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My Take on Demonetisation

Demonitsation

At the outset, I declare, am not an economist nor a banker.

But through my experience,
I have a different view on demonetisation.

Post RBI report on demonetisation, everybody (opposition camp) was kind of jubilant that nothing was achieved. Even today after two years a lot of sceptism has been developed.

We all have seen facts that have confirmed it boosted digital payments, BHIM, tax compliance etx.. That is all fine..

The report suggest that notes worth Rs. 16000 crore never came back.
So that means it remained in the system.

I am sure you are better person and also have access to the best of economists.

Just ask them how many worth of crores of assets can the currency of Rs. 1 cr can create.

It is like this -

1. You give somebody Rs 1000 in lieu of some products. You get the product. He makes some profit. Out of the profit he buys something, so it is passed on further. This profit may not be declared.

So the Rs. 1000 that you gave to one person actually passes through 1000 people (or even more) before it goes back to bank.

So, when the currency came out of RBI it's value was 1000 and when it got back into the RBI, it's value was still 1000 and that is what the RBI  counted.

But the point, is that, while this currency passed through 1000 people it created assets and services. Assets could good or bad / dirty.

So, that is how 1000 people benefitted, some legally some illegally.

So, of you look at the damage value of Rs. 16000 crore that never came back, it must be at least 5-6 times (conservative estimate) of that or even more, and that's what the corruption is.

Did you get my point?
Do you think it makes some sense?

I will be happy to have your valuable feedback.

Thanks,
Dhananjay Deshmukh

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