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Demonetisation drive:Rs 3,35,000 crore of black money expected to be wiped out

The unexpected demonetisation of high-value denomination notes such as rs 1000 and rs 500 is expected to be wiped out 3,35,000 crore black money. 1,34,000 crore will be added to the banking system, the sources said.

The unexpected demonetisation of high-value denomination notes such as rs 1000 and rs 500 is expected to be wiped out 3,35,000 crore black money. 1,34,000 crore will be added to the banking system, the sources said.

“This step by the government is a death blow to the cash component of black moneyin India,” said Robinder Sachdev, the president of   Imagindia Institute.

“Over $50 billion (Rs 3,35,000 crore) of illegitimate cash will be destroyed, and over $20 billion (Rs 1,34,000 crore) of legitimate cash will enter bankingchannels to become legal,” Sachdev said.

Read Also: Demonetisation: BJP Slammed It When Congress Did It In 2014

As per the data from Reserve Bank of India, the total value of the outstanding currency which is circulating in the Indian economy as on October 28 stood at Rs 17.77 lakh crore.

“Not all currency notes in circulation are illegally acquired cash. Our model to assess the impact of this step by the Indian government accounts for 70 percent of the cash in currency notes of Rs 500 and Rs 1,000 as legitimate, and 30 percent as illegitimate cash stowed away in bags and hiding places,” it said.

The surgical strike on corruption and black money are to eliminate fake currencies and financial terrorism. The government is expecting  this surprise move will strengthen the financial and banking infrastructure of India.

Read also: Demonetisation: Is RBI Goof Up Responsible For It?

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