Demonitisation Current Affairs - 2019
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The World Bank in its twice-a-year South Asia Economic Focus report has projected growth rate of 7.3% for India in 2018 and 7.5% for 2019 and 2020. The growth is expected to accelerate from 6.7% in 2017 to 7.3% in 2018 and to subsequently stabilise supported by sustained recovery in private investment and private consumption.
India’s recovering growth will drive South Asia to the fastest growing region. Indian economy has recovered from effects of demonetisation and the Goods and Services Tax (GST). India should strive to accelerate investments and exports to take advantage of recovery in global growth.
Disruptions from demonetisation and events surrounding implementation of GST led to setback in economic activity and potentially larger negative effect on poor and vulnerable. Private consumption will remain primary driver of growth while services sector and increasingly, industrial sector will lead production growth.
Every month, the working age increases by 1.3 million people and India will need to create 8.1 million jobs a year to maintain its employment rate. The employment rate is declining based on employment data analyzed from 2005 to 2015, largely due to women leaving the job market.
The Union Government has notified the Specified Bank Notes (Cessation of Liabilities) Act, 2017 to prohibit the holding, transferring or receiving of scrapped old Rs.500 and Rs. 1000 currency notes from 31 December, 2016,
This law makes possession of more than a certain number of the old Rs. 500 and Rs. 1,000 notes a criminal offence.
Key Features of Act
- It ends the liability of the Reserve Bank of India (RBI) and the government on the demonetised Rs.500 and Rs. 1000 currency notes.
- It prohibits the holding, transferring or receiving of demonitised notes from 31 December, 2016 and confers power on the court of a first class magistrate to impose the penalty.
- Possessing more than 10 pieces of old notes by individuals and more than 25 pieces for study, research or numismatics purposes will attract a fine of Rs. 10,000 or five times the value of cash held, whichever is higher.
- Fine of a minimum of Rs, 50,000 will be imposed for a false declaration by persons for being abroad during the demonetisation period (9 November-30 December, 2016).
The Union Government had demonetised old Rs.500 and Rs. 1,000 notes from November 2016 on the recommendations of the RBI’s central board to eliminate unaccounted money and fake currency notes from the financial system. As a follow up, The Specified Bank Notes (Cessation of Liabilities) Act, 2017 was passed by Parliament in February 2017 and received assent of President Pranab Mukherjee on 27 February 2017. The law aims to eliminating the possibility of running a parallel economy using demonetised currency notes. The demonetisation had abruptly sucked out 86% of the currency in circulation in the form of Rs.500 and Rs. 1,000 out of the system.