When RBI published its annual report on August 2017, the writing on the wall met its true fate. The historic move by the Modi government to demonetize high-value currency notes was termed by many as a right move in the best interest of the nation, But it turned out to be historic blunder which has not yielded any significant results as expected. Every body has been waiting for the central bank to publish its report, Perhaps were hopeful that it would at least meet some of its objectives. But the finally the report from RBI showed that demonization exercise was completely ill sought and unwarranted. The Initial objectives behind demonetization were to clean the economy from counterfeit notes, black money, terrorism funding. Has our government stated objectives have been achieved? I think in the light of the RBI report the answer is an emphatic no.
However, BJP, as a national party has benefited heavily due to demonetization in the political sense, in contrast to the expected economic sense. In the hindsight the demonetization has been complete dampener for the economy especially in the informal economy, no surge in job creations but only aggravated the situation further, the unaccounted money held in cash is very minimal, so unearthing black money through this activity has been minimal , Terrorism and its funding has not seen any decline, the recent skirmishes across the border has only increased.
The shift in goal posts.
Since the report by RBI came out in the public domain, comments made by FM Mr Arun Jaitley is nothing but a laughing stock. Our honourable FM told that nobody understood the objectives of demonetization better than him, in his statement the foremost objectives expected from demonetization exercise is to convert cashless economy to digital economy. But however, the report suggests that Govt has fallen short of achieving even that also.
Highlights of the RBI report
1)99% scrapped note are back into the banking system ie means almost all the currency which was in circulation came back into the banks
2) Total number of fake 500 rupee (old series) and 1,000 rupee notes detected between April 2016 and March 2017 was 573,891
3) Withdrawn notes to the tune of 24.02billion, But in proportion to the identified counterfeit notes is close 0%.
4) Even in the previous year with out demonetization, the number of counterfeit notes identified was stood at 4404,794.
After effects of demonetization
Even my personal experience with the many of the small scale shop owners during proved that their business activity has been steadily declining, even their average sales in provision stores & hard ware shops has been witnessing a steady decline in sales around 30 to 40% compared to pre demonetization months. The 80% cash economy in the upcountry market has been hit massively. more over people are worried pump money to start new ventures, even they had stopped taking more stocks for their existing business. Profit margins have been hit heavily, that is evident from their delayed EMI payments.
The most critically affected are farmers and construction workers, the move to demonetize the currencies of 500 & 1000 proved like adding insult on to the injury especially the crisis faced by farmers across the country. I think BJP as a party has seen a mercurial increase in their coffers with over flow of contributions into their party funds. I think more than any Indian, the benefit of demonisation has been completely utilised effectively by the present ruling party. The Govt of the day should take accountability for the failure of demonetization, Instead of that govt is busy shifting their goal posts very frequently to cover up their failure.
A lot of concerns has been raised on the performance of the economy, especially the GDP is below the expectation , Job losses are heading north, Low private investments, Govt’s start-up, Make in India plans never took off as expected barring few, perhaps we need to acknowledge the govt going gung ho for making tall claims, successfully running campaigns in social media, public image.
Media’S act as a lip service of the Govt
The Modi Govt could have done many things better as they have a strong majority in the centre, instead of that Modi dispensation has been busy whipping up passions on nationalism & patriotism, Cow vigilantism & completely overthrowing the democratic credentials of our nation. People have voted for a strong governance, but in the last 3 years, performance has fallen short of expectations. I think we need to put the blame squarely on the media also.The role of media houses owned by major corporates are doing the Job of mere Lip service, acting as a PR machinery of the Govt, Media’s role in a democracy is to constantly act as a countervailing force, how ever in the last 3years media has been dancing to the tune of the Govt.