Demonetisation: Latest Comments
Demonetisation by PM Modi was an illegal act. Please read this:
Conjecture on Decision
The economically irrational decision could not have been supported by RBI Governor or Jaitley. In my view both are sensible enough to have foreseen the adverse ramifications and indefensibility of the act. Then decision was presumably taken by Modi-Shah without consulting knowledgeable people.
Arrogance of Stupid
I once worked with a person who used to surprise me by his philosophy of believing that small time road side mechanics know more about engines than Ford or Honda. I call this philosophy as “Arrogance of Stupid”. Modi displayed this trait when he talked about his hard work being more powerful than Harvard.
Please listen to this:
Benefits of Demonetisation to India
Demonetisation brought the following benefits to India:
- Increased the direct tax net.
- It helped the government scrap a large number of shell companies.
Political Benefits to Modi & BJP
Through false propaganda about the benefits of demonetisation Modi won UP elections. Thus it was politically beneficial to Modi.
Losses to India
- GDP loss caused was about 1.5 to 2% which comes to approximately Rs 200000 crore.
- Hardships & deaths to the poor farmers, daily wage labourers & small industries.
- Read this excerpt from a report: Even the Bharatiya Mazdoor Sangh (the labour wing of the governing Bharatiya Janata Party) admitted: “As many as 250,000 units in the unorganised sector were closed and the real estate sector was badly affected, with a large number of workers losing their jobs.” For complete report please read the link: https://www.bbc.com/news/world-asia-india-41100610.
- The Centre for Monitoring Indian Economy had calculated the cost of demonetisation for the 50-day period from November 8 to December 30 as Rs 1,28,000 crore:
- Households (queuing, transaction cost): Rs 15,000 crore.
- Government & RBI printing cost: Rs 16,800 crore.
- Business (loss of business, sales): Rs 61,500 crore.
- Banks (staff cost): Rs 35,100 crore.
- Interest payment on black money that got converted to white: Rs 30,000 crore on approximately Rs4-5 lac crore.
Modi’s Claims versus Facts
It was claimed to end or reduce black money.
o Unprecedented quantity of black money is fueling BJP’s election campaigns, buying of votes and elected representatives.
o The estimated Rs 4-5 lac crores held as black money by individuals got converted into white. If it had remained as black money then banks would not have been paying interest on it. Since 2016 banks have been paying interest on it.
o Latest report says that the amount of money held by Indians in Swiss banks has increased by 50% to over Rs 7000 crore. Most of it is obviously black money.
With government’s electoral bond scheme inflow of black money to political parties (primarily BJP) has been legalized. Since funds with political parties as also disclosure of identity of donors to political parties cannot be obtained through RTI, Indians can in no way know how much of black money is coming to BJP. Thus transparency has been deliberately eliminated by legislation!
It was claimed to reduce terror funding and reduce stone pelting in Kashmir. The facts show massive increase in terrorism and stone pelting.
Cash less Economy
The exercise was claimed to reduce cash transactions and increase the formal economy. As per latest report cash in the Indian economy has become more than Rs 19 lac crore. It was about Rs 17 lac crore prior to demonetisation.
Removal of Fake Currency
The fake currency was not a major portion of the black money existing. It was claimed that this will be caught and removed from the economy. The fact is that the fake currency got deposited with the RBI and got converted into legal white money! It caused a loss of approximately Rs 10,000 crore to India. Fresh fake currency notes of Rs2000 and Rs 500 have entered the economy.
- Modi government will not come out with facts on the entire exercise & keep claiming that it was a great act through false propaganda. The amusing part is that forget ‘Modi-bhakts’ and bought media, a large number of ignorant people believe the false propaganda.
- The opposition has not pursued the matter strongly enough.
- No white paper by the government or an apology will come from the government.
- The only solution to get the truth out from the lies being promoted is through legal recourse. India needs the Judiciary to act in the case on the grounds that a policy decision was taken illegally and it was against public interest. I am sure in US Trump could not have been taken such an illogical act because the judiciary would have saved the US citizens. India needs strengthening of institutes to prevent recurrence of such acts against public interest. In a democracy the public must know the truth.