Six years on, jury is still not out on efficacy of demonetisation – Times of India

NEW DELHI: Jury continues to be not out on the choice to demonetise excessive worth foreign money notes on November 8, 2016, with the federal government claiming it has helped higher formalisation of the financial system whereas critics saying it has did not curb black cash and scale back dependence on money.
On November 8, six years in the past, Prime Minister Narendra Modi had introduced the demonetisation of outdated Rs 1,000 and Rs 500 banknotes and one of many key targets of the unprecedented determination was to advertise digital funds and curb black cash, moreover eliminating terror funding.
As per Reserve Financial institution information, foreign money with the general public has jumped to a brand new excessive of Rs 30.88 lakh crore an October 21, indicating that money utilization continues to be substantial even six years after the demonetisation transfer.
At Rs 30.88 lakh crore, the foreign money with the general public is 71.84 per cent larger than the extent for the fortnight ended November 4, 2016. On November 8, 2016, Prime Minister Narendra Modi had introduced the choice to withdraw Rs 500 and Rs 1,000 denomination notes with the final word purpose of decreasing corruption and black cash within the financial system.
The State Financial institution of India in a analysis report stated the share of Forex In Circulation (CIC) in cost techniques has been declining from 88 per cent in fiscal 2015-16 to twenty per cent in 2021-22 and is estimated to go down additional to 11.15 per cent in 2026-27.
Consequently, the digital transactions‘ share is constantly rising from 11.26 per cent in 2015-16 to 80.4 per cent in 2021-22 and is anticipated to the touch 88 per cent in 2026-27, SBI report had stated.
Criticising the Modi authorities’s demonetisation determination, Congress president Mallikarjun Kharge in a tweet stated demonetisation was promised to free the nation of black cash.
“However it destroyed companies and ruined jobs. 6 years after the ‘masterstroke’ the money obtainable in public is 72% larger than that in 2016. PM is but to acknowledge this epic failure that led to fall of financial system,” he stated.
Based on Jayati Ghosh, Professor of Economics on the College of Massachusetts Amherst, USA stated none of those targets has been achieved.
“It’s not shocking as a result of the logic behind the transfer (money is the reason for black cash), the design of the transfer (with out recognising the essential position of money within the casual financial system that sustains round 85 per cent of the inhabitants) and the implementation (sudden and excessive with out information of and preparation by the general public businesses and banks) have been all fully flawed,” she stated.
In the meantime, Soumya Kanti Ghosh, group chief financial advisor at SBI, in a tweet stated: “The bounce in digital has considerably slowed down the expansion of foreign money in circulation. As % of GDP, it’s now at 11.8%,
LocalCircles, in a report stated, six years after demonetisation of excessive worth foreign money to weed out black cash in circulation and test the expansion of the parallel financial system, the decision continues to be not clear whether or not this gigantic step has certainly delivered its set aim.
Anecdotal proof reveals that persons are nonetheless paying or accepting black cash in actual property transactions. Individuals are nonetheless promoting and shopping for merchandise like {hardware}, paints and lots of different family and workplace paraphernalia and in addition delivering providers with out correct receipts, it added.
Following the withdrawal of the then prevailing Rs 500 and Rs 1,000 notes as a part of demonetisation on November 8, 2016, the federal government had launched new Rs 2,000 foreign money notes as a part of re-monetisation. It additionally launched a brand new sequence of Rs 500 notes. Later, a brand new denomination of Rs 200 was additionally added.
In worth phrases, the share of Rs 500 and Rs 2,000 banknotes collectively accounted for 85.7 per cent of the entire worth of banknotes in circulation as on March 31, 2021, as in opposition to 83.4 per cent as on March 31, 2020.

Leave a Comment