Not a day passes by when people don’t talk about demonetisation. Modi government took a step which changed a lot of things about the Indian economy. Three years ago, this big decision was taken in order to bring a change and stop corruption in India. But the question here is did this work or the decision went in vain?
What was demonetisation all about?
8th November 2016, a memorable day for all the Indians. Not because it’s the birthday of some great personality, but because of something historic happened. Demonetisation in India took place on this day.
This step was taken by the Modi government to weed out those who have black money with them. But the question here is did it work?
Some people say it worked to some extent others say that it didn’t. Many people were caught red-handed with bags full of cash which was obviously black money. There was a time when there was no cash anywhere as the government banned Rs. 500 and Rs. 1000 notes.
The old Rs. 500 and Rs. 1000 notes were banned by the Indian government and it was no more in use in the market. People were standing in long queues in order to deposit the old notes into their accounts. For a while, India became cashless as new notes were not introduced in the market and old ones were banned.
The commoners or the middle class were the ones who faced the maximum number of problems due to this decision by the Modi government.
Impact on the Economy
This event took place three years back, but it seems like the Indian economy is still under its impact. Here are some of the post-demonetisation events which occurred.
Black Money back to banks: This whole step of canceling the Rs. 500 and rs. 1000 was taken to stop corruption and to catch those who were involved in it. But looks like over 99% of all the demonetised currency notes returned to the banking system. RBI board who gave their approval for this later said:
“Most of the black money is held not in cash but in the form of real sector assets such as gold or real estate and this move would not have a material impact on assets.”
Now it seems like the step was of no use.
Is fake currency is there? : One of the major objectives of taking such a step by the government was to minimize the number of fake currency in the market. But it seems like even this was incomplete. The fake new design notes of Rs.500 grew fastest in 2018-19. The government has stopped printing the Rs.2,000 notes introduced after demonetisation in order to prevent the easy printing of fake ones.
Transactions in India are digitalized: During this period, when cash was the least preferred mode of transaction digital market rose sharply. The growth in the number of digital and card transactions is now growing at a much faster rate. This also brings bad news with it, the number of corruption cases is unknown now.
Economy Slowdown: The Indian economy has slowed a lot after demonetisation took place. The current slowdown in the GDP started with this. It led to a vicious cycle of job loss and lower-income.
These are some of the memorable events which took place in India. What do you think about this step by the Modi government? Share your views in the comments.