Thursday, January 27, 2022

Opinion: Has Demonetization Failed?

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Aashna Rohira
Currently pursuing CA. A passion driven person. Loves expolring various aspects of life. My mantra-Learing is a never ending process,learn learn till you are alive.

November 8th 2016 is the day that has been engraved in the Indian history as a day of the bold move taken by our Prime Minister Narendra Modi. This day was marked as the day when demonetization hit India as a thunderbolt. There was widespread chaos and panic In India. People even rejoiced the bold move as it was about to bring in the black money running in the parallel economy in circulation.

As we all know that every coin has flip-sides so did demonetization had. It had its own repercussions and the boldness to blow in the black money in the economy. This move was criticized as well as was appreciated by many economist. The view regarding demonetization is little vague.


The Pros of the policy:


Everyone is quite aware that around 10% of the population holds around 80% of the wealth whereas the remaining 90% holds the 20% of the wealth. This imbalance was not getting balanced since a long time. In fact, the imbalance showed an uprise. Cash has always been a source of money laundering activities given rise to corruption and crimes. In the past there has never ever been a regularized system implemented to catch hold of the black money. Because of this black money holders always were at a dominating position. This sudden outbreak of demonetization paved a way to curb the black money circulation in the economy. As this money never comes under the circulation the government loses on a huge chunk of taxes on the same which is turn used for infrastructure, education, medical aid and public welfare remains generally out of the reach from the hands of the government. This in turn then impacts the development of the country. This policy created a lot of inflow of wealth for the banks that were at the knee of the NPA issue. This move even made the country take its baby step towards the cashless economy and would help the countrymen embrace the digital economy.

The Cons of the policy:


Though demonetization is not a full proof policy to curb the millions of black money graved in the parallel economy. It will to an extent only influx the black money in the economy and the dream of a nation free from corruption is still a distant dream. The policy failed miserably in terms of administration and in turn overburdened the bank officials. It created clutter all around the nation leaving the masses of the country to wait to have their own money being removed from one pocket to another. The 50 days created lots of hardships among the common man. It was the common man that was victimized because the real owners were was not the common man but white collared folks. The targets had are very well equipped to do away from this trap and the policy hence could not in real terms held the black money holders. In fact to an extent demonetization created another market for black money circulation in the society. The high value transactions were broken into the small transaction and were illegally distributed among the flock of small time black marketers. This smart move by the targets would never bring in them under the radar of the black money holders. Apart from this, these cunning men hold this money in the form of foreign assets, gold and real estate so the whole point of cash being flushed in the economy falls out of the preview all together.

The cash crunch in the economy created hardships amongst the common man but demonetization was highly appreciated by them and they showed their support in the fight against corruption. This move tough with a few flaws has somewhere bought in a ray of hope against corruption that was flowing in the economy like a poison which was slowly killing the development of the country. This move made the hard earned savings of the housewife’s from years bought into the radar of black money which is not justified to an extent.

The last day of the Demonetization which was marked by the Prime Minister’s Speech

On the New Year’s Eve where the Prime minister addressed the nation expressed his gratitude towards the countrymen in supporting his move towards his fight against corruption. He had grief for the folks who had to spend hours in the queue to seek their own money and against some serious crimes that were reported during the entire process. The Prime minister even addressed that 24 lakh people reported their Income above 10 lakhs. This was one of the best examples in the India history where the countrymen and the Government fought shoulder to shoulder to fight against a cause that was deep rooted within the economy. In multiple raids conducted in 50 days, over 3000 Crore have been seized.

All in all to sum up, every revolution or a fight has a gestation period to show its results. Yes, tough not a full proof plan to eradicate corruption but must say, demonetization is a very bold move to start off with the fight against corruption that India was longing to begin since decades. Let’s hope that India wins the battle soon.

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