Demonetisation: One Year After
Towards a Synoptic View
Sukla Sen
sacw.net – 28 November 2017
http://www.sacw.net/article13578.html
Prefatory Note
Demonetisation is, beyond doubt, the most talked of action taken by the
incumbent Narendra Modi regime, as yet, which came to be in place in
May 2014 , just over three and a half years back replacing the UPA
regime, with the Congress at the head, soundly defeating it in the
national poll held a while earlier.
One of the major promises made by Narendra Modi, and his party BJP,
during the poll campaign was to end the policy paralysis under the UPAII , led by, scholarly, soft-spoken and rather reticent Dr. Manmohan
Singh, who, btw, had never ever won a direct election, at whatever level.
The alleged paralysis, in turn, was at least partly an outcome of the
various corruption scandals that the old regime got embroiled in.
Modi, a fiery and raucous orator, a complete contrast from the public
persona of Singh - in very many ways, rather expectedly used this
opportunity to the hilt.
1
2, 3, 4
5
6
7
Be that as it may, November 8 2017 was observed by the various
opposition parties, including the Congress, as a black day, terming
demonetisation as a Modi-made disaster. The BJP, on the other,
celebrated it, in response, as the anti-black money day.
8, 9, 10
So, it'd be quite in the fitness of things to make a factual evaluation, even
if from a specific standpoint, of the measure, its actual impacts and to
what extents it has succeeded or failed to meet its initially, and also
subsequently, stated goals over the span of the last one year.
The announcement
In a shock and awe move, Prime Minister Narendra Modi
announced [today, Nov. 8, late evening] withdrawal of Rs.500
and Rs.1,000 notes in a bid to check black money and crossborder monetary transactions of counterfeit currency.
“Notes of Rs.500 and Rs.1,000 not valid from midnight
November 8, 2016,” said Modi in a late-evening address to
the nation, evoking strong reactions from the man on the
street to his political opponents.
11
Prefaced with some pep talk which included a laundry list of the various
welfare schemes introduced by his government ostensibly for the benefit
of common Indians and his determination to fight corruption, the shock
and awe rather burst forth:
To break the grip of corruption and black money, we have
decided that the five hundred rupee and thousand rupee
currency notes presently in use will no longer be legal tender
from midnight tonight, that is 8th November 2016.
12
While the tag shock and awe was quite apt if the reaction of the lay public
is taken as the criterion, the other qualifier surgical strike – as
emblazoned in the very caption of the subject news report, implying
precision targeted lethal attack (with no, or at the most rather minimal,
collateral damage), was quite visibly utterly misplaced.
Reportedly, as a consequence of the move, 86% of the currency was
overnight sucked out of the Indian economic system, which had been
heavily cash dependent - with the cash-to-GDP ratio being over
13% and, as per one recent estimate, 97% of retail transactions are
cash-based.
Thus, the announcement just triggered panic and chaos all around as
regards how to go on with one's daily, even if in so many cases rather
miserable, life.
Critics, however, did compare the move with firing cannonballs to kill
mosquitoes.
13
14
15
16
17, 18
The goals of this earth-shaking measure were, however, pretty tersely
laid down:
This step will strengthen the hands of the common man in the
fight against [I] corruption, [II] black money and [III] fake
currency.
He, however, had also, elsewhere, talked of four goals:
fight against corruption, black money, fake notes and
terrorism.
So, fight against terrorism constituted the fourth goal.
12
12
The rest of the speech was made up of a list of modalities of
implementation and a final emphatic appeal to Indian citizens to ignore
the temporary hardship in order to fight corruption and black money so as
to ensure that the nation's wealth benefits the poor.
The Political Context
In early 2011, India saw the triggering of a series of massive protests
against corruption in high places at the initiative and under the leadership
of Anna Hazare, a self-styled Gandhian from Maharashtra backwater. The
central demand was to get a new law legislated and enacted to appoint a
2
(non-elected) non-party effective overseeing body, both at the central
and state levels, in order to monitor and eradicate corruption.
The campaign spilled into 2012, because of perceived government apathy
and, at times, active hostility.
Eventually, however, the government and the parliament had to give in,
at least very substantially, and the Parliament of India enacted the Lokpal
and Lokayuktas Act, 2013 in December 2013.
But, by that time, the image of the then incumbent regime had got
severely soiled.
And, this anti-corruption campaign provided strong tailwind to the main
opposition, Hindu nationalist, BJP and its prime leader Narendra Modi in
the early 2014 poll campaign.
Along with the theme of Hindu nationalism, good governance,
development, job creation etc. etc. the issue of black money was also
emphatically harped upon.
19
In one video clip, which has since gone viral, the Prime Ministerial
aspirant Modi is heard claiming, in his signature style, that if the black
money stashed in foreign banks by thieves and looters is brought back to
the country then every poor of the country is going to get richer by Rs.
15-20 lakh just like that. Of course, the Congress was the culprit
overseeing and effecting this loot. And if he comes to power he'll
immediately ensure bringing this huge heap of wealth back to the
country.
