Impact of Demonetisation, and Future Prospects for India – An Exclusive Interview with Arjun Ram Meghwal MOS Finance

In a freewheeling conversation over the mobile phone with Prime Point Srinivasan, Editor in Chief of PreSense, Shri Arjun Ram Meghwal, Hon'ble Minister of State, Finance, Government of India spoke about the short term and long term impact of demonetisation, the future plans to curb black money invested in other assets, the future policies of the banks, and the likely change in the financial year. Some of the highlights of his interview are as follows:

• The objective of the Demonetisation was to curb (1) the tendency for corruption, (2) funding of terrorism, (3) counterfeit currency and (4) black money. The move was to eradicate the major 'disease', due to which the country could not progress much as planned and projected by the Government of India.

• The Government demonetised 500 and 1000 currency notes, which formed nearly 86% of the total currency. Of this, nearly 50 percent of the higher denomination was not in circulation due to hoarding.

• The situation in the country post-demonetisation, is improving. The urban areas are under control. However, more needs to be done for the rural areas and this will be facilitated through the Rural Regional Banks (RRBs) and the District Co-operative Banks (DCBs).

• So far, unaccounted (unorganised) activities in the country were not contributing to the country's GDP (Gross Domestic Product). Post-Demonetisation, all the activities in the country will contribute to its GDP. This will be a positive sign.

• The country is moving towards digital currency/cashless society. India's six lakh villages have to be educated and motivated to use digital currency. Unfortunately, even the existing holders of the plastic money, including senior citizens, do not use them. They need to be educated and encouraged to use plastic money. The Government has plans to create awareness among the villagers about the use of plastic money. Demonetisation itself has created the awarness. It is notable that while most of the political parties are criticising the move for Demonetisation, the public in general have welcomed the move.

• Post-Demonetisation, the banks will soon have sufficient liquidity and they may lower their rate of interest. This will benefit the public.

• The Government has plans to deal with black money parked elsewhere in real estate, benami deposits, gold and foreign currency. The Government will be initiating action against benami property either under the existing law, or amended to deal with it.

• The Government is considering a change in the Financial Year from April-March to the calendar year January-December. It is likely to be implemented in a year's time.

• The service rendered by the banking and postal service staff during the critical period following Demonetisation has been commendable, with their working day and night to deal with the demands.

• To a pointed question that was brought to his notice that there would be security risks when the data goes into the hands of various e-wallet operators owned by foreign companies, Hon'ble Minister said that the Government was looking into this aspect.

• In conclusion, the Hon'ble Minister said he was pleased with the Demonetisation move, and is optimistic of good times for the country in the future.

The full interview may be listened through the following link: