The demonetisation of high value currency notes has created a lot of misery in the country. There is no way of knowing whether this decision of the government by itself has either reduced black money, or is successfully facilitating a move to a digitised cashless economy.
What is clear, however, is that it was a hasty move which has been badly implemented. Not a day goes by without the government making new exceptions or announcing new measures to deal with the consequences of demonetisation.
After a voluntary disclosure scheme for black money and the demonetisation of high value currency notes, the government has now announced an amnesty scheme, whereby those with black money can declare it, pay a 50% punitive fine on it, and have the rest sequestered in bank deposits to withdrawn over a period of time.
The rationale for such an amnesty scheme, which can end up converting money which had become waste paper into half of its earlier value, is unclear - except that it seems one more way of mopping up revenue.
The impact of demonetisation is evident to everyone who has stood in bank or ATM queues. Daily wagers have suffered a loss in income, the informal sector has been badly hit, trade has suffered, and there is simmering public anger for being unable to transact essential business.
Demonetisation, in fact, induced a slow-down of the economy. Its downward impact on the GDP in this financial year has been estimated from 0.3% to 3%. Former Prime Minister Manmohan Singh has said that according to his conservative estimate, growth in India is likely to slow down by 2% at the very least.
The banking sector has been paralysed, with its entire functioning being reduced to changing old notes or counting currency to the extent of limited state-mandated withdrawal. On top of this, banks have to face public ire, as there isn't enough new currency or cash in their treasury chests to meet the public demand.
Watch Prof. Sudipto Mundle of the National Institute of Public Finance and Policy and former member of the Monetary Policy Advisory Committee of the Reserve Bank of India discuss the fallout of the demonetisation move.
- Losing the plot: what Bhangor farmers' stir says about Mamata's land policy
- #IWillGoOut: On 21 Jan over 20 cities unitedly march against sexual harassment
- Sheena Bora murder: CBI court frames charges against Indrani, Peter & Sanjeev
- Mass rape of Adivasi women in Bastar: Why are human rights body and women's panel mum?
- What killed the 6 pilgrims at Ganga Sagar? State says heart attack, PMO tweets stampede
- You may want to be clever like Birbal, but it's Chanakya who is inspiring many
- Heard of the love meter? You will in Khalid Akhtar's 'Love in Chakiwara'
- Snowflakes of Time review: This Sibal is the superior poet in the family
- Om Puri's memory deserves better than the sleazy biography his wife wrote
- Om Puri is finally free of the Chakravyuh we built around his life and death
- Kohli and Dhoni: A study in contrasts
- The biggest FIFA World Cup ever - 48 teams for 2026, will India make cut?
- O captain! My captain! There will never be another Mahendra Singh Dhoni
- SC axes Anurag Thakur as BCCI chief: the clean-up in Indian sport begins here
- Anurag Thakur ousted from his post as BCCI president by Supreme Court
- Why we should send Bill Gates to Mars
- Trumpus Andronicus? What the Byzantine Empire can tell us about the rise of populist leaders
- The number of House Democrats boycotting Trump's inauguration just keeps increasing
- 8 men as rich as half the world says Oxfam report. Is there a way to fix this stark inequality?
- No room for dissent in Pakistan; liberals face risk of being persecuted