Wednesday, December 14, 2016

The hard facts behind Demonetization..

As of 10 Dec 2016, exactly 30 days after Demonetization started, 12.44 lakh crores of withdrawn Rs 500 and 1000 notes of the total 15.44 lakh crores, have come back as deposits.. 81% of the total, ie, roughly at the rate of rs. 40,000 crores daily across the country.

With the remaining 21 days from Dec 10 till the drive ends on 31 Dec, daily deposits of 15,000 crores will see the deposits of money coming into the banks of demonetized currency to be exactly equal to the total value of notes demonetized and withdrawn, ie. 15.44 lakh crores .. ..
The real Indian picture captured by The Economist Nov '16

But if deposits on an average come across the country at the rate of Rs 24,000 crores per day, it will see the total amount returning to be equal to 17 lakh crores by 31 Dec 2016, which is 1.56 lakh crores more than the total value of Rs 500 and 1000 notes in circulation. The difference now of Rs 1.56 lakh crores will be the forfeited notes in circulation !! The most interesting thing to note is that these 1.56 lakh crores of fake Rs 500 and 1000 notes in circulation has escaped the attention of the bankers and the police all this while ...

This leads to a particular situation in the country where instead of not gaining any amount of money (the new note printing only led to extra costs incurred because of the instability in thinking of the leaders in the country) that will be taken out of circulation, it brings additional liability to the political leadership leading to a great monetary crisis.

Hope the PM may not find himself at the receiving end .. Notes getting printed in the four government note printing presses of the country for 7 days a week, it will take at least July August 2017 for the note crisis to dampen in the country.

Till then hope the PM will find some means to dampen the note crisis in the country. The urban crowd can do with cash less transactions but the rural crowd will be hard hit with lower earning capacity and hence a dent in their lifestyles ..


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