On November 8, 2016, the BJP government canceled the big note overnight and obstructed the Tulkalam incident in India. After the announcement of Prime Minister Narendra Modi, 500 and 1000 taka notes will become illegal all over India from midnight. He is a stupid person. However, many economists believe that India did not benefit from the decision taken five years ago.
Even many economists think that the cancellation of this note is one of the reasons why the Indian economy was booming before Corona.
The Prime Minister of India Narendra Modi cited these two reasons as one of the reasons for reducing the use of paper notes, increasing digital transactions and preventing black money transactions by hand. While five years have passed, digital transactions have increased, but so has the number of cash transactions and notes.
According to the Reserve Bank of India (RBI), the value of banknotes in circulation on October 29 this year stood at Rs 29.16 lakh crore. And just before the cancellation of the note, on November 4, 2016, it was 16.84 lakh crore rupees.
In the last parliamentary session, the Modi government claimed that the number of banknotes in the economy depends on the rate of GDP, inflation, the rate of exchange of bad notes and the increase in transactions outside of cash. Since the beginning of Corona last year, most people have felt comfortable keeping cash on hand. As a result, the value of banknotes in October 2020 increased by Rs. Although the financial activities have started, this time it has not decreased, on the contrary, the amount of cash has increased by 2 lakh 26 thousand 963 crore this time as compared to October last year.
In the fiscal year 2019-20, the value and number of banknotes in India increased by 14.6% and 6.8% respectively. In the last financial year, it has increased by 16.6 and 7.2 percent respectively. At the same time, digital transactions have increased. In the UPI system, Rs 6.81 lakh crore was exchanged through 421 crore transactions last month.
According to the concerned quarters, the impact of the shock on the economy in the first year after the cancellation of the note has already diminished. The GST system has been introduced on it, the slump of the economy and the corona have changed the spending habits of the people. Anuj Puri, chairman of real estate adviser Anark, told the Economic Times that although cash transactions have not stopped, its role in the housing sector has diminished.
However, according to a RBI survey published in April, in December 2016 and January 2019, banknotes were the preferred medium of transaction for people in six Indian cities. Especially in case of less than 500 rupees transaction. As a result, some experts think that this habit will not change very quickly.