You are here: Home » Economy & Policy » News » Demonetisation
Business Standard

One year of demonetisation: Hits and misses

From shortage of new banknotes to uncalibrated ATMs to people suddenly finding themselves standing for hours in queues, India started feeling the pinch

ANI  |  New Delhi [India] 

Demonetisation, Note ban

It was last year, when everybody in India suddenly got to know that most of their cash no longer had any value.

The old Rs 1,000 and Rs 500 notes - 86 percent of currency in circulation - were scrapped after Prime Minister Narendra Modi made an unexpected announcement during a surprise television address. He also gave the nation's 1.3 billion people a 50-day window to either deposit them into bank accounts or exchange them for minted notes.

Intended to be a surprise tactic to destroy the black market, the move didn't go as smoothly as planned. From shortage of new banknotes to uncalibrated ATMs to people suddenly finding themselves standing for hours in queues, India started feeling the pinch.

The move eventually started taking its toll on small businesses, farmers who reportedly couldn't buy seeds, taxi and rickshaw drivers who didn't have any way to receive payments and employers who were in a fix.

It's been 12 months since the announcement was made and by now, the economic impact of the has been discussed threadbare.

While the first quarter of created initial disruption in the Indian economy, industry as well as consumers eventually witnessed the positive impact of within the first year of its implementation.

Post demonetisation, analysts feared that the move would damage India's consumption story and slow down economic growth, but the turnaround came quickly, with domestic equity benchmark Sensex plunging over 1,800 points in eight sessions following the

According to the Reserve Bank of India's annual report that was recently released, all but 1 percent of Rs 1,000 and Rs 500 denomination banknotes invalidated on November 8, 2016 had been returned by the end of June, 2017.

The then attorney general, Mukul Rohatgi, while defending in the Supreme Court in November last year, had said that around Rs 4-5 trillion would probably not find its way back into the system.

However, with the RBI report stating that 98.96 percent of the money had returned to the system, the Opposition was quick to tag as a "failed" move.

Moreover, though was successful at wiping out all of the in circulation in the beginning, counterfeits of the new Rs 2,000 notes soon started emerging.

Meanwhile, the other main goal of disrupting the cash-centric economy was soon met by getting a larger slice of the population onto the digital economic grid.

When it comes to the debate on the move, the focus has always been on the economic consequences; not enough attention has been paid to the politics of this decision.

The shock move invited widespread criticism. The winter session of Parliament saw the Opposition parties locking horns with the government over demands for a vote on This tussle even washed out the entire winter session.

Now, the historic ban on high-value currency notes has approached its first-year anniversary, but the Congress-led Opposition still has a gap to close with the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) over the viability of the reform. The political mobilisation against the exercise is still proving to be difficult.

While the BJP is celebrating the one-year mark of Prime Minister Narendra Modi's mantra of a "corruption-free India" as an "Anti-Day" today, the Opposition is all set to protest against it by observing a "black day."

Speaking about the note ban, Congress leader and senior lawyer Kapil Sibal told ANI, "It was not demonetisation, but demonisation. The manner in which Prime Minister Narendra Modi declared currency ban, the result of that we are seeing today."

"Unemployement has increased, small business firms got completely destroyed and meanwhile, more than 100 people lost their lives in queues. The PM should now admit the negative impact of on GST. Their decision converted into white money. is the biggest scam in the country since independence," he added.

Echoing the same sentiment, Janata Dal (United) rebel party leader Sharad Yadav told ANI, "has been represented as a solution of black money, but the country was destroyed due to this. Employement went into a toss, real state went downhill, farmers got frustrated, 100 people died. Still, they are celebrating. Prime Minister implemented currency ban but Finance Minister is answering the questions."

However, the BJP till date hails as a great moral project to clean up the national economy.

Speaking about it, BJP leader C.

K. Bose asserted, "has been a historic, bold and necessary step taken under the leadership of Narendra Modi Ji. It not only curbed generation but also arrested the terror money in circulation. It had a multi-fold positive impact on the economy of the country."

"Yes, there were certain difficulties faced by the people. For any move, certain troubles and difficulties would come up but as a nation in a whole, we stood up for demonetisation," he added.

Bose also spoke about former prime minister Dr Manmohan Singh's recent scathing attack on the government, wherein he termed as a clear case of "organised loot and legalised plunder."

"If Dr. Manmohan Singh as an economist would have made a statement, we would have appreciated it. But it is Manmohan Singh, a politician controlled by Sonia Gandhi who is making the statements. So it has no value for the people of our nation. It was the first time in Independent India that black marketers were put in their place," he said.

"Mamata Banerjee is calling a disaster because her party was directly affected by it," he added.

UP BJP spokesperson Rakesh Tripathi also shared similar views over the

"The Indian public, by making Bharatiya Janata Party victorious in Uttar Pradesh and other states, have proved that had a positive impact. The parties who lost in the elections are troubled with and therefore are making such statements. The gave a new height to country's economy by creating more jobs," he said.

First Published: Wed, November 08 2017. 08:07 IST