Has PM Modi misread the Indian black money economy and in turn penalised the citizens?
With almost 12.5 Trillion Rupees out of the total 14.5 Trillion demonitised currency already deposited back into the banking system by 10th Dec 2016, it wouldn't be wrong to say that most of demonitised currency is already back in the system. Hence we are observing more stricter deposit regulations to prevent further inflow of cash. Clearly seems Modinomics has failed which leaves the question, where's the darn black money???
The "black money" likely exists, but corruption in India is a far greater problem than fake money from Pakistan.
The demonetization of India failed for several reasons. Not having enough cash ready to replace the old currency and designing money that can't fit ATMs are the worst reasons. Threatening 200% taxes on very large deposits is a major mistake, since it makes people want to launder the money illegally instead of deposit it in bank accounts.
Failing to have enough banking institutions and support for the hundreds of millions in rural areas has caused farming and fishing to come to a serious halt, and there are many who cannot earn a living for the lack of cash. Modi should have given more time to turn in the money so that people didn't have hospitals refuse the family's savings as payment, causing people to die for lack of care because they can't rebate the money fast enough.
In short, Modi failed to understand the needs of a mostly cash based rural economy, assuming that everyone is like the urban elites living off debit cards. And threatening to seize cash deposits from the poor is causing a lot of illegal activity from laundering money through farmers and tribal areas to buying up gold to giving money to temples so they can give 80% back to the "donor".
Feels bad to see the initiative collapse, both rural & urban economy have been hit hard. Not much impact on parallel economy though as they evolved through this phase. In fact rampant corruption observed across the banking sector for the first ti
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