After Demonetisation, the number of tax returns organizer by individuals shot up 25.3 percent and 9.1 million taxpayers already have been added to the tax net.

In this historical move, the government of India declares Demonetisation of Rs 500 and Rs 1,000 banknotes on 8th November 2016.

Demonetisation was an attempt to hold tightly down black money which can bump the economy towards digital payments; this step received a mixed reaction from different sectors of the economy and the national population.

It is said to be that some believed that Demonetisation is a reform would that can leave a long-term positive impact on the economy, while other people focused on the challenges caused in the nation post the announcement of Demonetisation for the short-term period.

Demonetisation Anniversary: 5 Positive Result Of The Same

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Today India marks one year of Demonetisation, let us have look at some impacts of the Demonetisation on the business and market of the country and also lets’ discuss its longtime effect on the coming futures.

Demonetisation Move towards a digital economy

After Demonetisation, 86 percent of the total currency in circulation declared invalid on last year. This urged citizen of the country to embraceor adopted the digital payment channels which reduce human dependency on cash.

With this phenomena citizen of the country actually realized about the cashless economy, the government also declared the different measures which can motivate and encourage digital transactions via banking channels.

The Digital payments industry actually witnessed a growth in the range of 40-70 percent as compared to 20-50 percent growth before demonetization has reached to the noticeable volume.

In the month of October 2017 the volume of digital transactions is around Rs. 50,000 crores.

A move towards digital economy actually makes the money transactions easier apart from it also create the new employment opportunities and the new market for the citizen of India.

Demonetisation has already has enabled the banking system to pass on the interest rate by pushed all the excess cash in circulation to the banking sector and it also cut by the central bank to the borrowers.

This system improved and enhanced the ability of banks to offer loans for the business activities and development projects at an affordable rate.

Boost to financial enclosure proposal

Deposits in Jan Dhan accounts more than doubled to Rs 87,100 crore in 45 days after Demonitizations.

Demonetisation along with Jan Dhan scheme was an accomplished way to the mobilization of savings into the banking system.

Almost 30 crore families opened bank accounts via the Jan Dhan scheme; the number of zero-balance accounts reduced from 77 percent pre-demonetization to 20 percent after demonetization.

This development has given a new momentum which is yet to realize the goals and aims of the financial inclusion.

After the expansion of the ambit of Jan Dhan accounts, it has now become easier for the government to pass on the subsidies and incentives which is intended for the underprivileged sections of the society.

1 Year of #Demonetization of 500 & 1000 Notes in India: A Different Take! Read The Proper Analyze

This is done by transferring funds directly to the Aadhaar-linked bank accounts of the beneficiaries, which prevent the siphoning/misuse of the funds by the intermediaries.

Compress down on black money

A number of tax returns filed by individuals shot up 25.3 percent and 9.1 million taxpayers have been added to the tax net after Demonetization.

More money flowing to the government exchequer via this increased tax base which was mean to add the more funds and that was also available for the socio-economic development and for its upcoming ventures.

Demonetisation exercise also helped to identify the people’s names who were indulged in tax evasion. 17.92 lakh individuals were identified for review as their tax profiles did not match with the cash deposits which they made after demonetization.

The shift in investment habits

Demonetisation also sees a large-scale cash deposit in bank accounts. Though the bank deposits offered nominal returns which made investors explore alternative and attractive investment avenues.

Equities and mutual funds emerged as preferred investment options.

Mutual funds also see a crucial inflow towards equity funds experiencing a net inflow of Rs 1.46 trillion in 2017, out of which the MFs have already deployed Rs 0.93 trillion till October 2017.

Retail investors gradually started moving away from low yield assets like FDs and are flocking towards MFs with around Rs 5,000 crore worth of SIPs every month.

As a large part of Real Estate transactions that occurred in the cash, the latter has lost sheen for investors. Similarly, Life Insurance sector sees a rush forward of 113 percent in the premium collection after Demonetisation.

Stock Markets: Fresh high

Following the demonetization announcement, BSE Sensex witnessed a drop. Though this movement can characteristic in the number of cases on this demonetization, which included, Donald Trump’s election as President of the US.

The subsequent rise in US bond yields apart from the strengthening of the dollar.

These developments led to funds flowing from Indian market on the immediate basis it will be the effect the market.

Although with the investors distracting their remaining cash to equities and equity mutual funds, the markets have done well over a year for the long time period.

This improvement in market performance was fueled partly by the desire of the investors to explore attractive investment boulevard and partly on account of improved fortunes of listed entities which would lead advantage for the implementation of Goods and Services Tax (GST) in July 2017.

These are some reforms which are expected to marginalize the informal economy. Retail investors started taking help from financial experts to channel their excess cash into viable stock investments.

The overall positive sentiment, led by various reforms introduced by the government, also boosted the confidences of the investor in the market.

It is very obvious that any measure of this magnitude is bound to have a crucial impact on the economic activity over a period of time.

So it would be cautious for us to take a long-term view entirely and totally to analyzing the result this measure anyway.

DisclaimerThe author is MD & CEO, Axis Securities. The views and investment tips expressed by the investment expert on are his own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

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