Voice from the Rooftop

Blog of Vincent Augustine D'Souza

Demonetisation Disaster

Demonetisation is a Disaster. No amount of sugar-coating or whitewashing can hide that. It was pain without gain. This decision was similar to that of Mohammed Bin Tughlaq introducing brass and copper coins.
For eight months government and RBI avoided giving figure of money that came back. RBI gave figures till the amount reached 12.44 lakh crores in mid-December 2016. After that it was silent. Unofficially it was known that 14.97 lakh crores had come back as on 30/12/2016. Now it is official that 99% of demonetised notes came back. On 30/8/2017 the figure was out. Out of 15.44 lakh crores, 15.28 lakh crores came back as on 30/6/2017. It means 31,000 crore rupees came back after 30/12/2016 and up to 30/6/2017. The remaining 16,000 crores would have come back if the government had not stopped RBI from accepting demonetised notes except from Non-Resident Indians who were out of the country from 9/11/2016 to 30/12/2016 and accepted money with co-operative banks and Nepali banks and money deposited in courts. It is said 8,000 crore rupees are with co-operative banks. When NABARD completes its exercise of checking the genuineness of customers a decision will be taken about acceptance.
Demonetisation was remonetisation. Rules of exchange and withdrawal changed several times. People who trusted the government or Prime Minister and believed they can exchange with banks till 30/12/2016 or with RBI till 31/3/2017 lost. For people who had marriages the dream turned into nightmare. They did not have enough cash. Later withdrawal of 2,50,000 rupees was allowed for marriages. Banks did not have enough cash. Patients could not pay for medical bills or treatment. At least 120 people died waiting in queues.
On 8/11/2016 the three purposes of demonetisation were ending black money, ending corruption, and ending fake notes and terrorism. Fake notes were said to be fuelling terrorism. Attorney General Mukul Rohatgi said in the Supreme Court the government expected 4-5 lakh crore rupees will not come back. Some economists wrote 2-3 lakh crore rupees will not come back. All were proved wrong.
The talk of cashless or less cash or digital economy was an afterthought when people suffered due to lack of cash. It was making virtue out of necessity.
Some say demonetisation was a success because BJP won elections after that. They do not mention elections BJP lost. BJP’s victory in UP was due to various factors. Leaders of Congress, BSP and SP joined BJP and contested on BJP tickets. Congress-SP alliance did not have credibility and members of both parties at local level did not support each other. There was infighting within SP between Akhilesh Yadav and Shivpal Yadav which damaged SP greatly. Shiv Sena attributed BJP victory to money and muni (monk).
Black money continues. Corruption continues. Election Commission countermanded an election in R. K. Nagar because voters were bribed. Some Gujarat Congress MLAs switched to BJP. Those who were shifted to Bangalore claimed they were offered 15 crore rupees each to switch to BJP.
It was said 400 crore rupees were fake currency. RBI says it found 41 crore rupees of fake currency.
On 31/8/2017 GDP figures were out. GDP growth was 7.5% in July-September 2016. In October-December 2016 it was 7%. In January-March 2017 it was 6.1%. In April-June 2017 it was 5.7%.
Spin doctors of BJP and their supporters claim success. They quote various figures. One of them is 25% increase in the number of Income-Tax Returns. They do not mention most Returns are Nil Tax.

Updated: September 2, 2017 — 7:37 am

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