the fund and depositing the money in their respective bank accounts by standing in long queues, each employee were given Rs. 500 each also. Therefore, the black money of Mr. X got utilized and Mr. X will not be receiving any letter from the Income Tax Department. 

Solochona: But, Banks have to bear the liabilities as those black money got deposited in Banks. Though, a major portion of those money got withdrawn. The money that got deposited in Banks can be used for giving advances. So, in an overall scenario, inflation is still under control. Side by side, the interest rates of CASA, Fixed Deposits and Loans is decreasing day be day which is a positive sign for Indian Economy. 

Arindam: Indirectly forcing people to invest money in SIP schemes of several Mutual Funds !

Roland: Not a bad idea to invest in Mutual Funds of India at this juncture because there has been a bullish trend in both Sensex and Nifty after that demonetization policy. Moreover, so many people have already been raided and so many people have come under the radar of Income Tax Department. For example, say, Mr. Y is a school teacher of any Government School. Every  year, Mr. Y files I-T return where he shows only the income that has been earned by him through school salaries. Mr. Y also earns around Rs. 3 lakhs per annum by doing private tuition. Mr. Y never showed Rs. 3 lakhs in the 'Other Income' section while filing the I-T return. After demonetization, either Mr. Y deposited all the 500 rupees and 1000 rupees in his bank account or distributed it somewhere. If Mr. Y deposited in his bank account, then he is liable to pay the extra income tax. Even if Mr. Y has distributed the money somewhere, the money indirectly got infused into the Indian Economy. Even if he has bought several items by doing shopping also by that 500 rupees and 1000 rupees, then also, he is contributing to the Indian economy indirectly. That black money is moving, not lying inside a box and remaining static for a long time. 

Sulochona: Yes, the funds got utilized. Even if a person wasted that 500 rupees and 1000 rupees by eating rich foods in 5 star restaurants or drinking alcohol in pubs, then also from 9/11/2016 to 31/12/2016, that person has contributed to the Indian Economy, because his black money got utilized as profit money for restaurant owners or pub owners.

Arindam: As per RBI reports, almost around 90% or so of the total denominations of 500 rupee and 1000 rupee note that were circulated, came back to RBI. Is it a good sign or a bad sign ?

Brijmohan: Of course ! It is a good sign. It means that a small percentage of money actually got wasted or destroyed. You cannot see any black money as it is intangible. The money which has been earned without declaring its exact source of Income to the Income Tax Department is the black money. Indian Government gave a chance to those people to give self declaration about it. When majority of them did not gave the self declaration, Indian Government played a master- stroke, where the entire fund earned without declaring about its source if income came back to the Indian Economy either directly or indirectly. The ultimate goal was not to catch the people having black money, but, to bring back the hidden money to the Indian economy again to boost Sensex, Nifty and Banking Sector. 

Sulochona: Even AADHAAR Card linkage and GST implementation is creating such an intelligent networking system that will help the Indian Government to track any financial transaction of anyone. PAN Card and Mobile Number is also linked with AADHAAR Card. Very soon, all Savings Accounts will be opened by extracting data from AADHAAR database as a new Customer ID will be created when a person gives his fingerprint on a biometric device. Say, Mr. Z wants to open a Savings Account. He just needs to fill up the Account Opening Form. The Bank Staff will enter  Mr. Z' AADHAAR Card Number in CBS Screen and then that person will be requested to give his fingerprint on the biometric device. Once the biometric authentication is successful, the Bank Staff will click the button, 'Generate Customer ID'. The Customer ID will be created by fetching the AADHAAR Card data from UIDAI database. Then the bank staff will create a Savings Account Number within 5 minutes with that Customer ID. Some Banks are also thinking about installing 'RETINA SCAN' machines and 'FINGER-PRINT SCAN' machines in ATM Centers where a person can withdraw money by entering the AADHAAR Card Number in the ATM Screen and then giving finger-print and doing retina scan to withdraw the money from any of his Savings Accounts of any Bank where his AADHAAR Card Number is linked. 

Roland: Overall, Indian Economy is going through a rapid change. Demonetization is indeed a master-stroke. But, Indian Government should have kept Rs. 100 rupee as the highest denomination. Though, there is a fear psychosis everywhere that anytime, any denomination can become just papers by an announcement only. So, many people will not take risks to keep too many 2000 rupee or new 500 rupee notes in the secret places of their house. Technical savvy people are already becoming accustomed to the cashless transactions day by day.

Arindam: Well, I think the time has come for the Indian Government to go for a coinless economy by replacing all coins with plastic notes. We will discuss about 'Coinless Economy' later on in another episode. So, after such a nice discussion, we can come to the conclusion by saying that , “THE ANCHORED BOAT FULL OF BLACK MONEY, SAILED INTO THE DEEP SEA OF INDIAN ECONOMY DUE TO DEMONETIZATION”. Thanks to Mr. Roland Ryan, Mr. Brijmohan Bhadra and Mrs. Sulochona Sarbadhikary for coming to our show and contributing with some important ideas and information. Viewers ! See you next time ! Have a nice time. Till then, Goodbye.