Doomed by Demonetization- an overall review

There are well-etched plans, that go through many revisions, fix their bugs, close their loopholes, and test their theories before going into execution at many levels. They require the smooth, co-operative working of many departments, and the unified vision of many more. They serve a purpose, a greater good that might look like a perilous change in the beginning but will soon prove to be a boon. In comparison to this grandiose description, and as we look at its shabby execution, Demonetisation looks like it was planned on a shady WhatsApp group on the night of 8th November 2016.

The primary goal of the note ban was to take the nation by surprise and expose all the unaccounted black money which could not have been exchanged in such big amounts. Well, the news about such money being found in the new 2,000 rupee notes in a Karnataka minister’s house soon after Demonetisation proves how that surely didn’t work out. Moreover, economist Arun Kumar, while talking to mentioned that only 1% of our black money was in cash form, so the whole exercise was a doomed attempt, to begin with. Makes you wonder when the facts so clearly show that the act was a failure, why did the ones we elected decide to carry out the whole ordeal with such conviction?

With the sharp fall in our GDP in the June quarter this year, falling to 5.7% from the 7.9% of last year, and some sections of the market like real estate facing catastrophic consequences; it is questionable if anything was achieved at all. As a developing nation, we rely on the primary sector more. Our textbooks deem agriculture as the backbone of our economy. Roughly 93% of our work force is employed in it, and it brings us about 45% of output. However, as an industry that conducted all its dealings in cash, it was badly hit. As if farmer suicides weren’t enough, we also decided to illegalise whatever little money they had. Moreover, the government had completely forgotten to consider how the supply of new currency was to reach rural areas, with no access to ATMs or digital modes of payment.

                                                                                         People standing outside bank

Arthakranti, a Pune based outfit, had claimed that they were the creators of this idea and had proposed this in a presentation to BJP leaders before the 2014 Lok Sabha elections. The organisation’s head, Anil Bokil, claimed that they had a 90-minute long meeting in July 2016 with the PM regarding the same. While neither the PM nor any cabinet members have refuted the claim, Arthakranti has claimed that their plan was implemented but not completely and that certain crucial parts of it were conveniently skipped. Not surprising anymore, is it?

JD(U) leader Sharad Yadav claimed that even Finance Minister Arun Jaitley was informed about the plan quite late. While Jaitley didn’t comment on it, he did not rubbish the claims either. It is also reported that the entire economic advisory faculty of the government was not expecting the backfire in the acceptance of the 2,000 rupee note. RBI had allegedly proposed the idea of new notes of 2000, 5000 and 10000 rupee denominations. Even someone with a basic knowledge of how numbers work could tell you why those denominations are impractical, and how it would make currency useless.

Tackling fake currency was the other issue that was going to be solved by Demonetisation. However, with the news of newer notes being so unrecognisable that even authorities didn’t know real from fake, of the fakes of new notes already being printed and brought in from Pakistan, and how an ATM dispensed notes by “Children’s Bank of India”, show us how unplanned and badly executed the whole act was.

The timing was a mess too. While the act needed an unexpected and sudden time to move to action, it chose the wrong time frame. November-December is the wedding and harvest season, which means a lot of white cash also gets stored in homes for emergency expenses and other requirements. Such holes in the planning make one wonder who we have entrusted our governance to, a bunch of blabbermouths with no understanding of how are their actions harming the country?

Demonetisation was a poorly planned and executed attempt at initiating digitisation of currency to make the system more accountable and transparent. While the intentions might have been good, an initiative of this magnitude should have been handled with a lot more responsibility than what was shown. This irresponsibility has cost many their livelihoods, great losses, and has caused the lowest recorded GDP under the Modi government.

Such grave mistakes that could have easily been avoided with proper strategy and precise execution, this just shows the lackadaisical approach that this government has towards the welfare of its citizens. The agonizing days of standing endlessly in queues and then going to 12 shops to get a change for 2000, are these the “good days” that we were promised?

Maybe, in theory, this could have been the act that changed the face of our economy and set us on the path of corruption-free development. However, looking at the consequences, the repercussions of the act being seen even 9 months later, the tremendous fall in economy and growth, one is bound to wonder if Demonetisation had any positives to it at all, apart from the pretty colours the new notes are being printed in.

Related posts: