Yesterday the first real-GDP numbers at 7%, after note
replacement, were out which showed little effect of demonetization when it fell
from 7.4% that left others puzzled who expected a lower growth rate which shows
that spending has been less affected, however it could be attributed to
black-money splurge, people have spent their black-money which has resulted in
higher spending and growth rate, they have spent (black-) money on luxuries
like gold and cars whose sales have shot-up in setting the black-money.
Nonetheless, lower inflation or GDP deflator may also result in higher
real-GDP, although nominal-GDP and inflation have come down, but it has also
increased the real-GDP which is not far from the truth that it has actually
been less influenced by hit on the money-supply and demand. The prompt
re-monetization as a result of measures taken by the RBI and GoI, flexibility in
rules and stress on cashless transactions made the movement effective in terms
of its effect on recovery from low demand, spending and lower growth-rate.
Recently Nobel laureate Amartya Sen (though)
half-heartedly has admitted that promoting cashless might work, he agrees with
the idea of the present government, but counts gaps which may take time to
level, however... it could be learned in two days, people would learn because
there is no other way to sustain... Payment with Adhar-card would help; its
penetration is higher... Black-money is social-injustice because government’s
ability to spend on education and health retards... Redistribution and growth
might suffer, inequality would go up... Poor people’s living-standard depends
on government’s income and social assets...
Demonetization and the cashless drives are to curb
money on which taxes has not been paid... It is too increase tax-compliance...
The less-cash economy would definitely help to reduce tax evasion...
Black-money is a crime against the whole society, it affects redistribution of
income by keeping it off from the banking system which lowers interest rate and
increase investment and employment and wages... It has lowered inflation and
inflation expectations and interest rate cut and lowered interest rate
expectations... which would increase spending as soon as the cash or
money-supply is restored... Consumption has only been delayed which would
return or probably has already returned...
Moreover, black-money hoarders are not poor people...
they have mobiles and bank-accounts... Only poor people do not have both which
does not attach importance or significance to the infrastructure deficit...
Poor people do not have black-money... Rich people have all the infrastructure
which is likely to increase tax-collection and government spending on health
and education...
No comments:
Post a Comment