The government and the RBI’s move to take out Rs 500 and Rs 1,000 banknotes from circulation though a harsh step but will help India towards a cash-less economy where most transactions are done electronically and that can be tracked thus bringing in more transparency. It will help in checking inflation as well as boosting growth in medium to long term. The indications of a cashless transaction were visible from the time Prime Minister Narendra Modi introduced direct benefit transfer for LPG through Pahal by streamlining domestic LPG connections and weeding out duplicate and unauthorized ones. The same was later linked to Aadhar. Then came Pradhan Mantri Jan Dhan Yojna, through which lower strata of the society was brought under the banking purview. After this, came the Income Declaration Scheme (IDS) for high income groups and the business communities where Prime Minister time to time indicated about the harsh steps at various platforms in case of failure to disclose income voluntarily. And then came the late evening demonitisation of Rs 500 and Rs 1,000 currency notes to be made effective from midnight of 8th November 2016. All these steps have been able to break the “long shadow of ghost economy” which has been a problem for the real economy to grow. The parallel economy which strived on black-money and fake currency had to major extent fueled inflation and had corroded the very base of the economy. It must now go. The decision though somewhat akin to the surgical strike carried to tackle terrorism would tackle the menace of corruption and black money. Modi’s new initiative would help in combating counterfeit currency funding terrorism. The latest move would help tackle terror financing, fake currency rackets, and money coming through Hawala. The government also looks forward to control the issue of drugs with the surprising move. Though a long-needed the step is a harsh one people will get familiarise to the new situation and would be able understand the economic benefit such economic schemes carry.
