So Indian currency ban led by Modi was a costly but pointless exercise?
The Reserve Bank of India has stated that 99.3 per cent of the demonetised 500- and 1,000-rupee notes were returned to banks and exchanged for new currency notes (“Indian currency decree does little to stop ‘black money’”, August 30).
Demonetisation was initiated by the government in November 2016, on the grounds that the amount of unaccounted wealth – an estimated 25 to 30 per cent of the currency in the country – would be uncovered. Prime Minister Narendra Modi said the money looted by many people over the 70 years since India’s independence would be exposed as a result of this demonetisation. However, the basic objective would seem to have been defeated, since almost the entire currency in circulation in the country was returned to the banks.
It would appear there was no “black money”, that is, unaccounted wealth, in the country – or it had been exchanged for the new currency through some machinations. And the Reserve Bank said the cost of currency printing doubled in the 2017 financial year on account of the new notes.
Ordinary people endured immense hardship for almost four months, standing in serpentine queues waiting to get legal tender for their own money. Farmers and small-scale businessmen were the worst sufferers, since many of their businesses ground to a halt. About 100 people died, according to media reports, some while waiting to exchange their savings for the new notes.
The demonetisation two years ago, therefore, was not necessary, the policy was not clearly thought out and the citizens’ woes were not addressed. Governments should be more circumspect about introducing such policies, which inconvenience citizens and can cripple the economy.
Rajendra Aneja, Mumbai