Worth Rs 4 Lakh Crore of Demonetized Notes, How will India Destroy It?

How will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes?

How will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes?After the government demonetized of 500 and 1000 rupee notes, a big question arise- How will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes? Although, this move was taken to crack down Black illegal cash holding or black money supply but consequences have marked its way. To give you a glace of what India is tensed for, take a look at last banknotes circulation scenario of March, indicating there were approx 90 billion notes in circulation.

Central banks are working hard to destroy Soiled and Mutilated Banknotes. Similarly, RBI has taken the initiative to shred the notes and make briquettes of them. Briquettes are usually use for lighting, heating and cooking purpose but the shred notes briquettes doesn’t serve such purpose. So, these briquettes will be dumped in wide land areas or sometimes recycled to make calendars, tea coaster, files and few more things. So the question- how will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes? Is no more a big concern…

To reduce the stress, 27 briquetting & shredding machines placed in almost 19 offices will work together to cut off the demonetized notes. According to central Bank, shredding 20 billion Banknotes is not a hard task. As per the scenario of 2015-16, more than 16 billion soiled notes were destroyed by RBI alone. Not only this, When in 2012-13, 500,000 fake notes were caught; more than 14 billion notes were destroyed by the banks.

How will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes?

Let’s See What Some Of The High Profile Names Are Talking About Government’s Move

Helicopter drop

Helicopter drop is an economics term used to define the printing and distribution of large amount of currency in order to speed up the economic growth; if we see from this point of view, shredding demonetized notes worth Rs. 4 Lakh Crore will completely reverse the Helicopter drop.

According to Prabhat Patnaik, government step-“betrays a lack of understanding of capitalism”; he told in a news site, “Typically, what happens in capitalism in a situation like this is that there would be a new business opening up about how to change old currency notes into new ones… A whole range of people would come up who will say you give us 1000 rupees and we will give you 800 rupees or 700 rupees or whatever. Consequently, instead of curbing black business it will actually give rise to the proliferation of black business,”

Inflating Targeting

According to Vivek Dehejia, “India now operates under a monetary policy regime known as inflation targeting. If a portion of the stock of currency in circulation, consisting of currency and demand deposits gets ‘burned’, metaphorically or literally, the Reserve Bank of India, the central bank, can in principle fully offset this through what economists call ‘open market operations'”

“These involve purchasing bonds from the markets and injecting money into the markets in return. This is standard operating procedure for central banks.”

“There will be short run adjustment costs as the old notes are replaced by new ones, but I see no medium to long term impacts on growth, inflation or other pertinent macroeconomic variables,”

“The gains will be a one-time tax on black money and a possible disincentive for future black money accumulation, in the event that there is a prospect for future demonetisations.”

Professor Dehejia is confident that this scheme surely, will succeed and not economy will not suffer at all.

Surely you’ll get to know much about- How will India Destroy worth Rs 4 Lakh Crore of Demonetized Notes? For more updates stay tuned with us at coolexamples.in

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