Notes Ban is threatening to bring down the entire economy in the country. The benefits of the demonetization may be in the long term but the after effects are almost immediate. The state government are losing their income big time and all the Treasuries are running into red now.
Liquor Sales and all the other cash bringing businesses are down since people are being cautious in selling the limited money they have. As a result, the money is not coming into government coffers due to lack of Taxes. Telangana government already said it will lose 2000 Crore this year while AP estimates 3000 Crore in the next five months. Many States could not even pay the salaries next month
On the other side, demands have started cropping that Center should disburse the Black Money Penalities to the states as compensation. Otherwise, the states which are already deficit will collapse while the Surplus budget states will run into deficit. On the other side, the central government is tightlipped about this.
Prime Minister Narendra Modi is in Japan Tour and so a clarity on this will emerge only after his arrival. On the other side, Banks are yet to release New 500 Notes. The 2000 Notes are proving to be useless for the commoners as shops are refusing those notes as they do not have change to give the customers. Shops are refusing the Notes unless the bill is more than 1500 in many parts of the country.
