Natural resources like water, forest, air, minerals, fertile land, technology, patents, and critical human resources are considered strengths of a country and economy. So, there are laws which contain rules and regulations to protect them. The fiat currency which is in circulation in the economy is a national treasure.
Any fiat currency should be printed by the central banks and is to be backed up by silver, gold, and US dollars.
Even though the currency that we own legally belongs to us, if we start storing more fiat currency in iron briefcases for the long run to meet the upcoming unanticipated needs that may come, we are indirectly blocking the circulation of money in the economy. Hence, the economy will grow more slowly than the actual growth.
Instead of storing excess fiat physical currency in our lockers, if we buy an asset like gold, it generates revenue for gold shop sellers and employment creation to make our ornament and the money enters into circulation again speeding up economic activity. Suppose we give money to charity, the money will end up in bank deposits or used to buy goods and services and it again boosts the economy. If we store the physical money for a long period, our economy will run at a slow pace. If we deposit INR 1000 in our bank account, then banks using a fraction reserve ratio will lend up to INR 10,000 by using our INR 1000 and it will in turn stimulate economic activity.
For the financial year 2022-23, the 6.77 crore individuals had filed income tax returns out of which 4.65 crore people who had reportedly paid zero tax. In India, many business activities are unorganized so they may not end up paying taxes. More than 76 lakh individuals have an income between INR 10 lakh and INR 1 crore in the Assessment Year 2021-22. In Telangana state, only 5,861 farmers in the state own more than 25 acres of agricultural land. Many rich people in India may not come into the economic radar of the rich to the government statistics.
Here, I am not talking about black money or white money. The excess money we are saving to meet future needs is sitting idle. It is not generating any excess revenue or not creating any assets. So, it is acting like a parasite that is sucking the blood out of the economy and is stopping rapid growth.
So, if we keep more physical money idle for a long period, we are slowing the economic activity indirectly by cutting the wings of banks to give loans, the revenue of individuals and companies, employment, revenue of the government in the form of taxes, infrastructure activities, and welfare measures.
By considering all these factors we should consider saving plenty of fiat currency for a long period as an economic crime. Even though the money is white and legally belongs to us, we are indirectly doing economic crime which slows the movement of overall economic growth of the country. So, we should update our mindset that in these modern digital eras, excess physical cash is not needed for us and it is also actually a loss for us without generating minimum saving interest from bank savings wallets. If we do, we are doing it against the growth of the economy and country.
