The eighth day of November of our foregone year will forever be a date etched in the minds of 1.2 billion people of our country,when the word demonetisation became a household name.That was the day when PM Narendra Modi through his live telecast declared that 500 and 1000 rupees would no longer hold any value.Demonetisation kick started from that moment onwards as frenzy set in among the rich and the poor alike.Queues were starting to build up in front of banks and ATMS instead of cinema halls and liquor shops.The effect of demonetisation was in full swing as ordinary citizens feared for their white money while tax evaders feared for their black money.
The following days would prove to be hell for a section of society-the bankers.Crowds started to gather in front of banks as people wanted to exchange their old 500 and 1000 rupee notes for the brand new 500 and 2000 notes.The whole process however left the opposition parties and critics of the government unimpressed.Claims and counterclaims were made by the government and its critics about the success and failure of the move.
The immediate effect of the move hit the rich and poor equally.People with unaccounted cash hoarded away found themselves in a conundrum as one fine morning their tax evaded money didn’t even have the value of the paper with which it was printed on.In a country like India,where more than 50% of the population did not have bank accounts,mostly rural India,the banking sector had a herculean task of putting money back into the hands of the people.Daily wage workers and unskilled labourers bore the brunt of the the demonetisation effect as contractors found it hard to pay workers their wages.This was evident in from the large scale migration of migrant labourers back to their home states as work started to dry up.
The government’s move to clean the Augean stables of black money even though commendable, seemed to be flawed in execution.Economists and financial experts are a divided lot when it comes to gauging whether demonetisation is a hit or a miss.While many are skeptical about its long term success most of them have lauded the government for their effort to bring down the parallel economy ie black money.This isn’t the first time our nation is witnessing the experiment of demonetisation,as the same was carried out in 1978 when Rs.1000,Rs 5000 and Rs.10,000 notes were withdrawn by the then prime minister Morarji Desai in his effort to counter black money.
So is demonetisation a resounding success or did it misfire?
Two months down the line,queues have started vanishing in front of banks and ATMs,the cash-economy slowly limping back to normal.The hardships caused to people and the temporary setback to the economy are realities which the government must accept and introspect.The government’s act of shifting the goal post from ‘demonetisation’ to a ‘cashless economy’ has also raised a few eyebrows.Nevertheless,the government’s mission of bringing back hoarded black money into the mainstream economy has born fruit as almost 3 lakh crore of unaccounted money has now been deposited in the banks.
Will demonetisation succeed in the long run?
Only time will tell.