Has demonetization been successful ?

The flagship revolutionary initiative of prime minister Narendra Modi last November called demonetization have gone into rough weather as the recently revealed results are not that satisfactory as they really were expected to be.

The way our prime minister during last November while declaring demonetization guaranteed the huge unearthing of the clandestinely stored black money in lakhs of crores, after the RBI’s revelation not the minutest percent of it has been recovered whereas about three hundred or more people have died while standing in queues of the banks under scorching sun to get their hard earned money exchanged for hours together even being hit several times by the police lathis. There was literal chaos all over the country as eighty-five percent of the currency comprising of 500 and 1000 denomination notes were declared illegal overnight resulting in over crowding in banks and closure of lakhs of small scale industries for want of new currency thus millions of workers becoming unemployed who finally headed for their respective hometowns.

Now the government says that about 99% of the demonetized money to the tune of Rs 15.28 had been deposited in various banks of the country till 30th June, the dead line fixed by the government. According to author Vivek Kaul it means that ninety-nine % of the black money instead of being burnt had been deposited in banks through various agents employed by these black money hoarders. But this is equally not true.

The fact of the matter is about 14/15 lakh crore currency that came into banks in total during the demonetization phase was actually the entire 86 percent of the circulated currency that was re-deposited by the people into the banks for the sake of exchange of the old currency including the five hundred and one thousand denomination notes. It wasn’t actually the black money. If at all black money has been deposited it was of negligible or of small proportion. The majority of the black money was used to purchase lands, houses, mansions, building and other assets.

In nutshell the 99% of the recovered money the government is talking about is not the black money but the actual money that was in circulation. Mr. Kaul says that as far as detecting the counterfeit currency is concerned, nothing much seems to have happened on this front as well. Data from the RBI annual reports indicate that a total number of fake 500 rupees notes (old series) and 1000 Rupees notes detected between April 2016 and March 2017 were 573,891. The total number of notes withdrawn stood at 24.02bn which means that as a proportion the counterfeit notes identified between April 2016 n March 2017 represent close to 0% of the withdrawn notes. Adds Mr. Vivek Kaul, in the previous year the total number of counterfeit 500 and 1000 rupees notes detected stood at 404,794 and this has happened without demonetization.

Conclusively it can be said that this huge demonetization effort that made people stand for days together outside ATMs and banks and led to so many deaths resulted in the closure of lakhs of small scale units and generated unemployment has not at all come true to the expectation of the peoples’ wishes who believed in the honest intentions of our policy makers at the helm and thought that not only will it result in capturing a huge quantum of black money but will also open doors for the economic future of the nation. But did it really happen is a moot point and rather a question ? Even today several hundred corporate houses and industrialists are on the government’s list of massive borrowers and defaulters of the government’s money to the tune of lakhs of crores and have not returned the same back to the government despite so much of hue and cry in the media. It is believed that if this borrowed money of the tax payers is actually returned back with penalties by these erring corporate houses and industrialists half of the problem of India’s unemployment would be resolved. Demonetization have been out rightly opposed by the economists of the country as according to them it would lead the nation into tremendous complexities and bottlenecks than prosperity as was being expected by those at the helm.

Sunil Negi