While, Prime Minister Narendra Modi may presently be earning both, bouquets and brickbats, for taking an overnight decision of banning of Rs 1000 and 500 denomination notes. After the 50 day window (As requested by the PM), the financial scenario will change and the government is likely to earn some brownie points.
Profits that the Government will earn!
Going by the figures provided by the Finance Department of the country, around Rs 18 lakh crore worth of notes currently in circulation out of which Rs 15.44 lakh crores is demonetized (Rs 500 and Rs 1000 notes).
• As per RBI’s records, out of Rs 15.44 lakh crore around Rs 12 lakh crore worth of money has already been exchanged or channelized through various sources.
• With 21 more days to go before the 30th December deadline ends, RBI is expecting approx Rs 1 lakh crore to come into their kitty, which means a total of around 13 lakh crores.
• Now, this 2.44 lakh crores (15.44-13) is unaccounted for, which means, it will be considered as black money.
This unexchanged amount of Rs 2.44 lakh crore will straightaway be calculated as the net profit earned by the government as the notes will deem to be of any use to the holder after 30th December.
So if we assume remaining money is black money and people will never try to deposit the amount. This means that this 2.44 lakh crores wouldn’t come to the mainstream economy ever & in simple terms this would be the profit of the government because it will reduce Govt liability. We know this move has lot of pros and cons, but let us not go into the details.
If things go the other way round!
Still 21 days are left for that 50 day period to end & if the remaining 2.44 lakh crores (Which we are assuming as black money) comes in within this window, demonetization would be nothing but a sheer waste of resources and time.
Even if 2 lakh crores comes in then recovery of 0.44 lakh crore black money doesn’t justify this demonetization move because common people have suffered a lot more. We hope govt is at least able to recover more than 2 lakh crores black money!
How far, Mr. Narendra Modi goes in improving the economic situation of the country by way of ending black money menace with his strategic move, will be known only after the deadline ends.
Do let us know your views on the same in our comments section below.
