On November 8th 2017, we completed a year since the infamous “demonetization” move by our Prime Minister Shri Narendra Modi along with the Reserve Bank of India was carried out; it sure comes as a shock that 365 days have been passed since that chaotic event which did not turn out to be as beneficial as it was visualized to be till date.
The opposition has been heard of terming this day as “Dhoka Divas” and are keen on observing the 8th of November as Black day for the Indian economy and as a day to mourn. The reasons stated for this move was mainly to eradicate corruption, to curb black money, to stop the illegal possession of money and also to create a Digital India. In a country like India, which is home to the 37% of the world’s illiterate population, it is of utmost importance that the concept of demonetization and digital payments be explained to the layman. Simply stating, demonetization (commonly called notebandi) is the act of ending something as the legal tender of the country.
demonetization as described by many economists around the world was a move that was strategized quite well. Everyone was in praise of the Modi Government. But in reality, the repercussions of the move were not positive alone. The actual impact was felt by the middle and lower middle class section of the society. So, to what extent this move has actually helped still remains in question. As every coin has two sides, the demonetization has been greatly welcomed by a few and also greatly criticised by few.
The uneducated sector not aware of the current happenings carelessly discarded all the notes of high denominations which were a great loss to their savings and to the economy. The poor and middle class households went berserk in running to and from the banks in a fit to exchange their currency. Since the RBI was lagging behind in the printing of new currency, the banking sector was extremely overburdened. It had become very difficult for every bank to handle such huge masses in such a span of time. This also greatly impacted the business sector and the people who depended on daily wages. The daily wage labourers were not paid for their work as there was a cash crunch and this indirectly affected businesses as most businesses rely on the former for day-to-day activities. It is also extremely difficult to explain the entire process of note ban to a layman and expect him/her to understand it which also made it cumbersome for people to accept the new Rs.2000 note as many people do not prefer to carry out transactions in such a high value.
Talking about how well demonetization benefitted the country, it’s safe to say that this move has stopped the funding of unlawful activities like terrorism. Such actions can be easily tracked by the government. Prior to announcing the note ban, the government asked the citizens to declare the income by the deadline method (30 October 2016). Post processing the results of this activity, the government received a great amount of information regarding undeclared income. After this move, the notes were banned in order to tackle all the undeclared and hoarded black money to stop it from being legal tender as absolutely no transactions can take place as the notes will cease to exist.
demonetization also forces people to declare their income and pay income tax returns on it. Making of a Digital India has also been one of the main agendas of demonetization. Promotion of opening of bank accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) in order to make banking services affordable to the poor, sky rocketed and also made it to the Guinness Book Of World Records for “The most bank accounts opened in one week” (18,096,130 accounts).
According to Union Finance Minister, Arun Jaitley, 99% of junked currency has now been identified with its owner. He also mentioned that among the mammoth impacts, one of them has been that the income tax returns rose over 25%. The acts of the opposition of calling 8th November as Black day was criticised by the finance minister and Modi by stating that no previous government has taken any concrete steps against black money alleging that the opposition kept the interests of the party over the general interest of the nation at a time when a move to curb corruption was the need of the hour.
In conclusion, the masses have suffered but it is forecasted by many economists that this move of demonetization will have long term benefits despite it being referred to as “organized loot”. The country’s economy has definitely experienced a hard time but it is also said that demonetization along with the implementation of GST will eventually make the economy more efficient. It’s just a matter of time for the masses of the nation to realise that the entire process of demonetization is a move that is implemented keeping in mind, the long term goals of the nation. The strategy implemented by Modi, though it has had a few bumps here and there, looks promising and shouldn’t be disregarded as a faulty measure without witnessing the end result.
-Contributed by Atreyee Chakraborthy
Picture Credits: ndtv.com