December 8, 2016

Demonetisation: All pain and no gain???

For the last few days, reports in the media have been indicating that the banks may end up receiving the bulk of the demonetised 1000 and 500 rupee notes in a legitimate manner.

Economist Arun Kumar, who has done extensive work on black money, is optimistic that going by the present pace of deposit and replacement of 1000 and 500 notes, over 95% of the invalidated currency may come into the banking system. This effectively means that the entire “shock and awe” strategy of Prime Minister Modi, accompanied by so much pain and disruption in the lives of a billion people, ends up with very little black money being located and extinguished.

This will be seen as a colossal failure of governance and there are serious implications of this failure.

.... As of today nearly Rs 11 lakh crore of the 1000 and 500 notes are back in the banking system. There is another month’s time for the depositing of these notes. Kumar says if “the bulk of the money comes back into the system it will be seen as the most foolish decision by the government involving all pain and no gain”. He says the whole exercise will then simply be described as replacement of current stock with negligible demonetisation, which was the original objective.


No comments:

Post a Comment