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Shifting on the goal post conveys a lot!

Posted in Featured, View Point

Published on September 08, 2018 with No Comments

The RBI annual report also discusses the fall in growth in India It points out that the ” growth slowed sharply after the post-demonetisation bulge of the preceding half and also reflected the pronounced deceleration in domestic economic activity in the first quarter of 2017-18.” In addition the Indians were seen passing through a phase of fear psychosis, who were made to rush to the banks against a time frame. Demonetization resulted in close to 110 people losing their lives as they stood in the serpentine queues to deposit their hard earned money. All this when the banks were also caught unaware of the decision of the government. Demonetization slowed down the economic activities considerably. India witnessed job losses and small & medium enterprises were hurt badly as the free flow of money got blocked due to demonetization which hampered their business activities. The small businesses suffered the most as the demonetization prevented free change of money in a hassle free money. A large number of people were deprived of their earnings and ultimately led to slowdown in economic activities. Small manufacturers and traders were not able to pay their staff for over three months as India witnessed a rationing of withdrawals from banks and the mode of electronic payment had not caught the fancy of many.
Responding to the RBI and opposition’s charges that demonetization was a a scam, Finance Minister Arun Jaitley justified government’s move of flushing out almost 85 % of the currency in circulation overnight. “Demonetization led to more formalization of the economy, more money in the system, higher tax revenue, higher expenditure, higher growth after the first two quarters.” He surprised everyone by writing that “The larger purpose of demonetization was to move India from a Tax Non-compliant society.” The finance minister in an obvious cover up didn’t mention any of the objectives that the Prime Minister had announced on the night of Nov 7 2016. “The disease of corruption and black money is deep-rooted in our society. These misdeeds of corruption and black money are the biggest obstacles in the path of eradicating poverty in our country. To free the country from the festering termite of demonetization and black money, we need to take some bold steps. From midnight onwards, which means from November 8, 2016, the 500 and 1000 denomination notes will no longer be legal tender.”
The continuous shifting of the goal post- from corruption & black money to tax-compliant society clearly indicates that the move went terribly wrong. What was termed as a “Masterstroke” by the ruling party was an ill conceived project. Prime Minister Modi failed to identify that there exists a difference between black money and black economy. The chunk of black money was with politicians and government workers. The politicians as well known had stacked their black money abroad. And cash in higher denominations is just one part of black money, with hoarders diverting their black money into property, jewelry and even in foreign currency. The drive was bound to fail as an ill conceived policy decision that lacked any sustainable plan for implementation.
Finance minister has not taken a rescue by advocating for cashless economy. India certainly is not ready for it. Where majority is not educated enough to adopt such means. In a nation where the government has to strive to build washrooms, a cashless economy is far from reality. Today, the Indian are feeling cheated as they were promised in 2014, that the new government will bring back all the black money stashed in Swiss banks and crack down on corruption was another major poll promise and was able to garner the votes. The Indian public too went through the 100 days of torment, stood in the long ATM queues to get the notes exchanged, all in the name of curbing corruption and black money, and today with each day the shifting of the perceived goal posts by the government only adds to the facts that the demonetization has been an exercise in futile.


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