DEMONETISATION-A MASTER STROKE
As the winding queues outside the banks,more particularly outside ATMs,reduce and money supply in the economy increases,it is time to sit back and take a hard look at the impact of demonetisation on the economy and the people at large. Let me bluntly state that it is not my case to belittle the hardships faced by the common man accessing cash from the banks or hardships faced by many in carrying out social functions planned(lavishly) earlier.
But in the hindsight,many people rejoiced at the cash shortage due to demonetisation and perforce scaling down festivities and extravagance.
There has been substantial increase in tax collections consequent to demonetisation and during the period since November 8,Direct Taxes collections going up by 14%,Indirect Taxes collection increasing by 26% and Excise Duty showing steep increase of 45% . This increase is immediate and for the limited period only. This should help the FM to streamline Income Tax Rate structure and reduce the rates to make these attractive for the common man to comply with the law.
Now consider the impact of old notes coming into the banking system- banks are suddenly flush with funds,cost free and reasonably stable. SBI have already reduced the Interest Rate on Home Loans to 8.6% for loans upto 75 lacs,the lowest rate ever. Other banks are following suit. Suddenly the common man finds it tempting and economically wise to avail loan for acquiring home,which step alone has the potential to boost the economy,generate employment in various sectors and provide impetus to the economy to grow faster.
Lower lending rates will also create conducive environment for industrial and service sectors to grow faster. House hold goods,automobiles and consumer durables are likely to be in greater demand. Automobile industry is sure to pick up speed. As the wages in the near future will not be effected,demand push by the organised sector is likely to be considerable. Though interest rates on deposits will come down and adversely impact senior citizens,but fall in prices due to increased availability of goods and services will neutralise this adverse impact to some extent.
With the boost to industrial sector,employment generation and accelerated economic growth,FDI is also likely to grow thereby further giving a push to the GDP. Improved ease of doing business regime will also help in attracting FDI.
Effect of demonetisation on increasing the Income Tax base by roping in all who have deposited cash in to bank accounts recently thus further buoying tax revenue on ongoing basis.
Agricultural sector has been adversely effected and need huge help and support to reap the benefit of good monsoons. Recent announcement made by PM in his New Year Eve address has kindled hope that demonetisation was not aimed at creating distress to the farmers and corrective action was afoot to ameliorate the situation.
Increasing emphasis on Digitalisation of the economy and expanding cashless transactions will not only improve efficiency but also further expand tax base and increase tax collection. The process has been started and will grow fast in coming days.
The middle class of a society is the backbone of any society. Whenever,the middle class has taken initiative anywhere in the world ,the change and change for the better has been spectacular. Remember the French Revolution spearheaded by the educated and intellectual class-Voltaire,Rousseau et al, who were all middle class heroes. Our middle class,educated,well healed and upwardly mobile is more than 400 million strong bigger than the entire population of US and once they are geared up and become the vanguard of change- agent,the nation will gallop to development. In most of the major Western countries,Indians,and all are the cream of middle class, are playing an important role in their economic life. And there is no reason why they should not do so here in their own country? Demonetisation has speeded up fight against corruption,black money and crime money and also kindled a hope among the educated middle class that things can and are changing. Well, they have to rise above personal pelf and position,lead by example and usher in ACHHE DIN for all.
Modi has shown the resolve to take tough decisions,even those that adversely impinge his votaries and now is the time to follow up demonetisation with toning up Tax Administration in particular and Bureaucracy in general and make them accountable and performers. The corrupt and the inefficient need to be weeded out.
Well,I see DEMONTISATION as the GAME CHANGER for India and support the move, notwithstanding personal inconvenience. more  

Here lies lot of responsibility on. Bankers who are not bothered to educate the customers. The Managers are only interested in lending high amounts to rich customers than small amounts to small customers. They are even not ready to make inquiries while withdrawing large amounts & issuing large amounts of cheques in third parties ( bearer cheques ). Recently I visited one Amul Franchisee & enquired whether they have swiping machine.but their mentality was such that they were not ready for cashless system and they informed me that the bank was asking Rs.10 K Deposit. In such cases either the Bankers should pressurise or the supplier should insist on cashless Payments. I hope this is not out of context. more  
Nicely written after detailed analysis more  
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