The sudden announcement of the demonetization of Rs.500 and Rs.1000 currency notes by Prime Minister Narender Modi has caused an uproar all over the country. The idea of this drastic change came from Anil Bokil of Arthkranti, a Pune based financial think tank.
Bokil reportedly met PM Modi a few months back to give a presentation on financial reforms and was given a mere 9 minutes to put forward his take on the issue. He suggested some key measures to control the flow of black money, the main one being a ban on big currency notes. Apparently, his arguments were quite intriguing to PM Modi and he kept discussing the matter for almost two hours.
The main suggestions by Bokil were:
1. The collection of money under 56 different taxes should be stopped except for import duty.
2. A ban on Rs.1000, Rs.500 and even Rs.100 currency notes
3. Each and every transaction should take place via bank with the help of cheque, demand draft or online
4. Revenue collection should be done with a single banking system
One of the reasons given by Bokil was that on an average, transactions of Rs.2.7 lakh are done on a daily basis in India which amounts to Rs.800 lakh crore in a year. Out of that, only 20% of transactions take place via banks and the rest are in cash, hence untraceable. Another reason he put forward for the ban is that about 78% of the population in the country spends only Rs.20 a day and therefore doesn’t require big currency notes. We don’t know what will happen in the future, but for now all we can say is that this is an incredibly bold move.
News Source: MensXP