November 8, 2018, marks the second-anniversary of Demonetization in India. Two years back Prime Minister Narendra Modi took to national television to declare that the highest denominations of the currency notes of that time, i.e. notes of INR500 and INR1000 would no longer be of legal tender. This move was initiated by the Modi government to fight corruption and illegal assets. This move was also considered as one step forward towards ‘Digital India’.
Two years later, the report by RBI government shows that about 99.3% of the invalidated currency was returned to the banks. The black money that was in circulation in the market was transferred in the banks and was easily converted to white, as criticized by the Opposition.
As far as going cashless is concerned, data shows that currency in circulation increased to ₹19.6 lakh crore as on October 26, 2018, from ₹17.9 lakh crore on November 4, 2016. Cash withdrawals from the ATMs also increased. However, Mobile banking has also increased over the past two years, but the idea of a cashless economy or even a less cash economy is still far.
Small-scale, medium scale industries suffered the most. The businessman did not have the cash to pay off their daily wage laborers. Farmers did not sell any crops due to lack of cash with the public.
Two years down the lane, this is how opposition criticized the move,
Take your pick & replace his "formalising" with: 1. undermining 2. damaging 3. debilitating 4. weakening 5. crippling 6. devitalizing 7. diminishing 8. impairing
9. impoverishing 10. vitiating#DestructionByDemonetisation @BharatTiwari https://t.co/LVfFG1czqt
— Shashi Tharoor (@ShashiTharoor) November 8, 2018
Demonetisation was a self-inflicted, suicidal attack that destroyed millions of lives and ruined thousands of India's small businesses. The worst hit by it were the poorest of the poor, forced to queue for days to exchange their meagre savings: RahulGandhi#BJPKiVoteBandi
— Avinash Pande (@avinashpandeinc) November 8, 2018
— Chandigarh Congress (@INCChandigarh) November 8, 2018
In the central government’s defense, Finance Minister Arun Jaitley commented that the motive of Demonetization was the formalization of the economy and not confiscating the cash. He further stated that there is a misunderstanding of the motives amongst the public. According to him, Demonetization helped formalize economy.
As per the stats, Demonetization has not been proved helpful in any manner, except for an increase in the income taxpayers, which is the only positive impact that’s seen until now. Digital banking is not possible for India as a huge population of the country still trusts keeping cash in hand.
It has caused absolutely no improvement as far as curbing corruption is concerned. If we are talking about having a psychological impact on the people, yes it might have. But is the impact worth the 8000 crores spent in issuing new currency notes, about 100 people died due to the unavailability of cash, people lost jobs and GDP growth decreased by 1.5%? A little bit of collateral damage here and there also included people standing in queues for about eight-long hours, struggling for cash, not being able to provide for marriages, medication, and other necessary needs.