New Delhi, Nov 8: The demonetisation may not have yielded desired results but it would remain one of the most contentious decisions taken by the Narendra Modi led government. Today is the second anniversary of demonetisation and it is still being debated as to how much of an impact it had on the economy, on the lives of the common man and to what extent did it meet the objectives.
While the opposition parties have dubbed it as an utter failure that pushed the economy back, the ruling dispensation has maintained that some of the objectives were indeed met.
There were three main objectives behind the banning of Rs 500 and Rs 1,000 notes in November 2016 – curbing black money hoarding, tackling the menace of fake currency and dealing a blow to terror financing.
Apart from these, the government also wanted to give push to digital transactions and bring more people into the tax net.
The total value of Rs 500 and Rs 1,000 notes, which were banned on November 8, 2016, was Rs 15,417.93 billion, out of which Rs 15,310.73 billion was returned. This means that around 99.30% of the banned notes were returned. The value of currency that did not return is far less than what the government had expected.
Coming to the fake notes problem, the overall detection of counterfeit notes was 522,783 pieces in 2017-18 as compared to 762,072 pieces in 2016-17, which is 31.4 per cent lower. But, the number of fake notes of Rs 2,000 denomination jumped to 17,929 in fiscal 2017-18 as compared to 638 pieces in 2016-17. Similarly, 9,892 pieces of counterfeit notes were detected in the new Rs 500 banknotes in 2017-18 as compared to 199 in the previous fiscal. So the overall fake notes in terms of the number of counterfeit notes have come down, but the counterfeiting of new Rs 500 and Rs 2,000 notes, that boast of improved security features, has gone up.
As said earlier, the note ban may not have yielded desired results, but we have to acknowledge that it was a bold move.
Impact of demonetisation on common man:
Demonetisation was done with such suddenness that it impacted every stratum of the society, though the degree of impact varied depending on how cash dependent one was. Even weeks after demonetisation was announced, banks and ATMs witnessed massive crowds as people wanted to get rid of worthless old currency and get whatever amount of new notes they could manage for day-to-day purchases of essential commodities.
Considering the fact that India is largely a cash-based economy and that most do not use plastic money, it has to be said that people exhibited a great deal of patience and stood by the Prime Minister’s decision. Great inconvenience was caused, but people did not revolt against the government’s move and patiently waited for their turn to come, which is a testimony to the fact that by and large people trust Modi.
Why was demonetisation a bold move?
Demonetisation was a move that could potentially have ended a Prime Minister’s or party’s chances of ever being voted to power again. But, barely two months after that, the BJP registered a thumping win in the assembly elections in Uttar Pradesh, the most populous state in the country. Considering the backwardness of the state, people of UP would have experienced massive inconvenience due to demonetisation, but they voted for Modi just like they did in 2014 Lok Sabha elections.
The opposition parties made note ban a focus of their poll campaigns and tried to capitalise on people’s annoyance due to demonetisation, but they failed and the Modi wave triumphed. The outcome of the demonetisation is still being debated, the actual gains from it are yet to be quantified and the question of whether it was a success or not is a long way from being answered. The point here is that even if we take it as an experiment being done on the economy, it requires a tremendous amount of courage and risk-taking ability to take a decision that can anger the voters.
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Politicians are known to try and woo the voters with their glib talk and appeasement. Seldom do they try to bite the bullet and take a decision that can cause widespread inconvenience, fearing that they may not lose their votes? Modi’s note ban decision, despite knowing that it can go horribly wrong, needs to be acknowledged for sheer fearlessness with which it was taken. It may or may not have yielded desired results, but at least an attempt was made to rid the nation of long pending problems.
What is the solution to corruption and black money problem?
Corruption and black money hoarding cannot be weeded out till the society as a whole starts taking pride in abiding by the laws. No matter what rules are made, people will find a way around them. Effective regulations from the government and a wholehearted commitment by the society to sincerely abide by it is the only way to rid our nation of corruption.