State sponsored recession and contingencies in India 09/11/16
Wednesday, November 9, 2016,21:17:17
ATHAR MUDASIR (MCOM)
The Gov. of India as introduced it’s very bold and uncertain plan by withdrawing 500 and 1000 currency note all over nation on 09/11/2016. The action was quite planned as announcement was made in late night when all the financial and other business markets where off and prevent public hue and cry. But what will it ultimately lead is uncertain as consequences may be both controllable and uncontrollable. The PMO as highlighted it as surgical strike on black money and money laundering at a certain point.
The action will first effect on normal business as public will be engaged in collecting their cash resources so that they can be exchanged. It will create disorientation on the confidence of money and will marginalize its value at particular time. Mostly poor and middle class people will suffer most as their exchange instrument became invalid both by government and public. The common people who will be successful in depositing money into bank will create a huge money supply in banks which will directly boost money supply to industry and entrepreneurs and raise borrowing debt of public which will directly become element for inflation and decrease money value alternatively.
The people who have unaccounted and black money deposited as cash will be under high pressure and they even couldn’t deposit at bank as they will be traced, so they will invest and layer their money in Gold, securities and unaccounted land transfer because receiver can easily exchange it with his bank and thus whole black money is white. Which will ultimately rise the sensex and other securities market and rise price of gold very high. Their government as planned to raise capital may get satisfied but proportionately the confidence on gold will make them dissatisfied.
The black money which is deposited in outside Indian banks and tax havens will not come to Indian account as they are already in numerical value and outside the jurisdiction of India, but however the black money of bureaucrats and other people whose money Is deposited as cash and been dumped underground will get a serious blow as it will become very difficult to mobilize such money in short time save if layered in small quantities as exchange it with banks with multiple people and multiple accounts so that the principle source can be evaded.
Changing the 1000 note of currency with 2000 note directly resembles the devaluation of money and inflation.
Alternate agendas from action:
Government has a plan to digitilise whole India including money so it will prove a crucial step towards forming digitize money exchange through internet, and apps with are defacto already in action such as ‘jio communication’ and ‘paytm’.
Government also believes that it will erode the supply of monetary supply to radical and terrorist organization and revolutions which are against the idea, state and nation of India.
Indian agencies also believe it will enhance Indian economy.
Conclusion
The policy and action will prove and pay chaos for short period but will do little to hamper money laundering and black money.
Wednesday, November 9, 2016,21:17:17
ATHAR MUDASIR (MCOM)
The Gov. of India as introduced it’s very bold and uncertain plan by withdrawing 500 and 1000 currency note all over nation on 09/11/2016. The action was quite planned as announcement was made in late night when all the financial and other business markets where off and prevent public hue and cry. But what will it ultimately lead is uncertain as consequences may be both controllable and uncontrollable. The PMO as highlighted it as surgical strike on black money and money laundering at a certain point.
The action will first effect on normal business as public will be engaged in collecting their cash resources so that they can be exchanged. It will create disorientation on the confidence of money and will marginalize its value at particular time. Mostly poor and middle class people will suffer most as their exchange instrument became invalid both by government and public. The common people who will be successful in depositing money into bank will create a huge money supply in banks which will directly boost money supply to industry and entrepreneurs and raise borrowing debt of public which will directly become element for inflation and decrease money value alternatively.
The people who have unaccounted and black money deposited as cash will be under high pressure and they even couldn’t deposit at bank as they will be traced, so they will invest and layer their money in Gold, securities and unaccounted land transfer because receiver can easily exchange it with his bank and thus whole black money is white. Which will ultimately rise the sensex and other securities market and rise price of gold very high. Their government as planned to raise capital may get satisfied but proportionately the confidence on gold will make them dissatisfied.
The black money which is deposited in outside Indian banks and tax havens will not come to Indian account as they are already in numerical value and outside the jurisdiction of India, but however the black money of bureaucrats and other people whose money Is deposited as cash and been dumped underground will get a serious blow as it will become very difficult to mobilize such money in short time save if layered in small quantities as exchange it with banks with multiple people and multiple accounts so that the principle source can be evaded.
Changing the 1000 note of currency with 2000 note directly resembles the devaluation of money and inflation.
Alternate agendas from action:
Government has a plan to digitilise whole India including money so it will prove a crucial step towards forming digitize money exchange through internet, and apps with are defacto already in action such as ‘jio communication’ and ‘paytm’.
Government also believes that it will erode the supply of monetary supply to radical and terrorist organization and revolutions which are against the idea, state and nation of India.
Indian agencies also believe it will enhance Indian economy.
Conclusion
The policy and action will prove and pay chaos for short period but will do little to hamper money laundering and black money.
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