Demonetisation: Boon or Breakdown for the Economy??

Let's skip the usual introduction part. We all are very well aware about Prime Minister Narendra Modi's demonetization of notes to combat corruption and terrorism. While this decision is appreciated by most Indian citizens, effect however, appears to be mixed.

-Firstly, we need to understand that Black Money, by its very nature, is hard to estimate accurately; therefore the gain from demonetization is also difficult to quantify. 

-We also need to understand that black money is not just in the form of hard cash. If someone has black money, they are likely to keep it either in the form of property, gold and jewelry, foreign currency or any other possessions or they have pushed it out of the border through the 'hawala' route.

Well, talking about the good part of demonetisation -

• Demonetisation has become a party pooper in Delhi-NCR as cash-based alcohol sales in bars, pubs and ‘ahatas’ have been going down since the announcement.

• Definitely a hit towards Fake Currency, the same cannot be said about Black Money. 

• Death of drug mafia and terror networks.

• This decision will help institutionalize the Real Estate Sector bringing more transparency in the Indian real estate industry.

• Demonetisation has come down hard on dowry seekers. According to a report a groom’s family in Bihar sought Rs 20 lakh dowry from bride’s parents. Now, demonetisation drive has dissolved bridegroom's family demand.

For the ones who can see only the brighter side of demonetization, here I go :

• Bankers are being overburdened with the exchange process and handling the restless queues.

• Weddings are being cancelled and are getting postponed as bills to wedding halls, florists and caterers are typically paid in cash across India.

• During announcement of demonetisation PM Modi said that, for few hours Rs 500 and Rs 1,000 notes will be acceptable by petrol pumps, hospitals, medical stores and for paying bills. While there have been reports of doctors denying treatment because patients had only 500 and 1000 rupee notes with them.

• People abandon their work to exchange money.

• Very difficult for more than half the population who are not well versed with the card transactions.

• In rural areas, where 833 million Indians or 69% of the population lives, the journeys will be long and arduous. We are possibly seeing the greatest churning of the subcontinent’s population since the Partition of 1947.

• And most importantly, people have DIED. Died waiting in ques, died in hospitals who didn't took old currency, died working in banks. 

How can you justify DEATH because of a poorly executed policy in the name of greater good?? 50 deaths have been reported due to demonetisation ( excluding all the fake dead news). Yet, this is only a 'little inconvenience' so we ought not unzip our mouths and criticize.. as we get branded as anti-nationals. 

Shortage of change issue. 

The new 2,000 rupee banknote is like a mighty, impractical sword when all one needs is a knife. Armed with this forbidding violet bill, Mumbaikars can scarcely buy food or medicines since few retailers can provide change.

"My daily requirement is a loaf of bread which comes for Rs 22, a litre of milk for Rs 50, vegetables worth Rs 50 and maybe Rs 40 for transportation. My weekly requirement of medicines is worth Rs 150. Each item is available at a different outlet. Which vendor will give change for Rs 2,000? This new note is of use only to those who hoard black money. For the middle class it is a showpiece that has no utility," said Anita Sitlani, a resident of Bandra.

The delayed arrival of Rs 500 notes and shortage of Rs 100 notes has hit all segments from homemakers to daily wagers, blue collar workers, middle class and the elite. Uday Singh, a security guard at Lokhandwala Complex, wondered what his family back home in Badaun, UP, will do with his monthly despatch this time. "There is no method of exchanging such big banknotes there yet. If in Mumbai I find it difficult how will villagers manage?"  (Source : The Times of India)

Do read an article published in Wire  by Rashmi Venkatesan here, if your views on demonetisation are still unclear.

Here are some questions which needs to be addressed :

   1. If people across India are facing problems due to a decision taken by government of India, which even lead to deaths, then who should be blamed and should be responsible for that?

   2. If government believes that black money is held predominantly in the form of notes of large denomination (500,1,000),why introduce a new note of a higher denomination (Rs 2,000)?

   3. There are still millions of people who are living in rural areas, who are not having access to bank facility. How is Govt going to handle such situations?

   4. If black money was aim of demonetisation, does Rs 2,000 note defeat the purpose?

The government recognises this is a problem but it is attempting to paper it over by invoking the spirit of voluntarism and sacrifice. We are told that a measure of “inconvenience” is necessary for the nation; temporary pain is “for larger gain”, as parliamentary affairs minister Venkaiah Naidu put it.

 Whatever the aims of the scheme, it is clear its impacts will be massive and hard to predict. No one is against curbing black money BUT if we literally had only this option of sudden announcement to grab those with black money then there should be proper arrangements and sufficient currency flow. Unless cash supply is set right quickly, the distress could deepen. It will take years to fully understand the effects of this shock to the economy, which politicians have insisted is just a "temporary inconvenience"


This video below will surely raise questions in the minds of demonetisation supporters. 

Well, I leave it up to you to decide whether it's a boon or breakdown for our economy?

 Take care peeps.!