The recent move by the Indian government to demonetise or ban 500 and 1000 currency notes as been hailed as a great attempt to combat tax fraud, kill the circulation of counterfeit money and eliminate corruption, as eliminating large denominations makes it harder to hide large amounts of cash.
The announcement has attracted immense praise and criticism from corporates, economic commentators, foreign investors and the general public. While some have opined that the move will change the face of the Indian economy, others have been sceptical of its effectiveness in wiping out unaccounted wealth labeling it as a short-term fix rather than a long-term solution for a clean economy.
- Experts have hailed this move as a landmark event in the digital currency era as the note reform seems to have sparked interest in bitcoin among India’s consumers. Queries for bitcoins are reported to have risen by 20 to 30 percent since the announcement.
- The demonisation is expected to have a deflationary impact specifically on India’s property prices, making homes affordable and thereby paving the way for an indirect advantage to honest tax payers. Helping to revive demand in the sluggish housing segment, the reform is expected to drive greater transparency in the Indian real estate industry, making it more attractive to foreign as well as local investors.
- If you are visiting India during this time, you can purchase foreign exchange currency at the airport exchange counters on producing a proof of purchasing the Old High Denomination notes.
While the debate for and against this crackdown on corruption and black money continues to dominate headlines, the next steps that the Modi government will take need to be seen. And with that, its impact on the global economy too.