Did demonetisation hurt the poor the most?

According to experts, demonetisation hurt the poor the most.

New Delhi, Nov 8: How would you like to spend Wednesday--the first anniversary of the Narendra Modi government's most "shocking" decision--demonetisation? By celebrating the day to cheer the Bharatiya Janata Party (BJP) government's "risky" economic policy to fight against black money, corruption and terror funding, or simply mourning how it changed the fate of millions by pushing them to further poverty and uncertainty?

Well, all depends on how you weigh the pros and cons of note ban.

While former Prime Minister Manmohan Singh in Gujarat on Tuesday once again called demonetisation "organised loot and legalised plunder", finance minister Arun Jaitley insisted that the country had moved on to a much cleaner, transparent and honest financial system since the note ban was announced by PM Modi on November 8 last year by deciding to scrap high-value currency notes of Rs 500 and Rs 1,000.

As the political slugfest over demonetisation continues, especially at a time when crucial Assembly elections of Himachal Pradesh and Gujarat are scheduled on Thursday and December 9 and 18 respectively, there is no denial that it is the poor who suffered the most by the Modi government's "watershed moment".

In fact, when criticism against the Centre mounted over demonetisation last year, Modi went to the people and told them that the step was "pro-poor" and "anti-rich". But the critics defer to accept the PM's stand.

Writing for The Indian Express Pratap Bhanu Mehta, vice chancellor of Ashoka University, noted that "it (demonetisation) was a populist measure, done in the name of the poor. But like many revolutions done in the name of the poor, it hurt them by extracting the highest price from them".

Talking about how note ban impacted Gross Domestic Product (GDP) by two per cent, Mehta wrote,"Demonetisation was supposed to accelerate growth. It might, on a time horizon where causally attributing growth to demonetisation will be an unfalsifiable claim.

"But in the short run, it dented growth perhaps by as much as two percentage points. The human cost of a two percentage point slowdown in GDP growth is high. Demonetisation was supposed to be revenge on intellectuals, those know-nothings who have held India back. Turns out the predictions of most of those 'know-nothings' were not far off the mark."

The author went on to describe demonetisation as an "ill-conceived step".

"...a revolution that was not going to succeed, because it was, above all, an act of hubris. It was part of a political imagination that is closer to a technocratic authoritarianism: Combining great faith in technology with state power. The very limited success of demonetisation is reassuring in reminding us that reality takes its revenge on revolutionary hubris."

OneIndia News