One year on: Should we really celebrate Nov 8 as anti-black money day?

When Prime Minister Narendra Modi announced demonetisation last year to get rid of "black money", the entire nation welcomed the move.

It's been a year since demonetisation was thrust upon the people of India. The BJP government is celebrating November 8, the first anniversary of the Union government's decision to demonetise high-value currency notes, as "anti-black money day" across the country. Well, one may ask the necessity of celebrating the day, moreover calling it as 'anti-black money day'.

When Prime Minister Narendra Modi announced demonetisation last year to get rid of "black money", the entire nation welcomed the move. The other reasons were to the purge the network of counterfeit notes and break up the terror finance network. The objectives of the government were laudable, but the people and the economic system paid price for it.

Deaths due to demonetisation and why is the government not sorry about it?

According to reports, the demonetisation move has claimed the lives of over 100 people. What made the matter worst was the incumbent government refusing to pay tributes to the people killed. Undoubtedly, opposition parties are up in arms to highlight the issue. During the parliamentary session after the demonetisation, Congress raised the issue in Rajya Sabha. "We have been saying for a long time that over 100 people have died because of demonetisation," said Ghulam Nabi Azad in Rajya Sabha.

"But the government refused to pay tribute to the deceased," he added.

A year after, Maharashtra Congress secretary Shehzad Poonawalla lodged a complaint with the NHRC. Poonawalla also said in his petition, "As a conscientious citizen of the county, we plea to this Hon'ble Commission to direct the Union Government to make a compensation of Rs 1 crore for relief and rehabilitation to the families of victims who lost their lives owing to the government's demonetization action. Hope that this commission gives justice to the families' prey to demonetisation."

The loss to the economy: Is there a plan to recover the loss?

Owing to demonetisation almost 87 percent of the money evaporated from the market. When the Prime Minister announced demonetisation to rid the nation of "black money", which really means unaccounted income, the entire nation welcomed it. The other reasons given were that it wanted to purge the system of counterfeit notes and break up the terror finance network.

Mohan Guruswamy, Chairman, Centre for Policy Alternatives Society, told OneIndia that "Demonetisation should be remembered as an act of utter foolishness. An act of great vandalism."

He explained that the RBI spent many months just to replace the high-value notes. There was bound to be economic costs for this prolonged anemia. The former Prime Minister Dr.Manmohan Singh, a top-notch economist, estimated the consequential contraction of GDP to be about 2 percent. He has now been proven almost on target. The official GDP figures are confirming this.

"Apart from the Rs.36000 crores, which is the estimated cost of the new Rs.500 and Rs.2000 notes. The loss of GDP will amount to about Rs.3 lakh crores. This is money that cannot be recovered ever. All the RBI got by way of counterfeits amounted to just Rs.42 crores, " he said.

Drive against black money a failure?

According to Reserve Bank of India's (RBI) annual report released last month, 98.96 percent of Rs 500 and Rs 1000 notes (by value) that were invalidated due to the demonetization exercise had been returned. The estimated value of the banned notes the RBI has "received" is Rs 15.28 lakh crores. This compares with the Rs 15.44 lakh crores of the invalidated notes that were in circulation as of 8 November.

Economist Arun Kumar, black money expert, in his book, 'Understanding the Black Economy and Black Money in India', says with demonetisation the black money the government was targeting is only about 1 percent of the black wealth held in the country and only 3.5 percent of the black income generated in 2016. He further said that even if the government managed to suck out all the black cash in circulation, it would not have much effect on the black economy which involves various activities in which black incomes are generated.

"It does not stop these activities from continuing. Moreover, 80 percent of the Rs500 and Rs1,000 notes ( which constituted 86 percent of the cash in circulation) was not black money, but the white money used by businesses and citizens."

Hence, the government better introspect the decision rather than celebrating demonetisation.

OneIndia News