Demonetisation Anniversary: Boon Or Bane
Demonetisation cannot be dealt in isolation rather the consecutive steps are taken to curb black money can help to understand it in its right perspective
Photo Credit : PTI
It becomes imperative to analyse the success or failure of demonetisation after one year of its existence. There are some who term it as a step taken in haste by Modi government for furthering his image as a crusader against corruption. This group holds it responsible for unemployment, low growth rate, problems faced by people in the queue for their own money. They even question the timing of the announcement and hold it as a source of mass corruption etc There are others who take it as a bold step taken with the good intension to streamline the unorganized economy. They justify their step by the patience shown by people while standing in long queues with discipline. They hold price stability fiscal discipline and UP election as a referendum shown by people in favour of this decision.Both these groups polarize the opinion of the public as per their own convenience. It has become a galvanizing force for the coming Gujarat elections so political rhetoric too cannot be ruled out.
Before shooting the messenger a few observations need to be put forward to straighten the things for the understanding of a common man, firstly, it was not the first time that demonitisation was recommended for curbing the black money and secondly earlier it resorted with low volume in high denominations. People question about jobs curtailed in the informal sector but no one questions why informal sector was allowed to flourish to such gigantic volumes? Should the wrongdoer be allowed to continue with malpractices? Was political will needed to curb the bull by horns? The failure of demonitisation was a big risk government had undergone if the scheme failed. The transition from no curbing of the black economy to drastic steps to control it cannot be an easy cake for anyone to enjoy because change has never been accepted easily by our society. Demonetisation cannot be dealt in isolation rather the consecutive steps are taken to curb black money can help to understand it in its right perspective.
It may be held clearly the demonetisation was an attack on the stock of money and not on the flow of money. The flow if not curbed can automatically lead to more stocks. It is the flow that needs to be streamlined. In other words, it may be said that unless cash withdrawal from economy takes place the demonitisation may yield a little. Cash strengthens the informal economy as it is easy to hold back and leads to black wealth in the country. It is a fact that we cannot have cashless economy overnight because of the big unorganized sector, low banking infrastructure and less internet facility but definitely, we can attain a less cash economy The less cash economy was promoted through the usage of plastic money, digital and other forms of money were encouraged.
This was followed by another big attack on black money in the form of GST. It is another game changer for the country where manufacturers, traders and service providers were placed under one tax umbrella. Where in continuous changes are taking place to accommodate the opinion of the business community, states and other stakeholders. Besides the tax rate, it involves internet knowledge on the part of stakeholders. The government established GST portal and tried to educate people on GST but much remains yet to be done.
The formulation of Benami Transaction prohibition act 2015 was another attack on black money. It is definitely an improvement over Benami transaction act1988. It amended the definition of Benami transactions. It came into effect on Nov 1, 2016. Freezing of shell companies also conveys the intensions of the government to control the black money.
The move to attach Aadhar to bank accounts can be one step further in this direction. All these steps are interrelated and convey the intension of the government but the haste with which they were implemented shook the confidence of business people.The salt on the wound was rubbed by the opposition who termed all these steps as useless by spreading various rumours about the intension and implementation.
These steps are in fact a direct attack on corruption not on business yet the lack of understanding on the part of stakeholders can be termed as a big lacuna, the short-sighted approach of opposition by propagating self-interest over national interest and the quick successive decisions along with slow down of international economy lead to suspicion about these steps. People rate intensions and rhetoric.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.