Demonetisation- aims and outcomes!!

The "D" word has  been synonymous with something notorious in the Indian parlance. The dusk of 8/11 marked an announcement on the same lines. Demonetisation - it stamped an expiry date of 50 days on 86% of the currency by value. The stated goals were- 1) Wiping out the scourge of black money from the face of the earth .2) Ending the menace of counterfeit currency which was mainly used by our sweet neighbour for terror financing and 3) Moving towards a transparent and cashless economy. The propaganda machinery was run full throttle showing how the corrupt were brought to their knees and the panic amongst the politicians and the rich. The common man standing in long queues and his pain was compared to that of the Jawan in Siachen and questioning the diktat was termed as immoral and Seditious.

Critics saw it as the last ditch effort to save the states of U.P and Punjab which political pundits had predicted to be out of reach of the BJP. This may or may not be true but undoubtedly it was the biggest gamble of our PM's career. The RBI and the banks were unprepared for an exercise of this scale. Cash crunch for daily expenses, long queues outside banks and ATMs and frequent policy changes became the order of the day. The public became restless and impatient when "Sonam Gupta Bewafa hai" memes started circulation. It would hardly be news that it was actually a 'safety valve'  designed to divert public attention from the crisis. Our Pradhan Sewak urged our country to just suffer for 50 days for the country and then see how Indian growth story gets the escape velocity of Jupiter😂😂

The New Year has arrived and the 50 day window has all but ended. 96.5% of the 14.5 lakh crore in old 500 and 1000 notes have returned to the RBI. The remaining is still being deposited via RBI counters which has witnessed long queues. The 50 day window witnessed fall in commercial activities, slowdown in the industry with large scale layoffs. The biggest victims were the people of rural areas who had little access to banking facilities. Agriculture witnessed distress sale and decreased sowing of the Rabi crop. The recent RBI directive to banks to ensure atleast 40% of new notes to rural areas is a step too little, too late.

The biggest objective of wiping out black money stands defeated. 2016 was the year which brought bumper riches to Bankers, Brokers and Income Tax officials. Their earnings were in the range of 15% to 50% of the currency. Political parties got the money required to contest elections. Counterfeit currency sure got a big jolt and the peace in Kashmir is an indication. The aim for moving to a cashless economy surely got a push.

Cashless economy with less than 75% literacy and predominant informal sector (86%) is a myth. Lack of banking penetration and financial literacy is also a roadblock. Introduction of  Rs 2000 note is retrograde step for a government aiming at checking black money. Overnight outlawing , instead of phased decommissioning entails too much ' collateral damage'. The poor and the most vulnerable suffered the most. A step like this should have been well thought and discussed. Clearly the implementation hurdles were not factored in the announcement. It's high time that the debate on success / failure of demonetisation be laid to rest. It would only increase divides and friction.