On Wednesday, the Central Government said that once the supply of hard-to-fake Rs 500 and Rs 2000 currency notes improves and a stockpile of lower denomination notes is created, the Cash Withdrawal restrictions will be eased.
The NDA Government said that a lot of black money lying unused will come into the formal economy that can be used for economic development of the country, after it withdrew notes of Rs 500 and Rs 1,000 in the country’s biggest crackdown against corruption and black money.
Revenue Secretary – Hasmukh Adhia said that once the supply of new currency notes is sufficient, then markets should stabilise and even the level of activity should go up.
The currency notes of Rs 500 and Rs 1000 withdrawn have to be deposited in post offices and banks by the 30th December 2016 and smaller denomination notes like Rs. 100, Rs. 50 can be withdrawn with certain restrictions – Rs 10,000 from a bank account in a day and Rs 20,000 in a week and Rs 2,000 a day from ATMs.
Revenue Secretary Adhia said that there will be restrictions on withdrawal, but as the supplies of new Rs 2,000 and 500 notes improve there would be relaxation given as early as possible. People should get some relief after some time.
Adhia further said that the value of Rs. 500 and Rs. 1,000 rupee notes in the economy is about 85%. It is a very big decision. This would have a major impact on the black money.
The move will curb tax evasion and black money. The move also mimics the action of European Central Bank to discontinue the use of 500-euro notes to stop their use in illicit activities.
One more good thing will happen that people will start using plastic money and they will use more of bank transactions because of the liquidity crunch. They will be used cheques and online transfers for day to day use.
He said that This decision also promotes India to be a less-cash economy. The poor people are not affected.
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