‘Further scrapping of currency can be expected’

NAGPUR: “We can expect further scrapping of currency notes, with, finally, Rs 50 being the maximum denomination,” said Atul Deshmukh, one of the trustees of Arthakranti, the NGO which had briefed Prime Minister Narendra Modi on the demonetization plan.
“A bit premature, but the move is certainly going to be beneficial in the long run,” said Deshmukh, a chartered accountant, at a seminar on the demonetization move, organized by Institute of Chartered Accountants of India (ICAI).Referring to the proposal made by Arthakranti, he said the ultimate idea is to have notes no bigger than Rs50, with the entire economy depending on banking channels, said Deshmukh.
“Do you know what is the highest currency in Britain, the country which ruled us for 300 years. It’s 50 pounds. If a developed country does not have high denomination currency then why should a developing country like India have big notes,” questioned Deshmukh while addressing a hall packed with professional chartered accountants as well as students.
As much as 86% of the black money is in currency notes of Rs1,000 and 500. If the Rs100 notes are included then the quantum comes to 93.25%. This is the reason large value currencies need to be done away with, he stressed.
The original proposal by Arthakranti to the government called for keeping only Rs50 notes in the economy, he told TOI. The idea is to encourage people to keep money in banks. If the deposits in banks go up, financial institutions will be flush with money for lending. This will also reduce the interest rates, he said.
“The idea behind the government’s move to introduce Rs2,000 notes is to ensure that there is no chaos after the move. It is expected that the government will evaluate the impact of having a Rs2,000 note, and take a call on further scrapping, “ he said.
Julfesh Shah said chartered accountants are having a tough time convincing clients that Rs1,000 and Rs500 are no longer legal tender since midnight of November 8. There is also confusion on accepting the currency till November 30, till when it can be exchanged in the banks.
Kailash Jogani, a chartered accountant and president of Nagpur Chamber of Commerce Limited (NCCL), said the move will have a major impact on the real estate sector. Calling it a bold move, he said it would increase liquidity in the market.
“Hawala dealers and fake currency smugglers are the biggest losers,” added Tejinder Rawal, who was also among the speakers at the seminar.