RBI data proves Prime Minister Modi's demonetisation failed on all fronts

A customer hands over cash to a merchant at a wholesale trading shop in Bengaluru. Indian shares ended higher on August 31 pulling back from losses earlier in the session as investors awaited GDP data for the April June quarter

In its annual report submitted yesterday, the Reserve Bank of India has made some shocking revelations on demonetization, that was announced by PM Narendra Modi on 8th of November-2016.

From the RBI annual report:Until June 30, 2017, specified bank notes (SBNs) were received by the Reserve Bank either directly or from bank branches / post offices through the currency chest mechanism.

"Prime Minister Narendra Modi has betrayed the people of India".

The party also demanded Modi's resignation over the demonetisation decision.

Having come to power on the promises of cleaning up a corrupt system existing under the Congress rule, Modi, with one decision, was able to enhance his reputation and create an image of a crusader against corruption and champion of the poor who took on those with coffers filled with ill-gotten wealth. Accusing the Opposition of creating confusion that demonetisation was exclusively to curb black money, Jaitley clarified that the objective of the massive exercise hadn't been confiscation.

Responding to the RBI report on Twitter, Rahul Gandhi, the vice-president of the opposition Congress party, called demonetisation "a colossal failure which cost innocent lives and ruined the economy", adding: "Will the [Prime Minister] own up?" And while the finance minister might say that opponents don't understand the logic behind demonetisation, the truth is nobody gets it better than those who bore the brunt of it and in some cases continue to. Also, the ban was to separate the forged notes from the system and another major reason to exercise the note ban was to take a step forward towards making the Indian economy cashless.

Chidambaram also said that none of stated objectives has been achieved through demonetisation. It added that as many as 7,62,072 pieces of counterfeit notes were detected in the banking system.

"While this shows that demonetisation exercise has not yielded a large one time gain, it has led to financialisation of dormant savings and helped bring down lending rates", said A. Prasanna, economist at ICICI Securities Primary Dealership Ltd in Mumbai.

"There are also long-term benefits from demonetization in terms of increasing income tax payments going forward and encouraging the use of digital payments over cash, a means of encouraging better tax compliance among businesses", Riser-Kositsky explained. The effect of the ban on bondage is on the right track.

The government had on November 8, banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the country.

The big question now is, where is the black money? Since a few small windows are still open for the return of demonetised currency, the final figure will certainly exceed 99 percent, which puts paid to the government's claim that demonetisation would deal a crippling blow to the black economy. Due to lack of cash after the note-ban, there has been a decline in terrorist and separatist activities in Chhattisgarh and Jammu and Kashmir. According to the report, the central banking institution's "net income from domestic sources decreased by 17.11 per cent from ₹52,157 crore in 2015-16 to ₹43,232 crore in 2016-17".



Other news