Talking Point: ICAI panel to study cost-benefits of demonetisation

Supporting the demonetisation, the institute said it would definitely be able to tackle all three malaises -- a parallel economy, counterfeit currency and terror financing -- plaguing the economy. “We have formed a group comprising seven to eight experts to study the impact of demonetisation on the economy. It is a cost- benefit analysis. We are planning to submit the report to the government,” ICAI President Manas Kumar Thakur here. 

“A majority of undisclosed income is expected to be disclosed by the move,” he said. The study will estimate the cost incurred by the various sectors of the economy due to this demonetisation move and will also examine the benefits that the sectors are getting from such drive, he said. “This bold move is causing some temporary inconvenience among the common mass but this short-lived inconvenience is a price that is worth paying for the long-term benefit of addressing the menace,” Thakur said.  He pointed out that only around two per cent of the people in a community used to get the benefits from parallel economy which causes higher money circulation and pushes up the inflation.  

Giving cost figures of printing notes, he advocated for a digital payments-based economy and supported the printing of high denomination notes. “Cost for printing a Rs 2,000 note is 20 paisa, for a Rs 1000 note, the cost is 32 paisa while for a Rs 100 note, the cost is Rs 1.82. It is worth considering printing a high denomination note from cost analysis,” he said. 

The cost for printing a Rs 50 note is Rs 3.60 while the monetary implication for doing a Rs 10 note works to a cost of Rs 9.60, he added.  Meanwhile, it may be recalled that FM Arun Jaitley had said the process of identifying a genuine note requires rubbing the currency against a cloth. A turbo-electric effect is generated and it is due to this that the note’s ink gets transferred on to the cloth.