Second anniversary of Demonetization

 Second anniversary of Demonetization

anniversary of Demonetization

On coming November 8 2018, it will be second anniversary of Demonetization, which was one of the hardest decision of BJP lead Indian Government. But still it is hot topic to endless discussion as it left different-different impression on everyone. Indian Prime Minister suddenly announced banned on Rs. 500 and Rs.1000 notes  by which may have his several political and economic motives. But for Indian citizen it was a sudden attacked in their regular life. With this announcement India's struggle began with demonetization. Despite after two year most of the citizens can never forgot those days which was imposed on them by the Government. With this decision entire population was divided into two part, one part of them was in favor and other was in against. It gave a biggest chance to opposition political parties and to Modi's opponent to come up with his condemned, even former Prime Minister Manmohan Singh and former RBI Governor Raghuram Rajan who were never actively participate in any political debate or issue came up with their opposite opinions. but demonetization came up as two stripe sword with one side it was popular to curb black money in our economy and make India cashless to step toward digital India or use plastic money and at the second strip labor class people lost their jobs, slowing down the economic growth, giving people nightmares of the long queues and the inability to spend liquid cash freely.

At the other political front on which Indian Prime Minister Narendra Modi was alleged to effect election campaign of the opposition parties in Utter Pradesh. The opposition alleged that it was only a political stunt to impress a class of population and to make difficult to continue their election campaign in their constitutional area. They further alleged that it was a hasty and premature decision taken by the BJP leads.

Now on the coming second anniversary BSP supremo Manavati said, “Instead of observing this day as ‘anti-black money day’ should observe it as demonetization forgiveness day.” as because BJP by their stubborn approach put country in “Emergency-like situation”.    (Indian Express).

There may further more political reason and effects but here our concern only to analyses it with only economic outcomes.

As we discussed above that it was come up with mixed effect on economy, at few points it praised and at another it was objectionable. It was depend upon the status and outlook of analyst.

On Black Money: It was one of the most important points on which people support demonetization. Was it associated to end the black money in India? However almost 99% of money was deposited back to RBI. But Indians were more concern to get back black money from foreign and Swiss banks. Which was the most strongly promised by the BJP while their election campaigning but BJP haven't took any strong decision on it. People had no clue that the Government is planning to lose their own pockets.

On Terror Funding activities: 

The second most praised reason to support demonetization was its role in curbing terrorism by increasing the obstacles in terror funding. terrorist organization were use fake Indian currency notes to fund their projects and the government believe they have all source to copy and print Indian Currency notes, by changing currency their all available sources and currency become useless to them. But it was not proved that how much cash reserves of several terror groups were severely hit by demonetization.

Use of Plastic and online money methods

Demonetization and Digital India: 

To promote India toward cashless economy was another popular reason, which may help to push India use plastic money to buying groceries, to pay utility bills during demonetization period. However as the flow of cash came back in market people again started to use currency notes for their day to day transaction. I don't think demonetization had effective in such scenario because people starts to use digital money because of there comfort not because by pushing, secondly modern cultured and youth were already using the plastic money in form of credit and debit cards..

Income Tax & revenue generation:

In the post effect of demonetization the 9.1 million new taxpayers were added into the slab which was 80% rise over the past years. This increased number of tax payers in the country has been credited to the Demonetization.  

Personal Finance:

People were started to facing trouble to spend their own money. People were forced to find out different payment options, that time there were few mobile apps present but people were unaware. For those who are already using plastic money or digitally paying their utility bills , groceries through mobile apps it was no big deal but for those who never had these facilities, no phone, no internet no such debit/credit cards They had to stand long queue out of banks to exchange their money. Suddenly their livelihood become difficult. Few of people lost their be loves while standing queue outside bank.

Effect on GDP:

The Indian economy is a cash-driven economy mostly manufacturing and construction industries are run behind the cash and demonetization has largely affected its growth by suddenly stopping of cash flow in these industries. The GDP growth rate of 8.01% in 2015-2016 fell to 7.11% in 2016-2017 after demonetization.
 

Small business unites.

Demonetization had a desolate effect on Indians Medium, Small and Micro Enterprises. Most of the medium and small enterprises turned towards digitization, however, the micro industries were affected by the worst of its wrath. The micro industry owners could never of a part of huge black money and they can not pay their labor digitally. Many micro industry workers returned back to villages and the growth rate of these companies went low. A major portion of the Indian workforce is a part of the informal economy.  All their expenses are fulfilled by cash and demonetization has resulted in a lot of them losing their jobs due to unavailability of cash.
 

Conclusion: Any law/policy maker should keep in his mind that what he is making will be going to affect someone’s life. Anyone should not feel penalized by any of the law especially if it is concern his livelihood. 

Demonetization has been praised as well as criticized on various grounds. A number of opposition were there in implementation of the policy. Initially, it came up with the problems related to less liquidity, unemployment, loss of growth, and a temporary halt to major economic activities.

In the long term benefits we can consider people are tilt to use online method of transaction. Further it is expected that it may improve our economy by increasing tax payer, reduce black money, reduce currency transaction cost, develop banking structure and etc. There are still have lots of uncertainty in its long run effects.


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