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1/4/2019 The impact on India's economy of demonetised currency returning to banks<br />
Higher tax buoyancy after FY16 indicates increasing tax compliance<br />
At Tax buoyancy of 0.5, an 8% increase in GDP results in (0.5 * 8) only 4% increase in tax<br />
revenue for government<br />
At Tax buoyancy of 2.0, an 8% increase in GDP results in (2.0 * 8) 16% increase in tax revenue<br />
for government<br />
Hence, with the same economic growth, the government can now expect a much higher tax<br />
collection year after year to spend on healthcare, education and infrastructure development<br />
Exponential growth in Digital Payments:<br />
Lack of cash during demonetisation provided the necessary impetus to bring behaviour<br />
change in consumers adopting digital payments. As per the data published by National<br />
Payments Corporation of India (NPCI):<br />
UPI (India’s homegrown payment system) based digital payments in India have grown<br />
exponentially since 2016<br />
the number of transactions:<br />
Aug 2016 – 93,000<br />
Nov 2018 – 52.5 crore (up by 5,645 times)<br />
value of transactions:<br />
Aug 2016 – 3.1 crore<br />
Nov 2018 – 82,000 crore (up by 26,451 times)<br />
Source: India Brand Equity Foundation<br />
https://www.opindia.com/2018/12/modi-government-impact-of-demonetised-currency-returning-to-banks-on-indias-economy/ 3/11
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