Demonetisation: Modi’s Promises vs Reality, a quick breakdown

Sonali PimputkarUpdated: Thursday, May 30, 2019, 02:23 AM IST
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An Indian vendor displays wallets made from replica prints of the demonetised 500 and 1000 INR currency notes prints for sale at a stall in Mumbai on November 22, 2016. India's Prime Minister Narendra Modi announced on November 8 that that 500 and 1,000 rupee ($7.50, $15) bills -- 85 percent of the cash in circulation -- would cease to be legal tender in a crackdown on fraud and tax evasion. The move -- which saw the notes withdrawn from circulation just hours after the announcement -- was initially welcomed, but frustrations have mounted in the largely cash-reliant country where millions have been left without enough to cover their daily needs. / AFP PHOTO / INDRANIL MUKHERJEE |

A year ago, Prime Minister Narendra Modi announced that the high denomination notes of Rs 500 and Rs 1,000 will not be a legal tender post-November 8 midnight. The government declared that scrapping the notes which amounted to 86 percent of currency in circulation would be an attack on black money and an attempt to push digitalisation and cashless economy. Though the debate on whether the move was really needed at all to fulfill the state’s aim is itself a question. There is a number of reports on the subject leaving people confused. On demonetisation anniversary here’s a quick reality check on demonetisation. Here you go.

Claim: The PM announced that after scrapping the notes of Rs 500 and Rs 1,000, ATMs and banks would be lacking cash for at least three days.
Reality: The period ATMs and banks ran out of cash not for days but for months. Nearly 100 people died because of cash-crunch induced anxiety and degradation.

Claim: Demonetisation would end fake currency and new notes of Rs 2,000 would have special security features.
Reality: The number of fake currencies has risen by 20 percent. 638 fake currencies of Rs 2,000 were seized. In addition to it, 485 fake currency of Rs 2000 was seized in West Bengal a day prior to the first anniversary of demonetisation.

Claim: Demonetisation will help in tax growth and the introduction of digitisation will help to boost the economy.
Reality: Gross Value Added (GVA), industry or sector, in Q3 was 6.7 and Q4 was 5.6 percent of FY17. While of FY16 was 7.3 percent in Q3 and 8.7 percent in Q4. The RBI spent Rs 17,400 in moping idle cash in FY17 and Rs 500 crore in FY16.

Claim: Demonetisation aimed to get cash into the banking system, resulting in the number of taxpayers. 
Reality: Not much has changed. The income tax collection was 20 percent in the financial year 2017 as compared to 16 percent in the year 2015.

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