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Narendra Modi has always been a prime minister in a hurry. In his zeal to fulfil his promise of transforming the Indian economy, he launched a slew of schemes such as Make in India, Start-up India and Jan Dhan, all within the very first year of coming to power. Even when he made what is possibly the biggest and most impactful economic announcement in independent India's history on November 8, 2016, he left very little space for the citizenry to respond. The PM's declaration that from the midnight of that day, Rs 500 and Rs 1,000 currency notes would no longer be legal tender, came late evening, much after normal banking hours, forcing people to queue up at petrol pumps, metro stations and other establishments that were still accepting the banned notes. Over one year since the note ban was announced, the government has tried to justify its implementation by leaning on reasons as diverse as black money and terror funding, GST and realty prices to sell the diktat to the people. Here is a recap of such justifications: November 8: Black money and fake currency In his speech announcing the implementation of demonetisation, PM Modi had said, “For years, this country has felt that corruption, black money, and terrorism are festering sores, holding us back in the race towards development. … To break the grip of corruption and black money, we have decided that the 500-rupee and 1,000-rupee currency notes currently in use will no longer be legal tender from midnight tonight, that is 8 November 2016.” So here he listed corruption, black money, and terrorism as the key reasons for demonetisation. For the people, however, it was an ordeal standing in long queues to exchange notes just so they could meet their day-to-day expenses. “I've been standing here (outside a bank) since morning, I have money but cannot withdraw. How is this going to change things when we won’t have money to buy food?” said a rickshaw puller standing in a queue on bone-chilling winter's day. However, according to RBI, banks got about Rs 8.45 lakh crore worth of scrapped notes till November 28, 2016. There was also talk about India’s economic security being jeopardised because of the growth of fake currency notes. November 27: Digital/cashless economy The demonetisation drive had some immediate and devastating effects, with a spate of deaths being reported among people lined up in serpentine queues and a prolonged cash-crunch threatening the socio-economic situation in the country. The Prime Minister, in his 'Mann ki baat' edition of 27 November 2016, dwelt at length about demonetisation saying it would put an end to the corruption of the privileged -- the rich and the resourceful who had hitherto enough opportunities to siphon off money. He declared that this was a national fight against black money and corruption. However, Modi went on to say that this move was designed to take India towards a digital economy, a cashless economy. This, even as the citizenry was struggling with a severe paucity of liquidity (read currency). A news channel reported that most ATMs had run dry and the few that were functional were confronted with never-ending queues. One banker from Agra said RBI wasn't sending enough small currency notes and that the new Rs 2,000 notes were not serving any purpose. December: Cashless or less-cash While the Prime Minister had stressed on cashless economy, Finance Minister Arun Jaitley had, on several occasions,claimed demonetisation was a drive aimed at achieving a 'less-cash' economy, as opposed to a cashless economy. While both the terms sound similar, there is a difference between the two. Following Modi religiously, a village in Dhasai in Maharashtra's Thane district, a predominantly tribal dwelling, became the state's first cashless rural habitat on December 1, 2016. However, not even a year down the line, the village started using cash again.
In other parts of country too, digital was promoted and PoS (point-of-sale) machines, swipe machines, mobile ATMs and such like were provided. Digital transactions did shoot up according to a NITI Aayog press release which said, "There has been a phenomenal 584 per cent increase (0.3 to 4.5 million) in transactions made through the Unified Payments Interface (UPI) since demonetisation. In the same period, payments using Aadhaar have also seen an unprecedented jump of 1,352 per cent (0.7 to 2.7 million)." December 27: Stop terror funding Demonstrators try to cross a police barricade during a protest against demonetisation organised by the Trinamool Congress The Reserve Bank of India was in no mood to be left behind in the race. RBI was probably quicker in changing norms for cash withdrawal and deposit than the government was, on doing flip-flops over demonetisation. The apex bank initially restricted ATM withdrawal to Rs 2,500 a day per card and later increased it to Rs 4,000 and Rs 4,500. However, it did allow farmers to buy seeds using old currency notes. As the first deadline to deposit the banned notes — December 31, 2016 — approached, Modi once again changed his narrative on demonetisation, offering a rather unexpected reason for the drive. On December 27, 2016, while addressing a rally in Dehradun, he said demonetisation was done to put a stop on terror funding. "With just one move on November 8, the world of terrorism, drug mafia, human trafficking and fake note smuggling was destroyed. Most people are for honesty; it is just a handful who are trampling them. We have waged this war to empower those who are being trampled," he claimed. Deposits in Jan Dhan account reportedly doubled to Rs 87,000 crore in 45 days post demonetisation. January 11: Widen tax base The deadline was extended and it was now Finance Minister Arun Jaitley's turn to deliver his narrative. And yes, it was another economic reason for demonetisation. On January 11, 2017, he said the note ban was done to widen the tax base. "Targeted verification of suspect substantial deposits is likely to widen and deepen the tax base," he told the parliamentary panel. He went on to say that demonetisation would also foster a transparent economy and pave way for better economic growth. “Along with other measures for increasing transparency and strengthening enforcement, demonetisation will pave the way for sustainable faster economic growth,” said Jaitley. January 26: Transparent Economy On the eve of Republic Day 2017, the then President Pranab Mukherjee hailed the government’s demonetisation move and said it would lead to a transparent economy. "Demonetisation, while immobilising black money and fighting corruption, may have led to a temporary slowdown of economic activity. As more and more transactions become cashless, it will improve the transparency of the economy," he said in his address. January 31: Realty prices are the devil By January end, we had yet another reason for demonetisation. Chief Economic Advisor Arvind Subramaniam added real estate prices to the list of drivers. On January 31, 2017, he said, "You do see a blip in real estate prices, sales and launches and of course some of it may be adverse to the economy but in the long, some of that could be good because the aim of demonetisation is to bring down real estate prices. On the short-term effect on the real estate sector through December-end, the Economic Survey said, "Prices declined, as wealth fell while cash shortages impeded transactions". July 23: Aid GST, grow GDP When realty prices weren't turning out to be a big enough a reason, Jaitley brought GDP into the argument. Here's what he said in February: “Demonetisation was a bold and decisive strike in a series of measures to arrive at a bigger, cleaner and real GDP.... There is greater integration of informal economy taking place with formal economy that leads to larger and cleaner GDP, that was our objective behind the decision on demonetisation.” Jaitley also linked the note ban to the launch of GST. On July 23, he said, “Demonetisation coupled with the implementation of Goods and Services Tax regime will make generation of cash a lot more difficult, help towards the objective by creating greater compliance and increasing digitisation,” Over the past one year, the Prime Minister and his men have been struggling to find a convincing reason to sell the demonetisation drive to the citizenry. Rapidly changing the 'triggers' every now and then has only given the impression that a desperate government has been clutching at straws to justify a move that seems to have caused more grief than good to the audience it was directed at. Worse, the response of the government to public anger has only fuelled the impression that Modi and his team were themselves not very sure about the motives of the note ban and whether or not its implementation achieved them.