I would think the main benefit from this point would be in the future.
If folks have a lot of money stashed away in their house, tax free - and they dont' turn it in, that money is lost. Moving forward, it will be more difficult to do the same sort of thing (in theory) because of the sheer inconvenience of storing up all of those small bills. And if the people do, in fact, wind up being more upfront about their monies, it'll mean more tax revenue for the government - you know, for all the stuff governments want to do. Roads and security and improvements and such.
Basically, this is a push for a better future, with some inconveniences and unfortunate stories in the present. There is some hope. Hope is pretty important.
I'm not sure the benefits are so minuscule compared to the costs.
The people with black money will never again use the rupee as a storage medium. They will convert it into gold or US dollars or euros or <insert fungible thing>. It might lead to a "dollarization" of the black economy. It seems to me, in my opinion, that all this is Modi and the BJP posturing before their base. They are "doing something".
> I would think the main benefit from this point would be in the future.
There is nothing to suggest that there would be any change in the future. The incentives and mechanisms still exist. We can hope and think whatever we want - the reality still lurks around.
The benefits are absolutely miniscule when you demonetize 86% of the currency to target 6% of unaccounted income in cash.
If folks have a lot of money stashed away in their house, tax free - and they dont' turn it in, that money is lost. Moving forward, it will be more difficult to do the same sort of thing (in theory) because of the sheer inconvenience of storing up all of those small bills. And if the people do, in fact, wind up being more upfront about their monies, it'll mean more tax revenue for the government - you know, for all the stuff governments want to do. Roads and security and improvements and such.
Basically, this is a push for a better future, with some inconveniences and unfortunate stories in the present. There is some hope. Hope is pretty important.
I'm not sure the benefits are so minuscule compared to the costs.