The Reserve Bank has twice released its reports stating that the demonetised Notes of 500 and 1000 have been substantially deposited in the Banks. A widely stated comment has been that just because most of the currency came back into the Banks, the object of Demonetisation has not succeeded. Was the invalidation of the Non-deposited currency the only object of demonetisation? Certainly Not.
The larger purpose of demonetisation was to move INDIA from a Tax Non-compliant society to a compliant society. This necessarily involved the formalisation of the Economy and a blow to the black money.
In March 2014, the number of Income Tax returns filed was 3.8 crores. In 2017-18, this figure has grown to 6.86 crores. In the last two years, when the impact of demonetisation and other steps is analysed, the Income Tax returns have increased by 19% and 25%. This is a phenomenal increase.
This is the positive impact of the Demonetisation. More formalisation of the Economy, More Money in the System, Higher Tax Revenue, Higher Expenditure, Higher Growth after the first two quarters.