CA
Saurav Somani
Cleaning
the Currency
A
Surprising Swachh Bharat Abhiyaan!!
Intriguing,
Ingenious, Incredible!
“So
once again, Prime Minister Modiji makes his “Modi-fying Miracle Move”!”
Subodh, a businessman, said to his friend CA. Kushal.
“Well,
who in their wildest dreams would’ve thought that “Swach Bharat Abhiyaan”
could even extend its broom to clean up the money at such a macro-economic
level?” Kushal wondered.
“But
can this demonetization really dust off the weeds?” Subodh sounded hesitant.
“Of
course! That’s so obvious –
“Oh,
you’d say the same: economic benefits, boosting the banks and so on! I’d really
appreciate tangible evidence and not mere hollow words! What I know is
that it’s causing chaos to common people like us: the lack of Rs 500 and Rs
1000 notes is just like – water-water everywhere, not a drop to drink!”
Kushal
laughed and said, “Successful reforms comes with small sacrifices! Let’s
look at the Bigger Benefits from a different but simple angle.”
Kushal
resumed, “What if I tell you that you can enjoy your bank loans from now
onwards?”
Subodh
looked confused, “Enjoy your bank loans?”
Kushal
replied, “As per economical statistics, India has in its kitty, estimated
unaccounted money to the shocking tune of Rs 4500 billion! Thanks to
this clean-up drive, a significant portion will be pumped into the banking
system. That’s a huge boost to the banks and eventually will decrease the
lending rates!”
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“Oh
yeah…” Subodh nodded.
“And
what’s more,” Kushal continued, “A large population is still an “Unbanked
Sector” despite the Jan-dhan-Yojana scheme. Now those people have no
option but to open their bank accounts. It will inculcate banking and saving
habits among them. A huge number of people will come not only under
the brackets of banks but also under the umbrella of taxation – particularly
the Income taxes!
“So,
this “Modi” Move is not just a modifier but also a marvellous Multiplier!”
Subodh suggested.
“Precisely,”
Kushal agreed, “India’s GDP is expected to be around 9% by F.Y 2018-19 on
account of such massive money drive!”
“But
so many limits have been imposed.” Subodh said, “Like withdrawal limits: 10000
a day subject to weekly limit of Rs 20000 and so on. And if your deposits
exceed Rs 250000, The Income Tax Department will hunt you like a blood hound!”
“Not
necessarily,” Kushal chuckled, “if you are a regular tax payer, your occupation
is genuine and fully accounted for; there isn’t anything to worry about.
Moreover, Rumours are ripe that depositing more than Rs 250000 will attract
penalty to the tune of 200% on deposits! Nothing could have been so funnier and
ridiculous! That’s a rubbish rumour. Penalty can only be levied on concealed
income and not on deposits! Of course, there are withdrawal limits but
these will go on for few days.”
“Rs
1000 old notes should have been replaced by Rs 1000 new notes. Why the need for
Rs 2000 notes?” Subodh queried.
“That’s
a good question with a simple answer,” Kushal said, “Suppose you have
unaccounted money of old Rs 1000 notes, famously known as “Black Money”.
You deposit Rs 1000 old notes in your bank and withdraw the new Rs
1000 notes. Now, it might happen that you have more old notes of Rs 1000.
So you might deposit the old once again. But you will treat it as if you are
depositing the new Rs 1000 notes which you had withdrawn in the first case!
You will withdraw it again and continue depositing the old ones but treating as
if your bank account is being credited with the new ones! In this process, your
whole bucket of black money will be converted to white without any one
realising! This you cannot do with the new Rs 2000 notes.”
“That’s
a very ingenious move by the government!” Subodh exclaimed.
“But
there’s another reason, though an economical one,” Kushal continued, “The cost
of printing Rs 1000 notes averages about Rs 3 per note as per RBI. By the end
of March 2016, the reports stated that Indian economy had 6.7 billion or say 7
billion ‘Rs 1000’ notes in circulation. Now these 7 billion notes of Rs 1000
have scraped in seconds! The cost of printing another 7 billion 1000 notes at
one stretch to maintain the circulation in economy will be exorbitantly
expensive for the Government. But with Rs 2000 denomination just half
quantity is required to print. Of course, the overall cost of printing Rs
2000 and Rs 500 notes would be a whooping amount of thousand millions! But it’s
still economical!”
“Yeah,
that’s economical but still sounds expensive…” Subodh said, “And speaking of
new notes, you can’t help but be dismayed and disappointed by the design and
quality of these notes: they are razor thin, prone to get torn and soiled,
unlike the old ones which were crispy and solid.”
“Ah…well,
I was dismayed, too, just like you.” Kushal responded with a shrewd smile, “But
as I pondered over, a peculiar explanation struck me. The reason behind the
thin notes, in my opinion, is a deliberate one; it may sound far-fetched but
still deliberately excellent one.”
“Fire
on,” Subodh urged eagerly.
Kushal
resumed, “You see, the currency notes of lower denomination like Rs 5, 10 and
Rs 20 are razor thin. Think carefully: these notes, if kept too long at
one place, get soiled, dirty and thus, needs replacing. The idea behind the
thin new Rs 500 and Rs 2000 notes is to reduce their durability and longevity
which would very well ensure that these are not kept at the same place for so
long and keeps on rotating, circulating and renewing in the market!
People
were known to keep their black money in the form of old 500 and 1000 notes
buried underground or stacked inside cemented walls and so on. The new notes,
if treated with such callousness, would get mutilated.”
“That’s
incredible!” Subodh quipped.
Kushal
took deep breath and concluded, “On an overall perspective, the positive
effects are bound to multiply exponentially. Of late such proactive and
epoch-making steps like Income Declaration Scheme, Law on Black Money and
Foreign Assets have been positively impactful in making a better India. Now
this Demonetisation scheme will pave the way towards a never-before-seen
powerful India. Furthermore, we can expect more of such schemes to come forth
and clean the harmful corrosion glued to our nation. We are, after all,
spearheading towards a cashless, corruption-less and clean economy and the
broom of Swachh Bharat Abhiyaan has to be swept in every sector of India.”
(Author
can be reached at Email: casauravsomani@gmail.com)
More
Under RBI / FEMA
- See more at: http://taxguru.in/rbi/cleaning-currency-a-surprising-swachh-bharat-abhiyaan.html#sthash.aznY7SU8.dpuf
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