A year after demonetisation

Zafar Choudhary. Updated: 11/9/2017 4:48:05 PM Edit and Opinion

Little did one imagine that there could be an anniversary celebration of a chaotic event such as demonetisation? But the art of branding was never known as this intelligent before the coming of Narindra Modi led BJP government at the Centre.

So, the eighth of November is now “Anti-Black Money Day” for the government and “Black Day” for the opposition. But what is it exactly for the common people. Did it bring pains or gains?

In an overall analysis, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system. Benefits of these may not yet be visible to some people. The next generation will view post November, 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in. When the country is participating in “Anti-Black Money Day”, a debate was started that whether the entire exercise of demonetisation has served any intended purpose. This narrative attempts to bring out positive outcomes of demonetization in short-term and medium-term with respect to stated objectives.

One of the important objective of demonetisation was to make India a less cash economy and thereby reduce the flow of black money in the system. The reduction in currency in circulation from the base scenario reflects that this intended objective has been met. It is common knowledge that cash is anonymous. When demonetization was implemented, one of the intended objectives was to put identity on the cash holdings in the economy. With the return of Rs.15.28 lakh crore in the formal banking system, almost entire cash holding of the economy now has an address. It is no more anonymous. From this inflow, the amount involving suspicious transactions based on various estimates ranges from Rs.1.6 lakh crore to Rs.1.7 lakh crore.

Now it is with the tax administration and other enforcement agencies to use big data analytics and crack down on suspicious transactions. The reduction in incidences of stone pelting, protests in Jammu and Kashmir and naxal activities in the Left Wing Extremism affected districts are also attributed to the impact of demonetisation as these miscreants have run out of cash.

All these conflict are not entirely run by money as the bruised emotions are far more powerful motivating factors but there is no denying the fact that demonetisation has helped check the commercialisation of conflicts. In the final analysis, demonetisation was not bad idea but it’s hasty implementation inflicted the pain.

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