On the third anniversary of demonetisation, former financial affairs secretary S.C. Garg stated the ₹2,000 word, which the Modi authorities introduced changing older 500 and 1,000 notes, have been being hoarded and must be demonetised.
Three years in the past, on at the present time, Prime Minister Narendra Modi made the inventory announcement of banning the usage of previous 500 and 1,000 rupee notes with a view to curb black cash, promote digital funds and make the nation a less-cash economic system.
“Cash is still quite high in the system. There is also stocking of ₹2,000 notes in evidence. The expansion of digital payments is taking place all over the world. It is happening in India as well. The pace is much slower,” Mr. Garg, who took VRS from authorities service after he was abruptly shifted out of the finance ministry, stated in a word.
Mr. Garg, who headed the division that abroad forex circulation amongst different issues, stated the ₹2,000-notes account for about one-third of forex notes in circulation in worth phrases.
“A good chunk of ₹2,000 notes are actually not in circulation, having been hoarded. ₹2,000 note, therefore, is not presently working as a currency of transaction,” he stated advocating that they might be demonetised or withdrawn from circulation.
“It can be demonetised, without causing any disruption. A simple method, depositing these notes in the bank accounts (no counter replacement), can be used to manage the process,” he stated.
The November 8, 2016, demonetisation determination was aimed toward reducing the excessive denomination forex in circulation, however nearly the entire demonetised forex got here again into the system through the window offered by the federal government for that.
Mr. Garg stated money is previous its hey-days, though for a really completely different purpose it’s making a comeback.
“Very convenient digital modes of making payments are replacing cash at a fast pace,” he stated. “India has still a long way to go with more than 85 per cent payment transactions in the country still taking place in cash. The pace has to be accelerated.”
Making giant cash-based transactions costlier and topic to some tax/cost, making digital modes of funds conveniently obtainable always and stopping money dealing with within the authorities fully will assist transition our nation to much less money and to no money economic system, he stated.
Additionally, the Reserve Financial institution of India (RBI) wants to maneuver past the banks and contain all different fee infrastructure members on this enterprise of creating funds digital, he stated.
The previous bureaucrat stated money has extreme limitations though for small worth transactions, it’s nonetheless fairly aggressive and handy.
The “trick is to make the non-cash mode of transaction as, if not more, convenient and as, if not less, costly as cash mode,” he stated. “China has done it. More than 87 per cent transactions now take place in the non-cash mode as compared to 12 per cent in India.”
He advocated taking extra measures to make money somewhat costlier and extra inconvenient, and fin-tech based mostly transactions environment friendly, price much less and handy.
Implicit subsidies for money transaction (no cost whereas depositing money in banks, not offering notes of lower than 10 rupees for transactions) have to be steadily eradicated and fin-tech infrastructure – utilizing the LED mannequin, made common and cost-free, he added.