It is premature to pronounce that demonetisation was a disastrous move based on a single piece of evidence — that 99% of demonetised notes have returned to the banking system (“Shifting goal posts”, Sept. 1). Figures often hide more than they reveal. How much of the money deposited in the banks constitutes black money? It is disingenuous to assume that all this money can be accounted for by the depositors. It is likely that hoarders felt it was worth risking a tax probe and tried to salvage at least a part of their ill-gotten wealth rather than keep the banned notes which would have amounted to nothing but useless paper. Even if 10% of the money is proved to be unaccounted for, it will be a staggering amount.
It was not the withdrawal of high-value notes, but the absence of an adequate supply of alternative currency notes that caused so much disruption apart from choking the supply chains of the cash-dependent unorganised sector. The question we need to pose to the government should be this: was the RBI informed about demonetisation in advance so as to enable it to print and stock a sufficient number of alternative currency notes? Or did the RBI fail miserably in its currency management despite being in the loop?
V.N. Mukundarajan,
Thiruvananthapuram
The economic survey and the RBI’s annual report clearly indicate that demonetisation was a disaster. The objective of reducing counterfeit currency seems unachieved. Neither has the government tackled corruption nor terror funding. The government takes credit for promoting a cashless economy, but was that the main objective? If it was, then the lives of more than a hundred people and the loss of thousands of jobs was a huge price to pay. The move seems to have been a clever strategy before the Assembly elections in five States, in which it succeeded.
Siddharth Dwivedi,
Lucknow
Demonetisation was a well-intentioned strategy, but it failed to deliver the promised gains due to unrealistic goal expectations, and poor preparation and execution. That it would wipe out black money and corruption was a tall claim, forcing the Finance Minister to discover other virtues. Before introducing demonetisation, the government did not prepare well to plug other means of converting hoarded cash into new currency, such as the misuse of Jan-Dhan accounts. It did not estimate correctly the adverse impact of the move on micro, small and medium enterprises, and on unorganised labour. Further, implementation suffered with the RBI failing to give out legal tender.
However, the move was not a total disaster. There are more people in the income tax net, more tax collections, and it has created the environment for cashless transactions. Also, more revenue will come when detected cases of concealed income are pursued. But the common man is yet to see tangible gains in terms of job creation and poverty reduction.
Y.G. Chouksey,
Pune
The much-trumpeted demonetisation move was a well-intentioned one, but has proven to be a damp squib. It falls short of reaching its intended objectives. It is unfathomable how the lion’s share of black money miraculously found its way back into the system, the very thing that this scheme aimed to forestall. That the BJP still proclaims this scheme as being successful in spite of this is ludicrous, to say the least. One wonders whether the most corrupt were tipped off before this policy came into effect to preserve their ill-gotten gains. This “masterstroke” was supposed to be a body blow to the corrupt, but seems to have been nothing more than a flea bite for them.
N. Venkata Sai Praveen,
Punggol, Singapore
On top of the joke called demonetisation comes this shock of dropping GDP numbers. We know that the informal economy, which is the backbone for two-thirds of our population, was worst hit by demonetisation. With the formal economy absorbing the remonetised money almost fully, the informal economy has not recovered. Those at the lower levels continue to suffer because of a lack of livelihood opportunities, which is partly seen in rural distress. For gaining political ascendancy, the BJP has pledged the nation not just socially but also economically.
M. Balakrishnan,
Bengaluru
