May 10, 2017

Has demonetization been a failure?

Demonetisation has worked beautifully for the PM and the ruling party. But what about the economy?

The objective of demonetisation was to
- reduce black money/ corruption
- fake currency/ stop terrorism / naxalism financing
- bring windfall gains of Rs.400,000 crores to the government
- increase tax revenues

- corruption has not come down
- terrorism / naxalism continues as before - infact it is worse now.
- entire money (or more?) returned back to RBI so no windfall gain to govt.
- pindrop silence from RBI and govt on how much money has come back
- only 12300 crores tax collected versus expected 100,000 crores.
- this means black money was converted to white at a very nominal cost.
- unorganised sector hit very badly/ yet to recover.

Further rationalisations - cashless economy or go digital blah blah. Everything now is back to pre-demon days.


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