The term 'Demonetisation' is just technical; the apt term to define the historic, tough, unprecedented and politically risky decision taken by Prime Minister Narendra Modi is actually 'Black Money Neutralization.' It’s a multi-pronged reform that the Indian government has unleashed, keeping in tune with its agenda of ‘Reform, Perform & Transform.’
The recent Reserve Bank of India numbers clearly establish that the demonetisation decision by PM Narendra Modi and execution by Finance Minister Arun Jaitley is a pathbreaking success. Success of any decision depends on fundamental objectives of making that decision. In short, it’s expected outcomes. As the government stated right at the beginning, there were three core objectives and many peripheral objectives to this massive reform.
The first objective was to neutralise fake currency, which was being used as a soft weapon by our enemy from across the border. There were reports of massive circulation of fake currency, sometimes up to 25 to 30% of the official currency in circulation. Fake currency was funding many clandestine activities and had to be stopped.
The demonetisation decision has evaporated the fake currency from the money markets overnight with the ban of the larger denomination notes. The heaps of cash stashes of fake currency were rendered worthless with one massive decision. This prime objective was met instantly with 100% precision.
The second objective was to neutralise black money. The unaccounted cash was running almost a parallel economy in the grey aisles of undeclared business and tax evasion. It was draining bank capital, funding political parties unethically, promoting massive corruption, negatively impacting governance and disadvantaging the honest tax payers. RBI figures establish that 99% of all the demonetised higher denomination notes returned into the banking system. It simply means, the black money hoarders have through many means got their unaccounted cash back into the mainstream banking system. They couldn’t simply burn it.
The tax enforcement agencies have initiated investigation over Rs 2.89 lakh crore deposits. There is an ongoing scrutiny of over 18 lakh accounts. The advance data analytics have identified 5.56 lakh new suspect cases and over 4,73,003 suspect transactions have been detected. An undisclosed and unaccounted income of Rs 20,213 crores has been detected and admitted.
Just about Rs 16,000 crore worth black money did not return to the banking system, post demonetisation.
All the above statistics indicate cleansing of the entire money market and a new-found fear in those who were hoarding unaccounted cash. Never in the 70 years of Indian history did the cash hoarders turned in their entire cash to the banking system to be accounted for. This would eventually lead them to own up and pay required taxes and even penalties. The second objective’s success is stupendous and unprecedented.
Demonetisation did not just fix the broken system by allowing all the black money hoarders to start accounting for their income, but it also formalised a large chunk of cash-led informal economy. It was draining tax revenue for the government and exploiting those who were working in these unorganised sectors.
The third objective was to destroy the funding channels to terror networks. Terror funding was primarily through fake currency and black money. Both have been chopped at the root level with the demonetization and tough new legislations against black money and benami properties have been brought into force. The third objective is also accomplished with surgical precision.
There are many peripheral objectives which have been achieved through demonetization. Some of them are: the dependence on currency reduced by 21% and a huge surge in the digital transactions is leading up to substantial savings to the end consumer and benefiting manufacturers. It has opened up many new avenues of employment through e-commerce and online business expansion.
Entire banking system is rejuvenated with cash flows and recapitalisation. Robust banking is the backbone of any economy and Indian banking has got a fresh lease of life through demonetisation. Crores of people at the bottom of the socio-economic strata for the first time have experienced banking services, financial institution connect, debit and credit cards and cash less transactions. It opened a new world of opportunities for them to save, spend and loan from the newly accessible financial infrastructure.
The social, ethical, moral and corporate accountability has been challenged for good. The entire economic ecosystem has taken the shock and withstood it. It highlights the strength of our domestic demand and economic fundamentals despite severe disruption. Demonetisation led disruption of traditional banking methods, regular transactional process, cash led trade. It has led to the much-needed investments into critical and modern technologies which were long being procrastinated by businesses & trade.
Adaptation & experience of concept stage technologies at mainstream transactional level has led to strategic leaps in accomplishing generational shift in technology usage. Today India stands at the top of rapidly transforming digital economies, leaving even China behind. Thanks to demonetization!
Opposition parties led by dead ender Congress party are still gasping for breath and they are still to recover from the shock of demonetisation decision by PM Narendra Modi. They do not even till today know what hit them. They were not prepared for this monster size of a decision as they are inherently habituated to policy paralysis for most of their six-decade rule.
None of the parties had a grand vision of India neither as a single market unit nor as a giant which can transform itself through disruption. After this historic and bold decision, they tried building opposition from people against it, however failed miserably. Even the poor, lower middle and middle-class citizens welcomed the decision and patiently stood in long queues as never expected of them by the opposition. Indians showcased amazing maturity and patience for a massive reform which was disrupting their everyday lives, which was never ever tested.
BJP has won from ward level to State Assembly polls and bypolls through this shocking demonetisation period and people across India chose BJP at every electoral opportunity in the last 10 months to govern them. It highlights the intention of the decision was clearly understood by the people and they reposed an unprecedented faith in the integrity and intent of PM Narendra Modi. Opposition continues to be clueless.
After the RBI released the numbers, the opposition has once again exposed their ignorance and their utter disconnect from common people by declaring this massive national exercise as a failure. They have to realise, this project has been driven by common people from across the nation and they have been the primary stakeholders for demonetisation.
By terming this entire exercise of demonetisation as failure, where the common people of India have sacrificed and contributed the most, Congress and its stooges are insulting the people of India and indulging in their recent favourite sport of ‘shooting their own feet.’