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How Aadhar, Demonetization, and GST are helping our Economy.

The condition of the economy is much in discussion lately. This is natural, considering the resurgent GDP growth rates of the past couple of years that had gained India the tag of the quickest growing large economy have come down in the past 3 quarters. On top of that is an unbroken lack of private sector investment and job creation.

Aadhar, Demonetization, and GST are the foremost things that helped Indian economy evolve in last few years. Though GST is new, it has helped a lot to transform our economy. These things have truly proved to be helpful and healthy for Indian Economy, and today we are going to discuss how…

Aadhar was introduced in January 2009 to establish the first step towards digital India. And it makes sense because, after the introduction of Aadhar, India has truly become digital. Let’s see how…

  1. Income Tax Returns made easy with Aadhar’s involvement.
  2. Passport creation made easy with Aadhar, now people can obtain their passport with Aadhar number in just 10 days.
  3. Opening new bank accounts made easy with Aadhar.
  4. Senior citizens are getting their pension money faster due to Aadhar.
  5. Provident fund disbursement made easy with Aadhar
  6. People can avail the benefits of LPG subsidies and other subsidies.

Aadhar is easily accessible and it has an approval from the government itself. Now that it is mandatory to link our Aadhar number to our bank accounts and PAN, the government can easily keep track of monetary transactions made by all the people. Clean economy is the aim when we relate Aadhar with Indian Economy.

On November 8th, 2016 Prime Minister Narendra Modi announced to demonetize higher currency notes. The decision was the best but the implementation of demonetization faced some challenges because of some aspects such as large population and Geography.
The decision of demonetization ultimately helped the Indian economy, let’s see how…

The move was anticipated to extinguish the unaccounted cash in the system and would not only reduce the liabilities of the government but would raise its finances. This would help the government spending on massive infrastructure projects, thus pushing the capital expenditure cycle.

Demonetization was predicted to have a ‘habit-changing’ effect on the Indian citizens.

  • Individuals currently prefer keeping cash in banks instead of keeping it at home/lockers. This boosted bank’s CASA ratio cut back the cost of funds and helps bank’s NI margins.
  • The move led to higher tax compliance, raised the Tax to GDP ratio and improved collection. this again led to lower borrowing and higher fiscal management. Also, with lower cash transactions in the near term, inflation may see downtrend within the near term.
  • With limited cash transactions, the digital mediums of money transfers have got a boost like UPI, Online Wallets, Debit-Credit Cards and other online money transfer methods. This has improved the track of money flow and it has given the government to keep an eye of black money transactions, the improved tax reforms and collections are helping the government to finish the infra and other projects taken in hands.

The Goods and Services Tax, which we know commonly as GST was introduced in India on July 1st, 2017. While looking at the financial condition across the world, India has posed a beacon of hope with ambitious growth targets, supported by a bunch of strategic undertakings like the ‘Make in India’ and ‘Digital India’ campaigns. The Goods and Services Tax (GST) is a similar undertaking that is expected to provide the much-needed stimulant for economic growth in India by reworking the present base of indirect taxation towards the free flow of goods and services. GST is additionally expected to eliminate the cascading result of taxes. India is projected to play an important role in the world economy in the years to come. The expectation of GST being introduced is high not only in the country but also within neighboring countries and developed economies of the world.

Benefits of GST on Indian economy:

  • Removing all the bundled indirect taxes like VAT, CST, Service tax, CAD, SAD, and Excise.
  • Less tax compliance and a simplified tax policy compared to the current tax structure.
  • Removal of cascading impact of taxes i.e. removes the tax on tax.
  • Reduction producing costs attributable to a lower burden of taxes on the manufacturing sector. Hence prices of goods are going to be likely to come back down.
  • Lower the burden on the common man i.e. public will have to shed less cash to buy the same products that were expensive earlier.
  • Increased demand and consumption of goods.
  • Increased demand will result in increased supply. Hence, this will ultimately lead to a rise in the production of goods.
  • Control of black money circulation because the system normally followed by traders and shopkeepers will be put to a compulsory check.
  • Supporting the Indian economy in the long run.

The introduction of the Aadhar, Demonetization and GST will be a very noteworthy step in the field of indirect tax reforms in India. By merging an outsized number of Central and State taxes into one tax, GST is anticipated to considerably ease double taxation and convert taxation overall simple for the industries. For the end customer, the most useful will be in terms of reduction in the overall tax burden on goods and services. Introduction of GST will also help Indian products become more competitive in the domestic and international markets. Finally yet importantly, the GST, because of its transparent character, will be easier to administer. Once implemented, the planned taxation system holds great promise in terms of sustaining growth for the Indian economy.