Sudhanva Shetty Shetty
Writer, coffee-addict, likes folk music & long walks in the rain. Firmly believes that there's nothing more important in a democracy than a well-informed electorate.
“So, in this fight against corruption, black money, fake notes, and terrorism, in this movement for purifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this ‘mahayagna’. My dear countrymen, after the festivity of Diwali, now join the nation and extend your hand in this Imandaari ka Utsav, this Pramanikta ka Parv, this celebration of integrity, this festival of credibility.” – Prime Minister Narendra Modi, announcing the note demonetisation, 8 November 2016.
On 8 November 2016, Prime Minister Narendra Modi announced the demonetization of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series – essentially, 87% of India’s currency.
Six months after demonetization, the country struggles to determine whether demonetization was a beneficial move or not. It is a popular belief that the move was good politics but bad economics. The move reaped the ruling Bharatiya Janata Party rich harvests in Assembly elections in Uttar Pradesh and other states, while at the same time negatively affecting most aspects of the economy. A major obstacle in analyzing the effects of demonetization is the lack of credible or extensive data on the same – it has not been provided by either the Finance Ministry or the RBI. One can only hope that more data will be revealed in the near future so that a detailed, in-depth analysis of the aftermath of demonetization can be made.
It is widely accepted that its stated goals of combating black money and terrorism have been either overhyped or unmet. Furthermore, in the weeks after 8 November 2017, the government transformed the rhetoric from one that revolved around tackling corruption to one that revolved around the need to digitise India’s economy. While this in itself was criticized as a cop-out, even when it comes to digitization, the numbers are unimpressive, with the number of digital transaction falling throughout 2017 to pre-demonetisation levels.
Demonetisation has also claimed the lives of many people. While the exact number is still unknown, it is above 100. The move hit the poor, the farmers, and those citizens employed in the informal sector the hardest.
The main consequences of demonetization can be classified under five headings:
After the Prime Minister’s announcement, the Governor of the Reserve Bank of India (RBI), Urjit Patel, and Economic Affairs Secretary, Shaktikanta Das held a press conference.
— Narendra Modi (@narendramodi) November 8, 2016
My analysis of India's demonetization. I feel pretty sure both Amartya Sen & Jagdish Bhagwati will agree with me. https://t.co/Dg1g1Rdpqo
— Kaushik Basu (@kaushikcbasu) November 28, 2016
— Saikat Datta (@saikatd) December 23, 2016
#PresidentMukherjee welcomed bold step of Government of India which will help unearth unaccounted money & counterfeit currency
— President of India (@RashtrapatiBhvn) November 8, 2016
Demonetisation of ₹1000/500 notes & remonetisation with new highly secured currency is a big step towards benefiting Indian economy.
— Arun Jaitley (@arunjaitley) January 8, 2017
Data (not that anyone cares these days) says that Cash usage is going back to its pre-demonetization level.
Imaginary cashless economy? pic.twitter.com/UzgCKDTl3W
— Srivatsa (@srivatsayb) April 15, 2017
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