One year after demonetisation, the Indian economy is still hurting.
People fear government’s decisions
Demonetisation has proved to be a goalpost changer, and nothing more than that. It was a missile shot at black money and corruption, but ended with Prime Minister Narendra Modi saying he will give allowances to pregnant women! It seems that the aim of the process was not decided and Mr Modi came up on November 8 to announce that Rs 500 and Rs 1,000 currency notes would be banned and he declared that it will stop the flow of black money. After a few days, his statement changed and he told the nation that demonetisation was affecting terrorism, and at last gave a ridiculous reason — to give compensation to pregnant women. This clearly states that the government itself wasn’t sure of its action.
A decision which affected the Indian economy and its 125 crore people was taken as an adventure sport by the PM. After a year, the RBI data has proven that 99 per cent of the money was deposited in the banks and it was indeed a failure. The RBI paid only Rs 30,663 crores as dividend compared to Rs 65,880 crores a year ago, and the note ban was one of the key reasons for lower profits. On the expenditure side, the RBI spent Rs 7,965 crores on printing new currency notes in 2016-17, more than double the Rs 3,420 crores spent a year ago. In its efforts to quickly remonetise the economy, the RBI issued 29 billion currency notes in 2016-17 compared to 21.2 billion a year earlier.
GDP growth, from 9.2 per cent in the last quarter of 2015-16 has slipped down to 5.7 per cent, but no one in the government is admitting the fact. A Ficci survey on manufacturing showed that a staggering 73 per cent of respondents said they are unlikely to hire any additional workforce over the next three months. This was mildly lower than the 77 per cent of respondents showing a similar concern earlier.
Slow hiring may put more pressure on the market even as job losses continue to be a major concern in the post-demonetisation era. According to another study, the government’s demonetisation exercise is estimated to have wiped away around 1.5 million jobs.
Besides many discomforts to the people of India, we all would have accepted it if there could have been a single benefit to the nation. On the contrary, only losses have incurred. None of us can erase those difficulties we faced a year ago. There is a psychological threat in the minds of the people regarding the uncertainty of government decisions.
The writer is an AICC secretary
Note ban has proved to be a success
November 8, 2016 will be remembered as a watershed moment in the history of the Indian economy. This day signifies the resolve of the NDA government to cure the country from “dreaded disease of black money”. It was the people of India who demanded strong action against black money and corruption. Thus, in political terms, demonetisation has already proven to be a resounding success.
Several reputed economists have pronounced their judgments on demonetisation. Former RBI governor Raghuram Rajan has mentioned that he believed that while there might be long-term benefits, the short-term economic costs of demonetisation would outweigh them and that there were alternatives available to achieve the main goal. Manmohan Singh has estimated the cost of demonetisation to be two per cent of GDP. He even termed it as an “organised loot” and “legalised plunder”.
But Dr Singh forgets that loot was what happened in the UPA tenure in the form of 2G scam, Commonwealth Games, etc.
If we see the impact of demonetisation we can call it as India’s highest ever unearthing of black money, where 0.00011 per cent of India’s population deposited 33 per cent of total cash in the country.
One of the major impacts of demonetisation was the decisive blow to terrorism and Naxalism. We have seen stone-pelting incidents in Kashmir reduced by 75 per cent. Incidents of left-wing extremism came down by more than 20 per cent. It was due to PM Narendra Modi’s vision that this massive cleansing of India’s financial system happened, with a maze of shell companies dealing in black money and hawala transactions uncovered. In a surgical strike on shell companies, 2.24 lakh companies were struck off after 58,000 bank accounts belonging to 35,000 companies were caught transacting Rs 17,000 crores after demonetisation.
People have got multiple benefits from demonetisation like the reduced rate of interest for loans, decrease in real estate prices, increased income of urban local bodies, etc.
In the overall analysis, it would not be wrong to say that the country has moved on to a much cleaner, transparent and honest financial system. The benefits of these may not yet be visible to some people. The next generation will view the post-November 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in.
The writer is a Delhi BJP spokesperson