You’ve all heard the 📰news last night as 🇮🇳India was dropped into a bout of mini 😰confusion😓 over ✌Modi’s new ₹500 & ₹1000 note💵 policy to curb ⛔black money. While some 🇮🇳Indians have praised the move in the belief that it will truly be a hurdle to 👹corruption, most others don’t❌ just see the inconvenience in it but the tiny economists👓 in them don’t believe in the overall benefit in it either😕. Let’s first agree on the fact that counterfeit money👻, black money☠ & 👹corruption in general are a major issue in 🇮🇳India without which we could make serious strides📈 in our overall economy. With that in mind, one can see the motive behind ✌Modi’s move, but the question remains: 🤔How viable is it❓❓❓
🔸It does fight Black money, 👹corruption, ☠terrorism & counterfeit currency.
🔸💀Terrorists won’t have any funding (counterfeit currency) to go to & arms smuggling & espionage will also face a major problem.
🔸Card transactions💳 will slowly replace the 💵cash transactions daily, making it easier for the 🏛Govt. to track money.
🔸Black money, which is mostly in ₹500/₹1000 notes💵 will be difficult to get rid of.
🔸The Real estate sector🏢 will be forcibly institutionalised bringing more transparency in the industry while making it more attractive to the foreign as well as domestic investors💰.
🔸Housing prices🏠 could come down📉 & revive demand in the housing segment.
🔸It will end the artificial 🔺increase in Real Estate, Higher Education🎓 & Healthcare🏥 transactions.
🔻Immediate but short-term inconvenience to 👥people who will have to exchange the ₹500 & ₹1000 currency notes💵.
🔻The move is expensive💰: The cost of replacing the ₹500 & ₹1000 notes💵 if replaced & printed using 💯 notes will be ₹11,900 crore😖😣😂. The total amount they will replace is an astounding ₹6.666 trillion😐.
🔻ATMs will probably charge more💲😒 to issue transactions as they will have to be maintained & refilled more frequently.
🔻More than half of 🇮🇳India isn’t familiar with card transactions💳.
🔻Rural 🇮🇳India has a serious lack of forms of identification🎫 & will find it difficult to exchange notes as they transact heavily using ₹500 & ₹1000 notes💵.
🔻Small businesses & working sector individuals👷🏽, like drivers, maids, cooks, electricians👷🏻♀, & anyone who provides services in the informal sector & depends on monthly cash will be affected by the move😓.
🔻What if someone innocent has several fake notes🤔? What will the 🏛Govt. do in such cases😐?
🔻The move only affects general 👹corruption & doesn’t lay a hand on major corporate thieves😈 as they don’t❌ store their black money as hard cash, but foreign currency💶 & 🔱gold kept safely in tax havens🇵🇦.
💥💥💥Immediate Impact: Heavy Deflation📉
🔹There will be heavy deflation📉 anyone with illegal 💵cash earned through means like smuggling & 👹corruption won’t❌ declare the money for fear of prosecution. They will probably find ways to destroy the paper money & any evidence of it leading to a 💵cash void in the economy which will make it seem like a deflation📉 as commodity prices will remain unchanged.
🔹Gold prices, stocks📊 & commodities will drop📉.
🔹People with legally earned 💵cash kept in large amounts will have to deposit it in the bank🏦 as well.
🏦Banks with more deposits will be better equipped to lend money making loans easier to acquire & possibly bring down interest rates, increasing broad money💰 supply. These factors can lead to inflation📈 but it won’t happen quickly. Eventually, the deflation & Inflation will 🚫cancel each other out in the future.
Original Image Credit📷: IANS