The then national president of the BJP, Rajnath Singh had reportedly
promised to do this in the first 150 days. As per another, he had
promised to do that in just 100 days.
20
21
22
It is rather needless to point out here that after the BJP in fact coming to
power nothing of that sort happened.
Of course, a Special Investigation Team (SIT) was appointed to unearth
black money stashed in foreign banks, in July 2014, but only under the
instructions of the Supreme Court.
But, not a single rupee of black money came back from foreign banks.
Not a single list of people having suspicious accounts in foreign banks was
made public by the government.
Not till November 8 2016.
(Not till today.)
23
On the other, a major high-profile economic offender, Vijay Mallya, with a
number of serious charges pending against him, had smoothly slipped
away to London, in early 2016, from under the very nose of this regime.
Prior to that, another high profile economic offender, Lalit Modi, publicly
acknowledged having sought and received help from External Affairs
Minister Sushma Swaraj and Rajasthan Chief Minister Vasundhara Raje
while in the UK, where he had earlier escaped to.
24
25
Demonetisation: One Year After 3
After coming to power at the Centre, Modi persisted with developing an
unabashedly business-friendly image promoting development, without, of
course, abandoning the theme of Hindutva (Hindu nationalism).
A rather revealing representative illustration is how this regime
persistently tried to nullify the peasant-friendly amendment effected via
the Land Acquisition, Rehabilitation and Resettlement Act, 2013 by
repeatedly issuing ordinances to bypass the hurdles posed by the upper
house of the Indian parliament.
Another poor-friendly Act, National Rural Employment Guarantee Act, had
been publicly scoffed at by Modi.
26
27
All these led to the government being labelled as a Suit-Boot ki Sarkar.
The label appeared to have stuck all the more as Modi had strutted in an
allegedly Rs. 10 lakh suit with his own name written all over with gold
thread to greet the then US President Barack Obama, on a three-day trip
to India having been invited as the Chief Guest at the Republic Day
function in 2015.
Even Modi's pre-election promise, sort of further endorsed by the then
BJP national President Rajnath Singh, of bringing back Rs. 15 lakh for
every (poor) Indian from the foreign banks turned into a popular butt of a
joke in the social media and also in the real world.
So much so, the new BJP President Amit Shah, considered to be too thick
with Modi, was constrained to issue a clarification of sorts that it was only
a political jumla (or customary empty campaign rhetoric).
This, in turn, would attract a hail of flak.
28
29
30, 31
More importantly, soon after, in an early February poll for the Delhi
assembly, the BJP had to suffer a humiliating defeat.
This was further accentuated by a resounding loss in a Bihar poll by the
end of the year.
32
33
An astute politician that Modi is, that set the stage for repositioning the
brand Modi, without too much tweaking the product itself.
Apart from continuing with the image of an unrelenting (economic)
Reformist, as has been currently highlighted in the act of single-minded
pursuit of the (disruptive) GST (and also, for that matter, the celebratory
din over the, apparently economically unviable,
Ahmedabad-Mumbai
Bullet Train, India's markedly improved ranking by the World Bank in
terms of ease of doing business
and upgrading of India’s sovereign
ratings by Moody’s, while maintaining stoic silence over the slippage in
Global Hunger Index and the widening gender inequity, which rather
compellingly underlines that ease of doing business and ease of living life
are just not the one and the same thing), albeit with a somewhat
fluctuating emphasis, a calibrated dose of populism, with two
interconnected constitutive elements, is to be added now.
One is a pro-poor stance, and the other is an enhanced emphasis on
Hindutva, as would be graphically illustrated in the choice of Ajay Singh
Bisht aka Yogi Adityanath, a fire-eating and utterly controversial head
34
35, 36
37
38, 39
40
41
42
43
4
priest of a major Hindu temple, as the Chief Minister of UP, the most
populous Indian state with the highest number of parliamentary seats and
the subsequent virtual ban order on cattle sale in cattle markets.
The rather stunning act of demonetisation is the most dramatic and eyecatching component of the former element.
44, 45
46
47
Past History of Demonetisation in India
There were two demonetisations in the past.
The first time India had demonetisation under British rule on January 12
1946.
In the post-war scenario, demonetisation of high denomination notes was
effected following in the footsteps of several foreign countries, including
France, Belgium and the UK itself, ostensibly to fight against black market
money and tax evasions which had understandably assumed enormous
proportions.
Interestingly, even then the Reserve Bank was reportedly not in
alignment and the outcome appeared to be a failure:
The measure did not succeed, as by the end of 1947, out of a
total issue of Rs. 143.97 crores [sic] of the high denomination
notes, notes of the value of Rs. 134.9 crores [sic] were
exchanged. Thus, notes worth only Rs. 9.07 crores [sic] were
probably ‘demonetised ‘, not having been presented.
48
The next time, it was on January 16 1978, under the Morarji Desai
government (of the Janata Party) with H M Patel as the Finance Minister.
The declared aim was broadly similar. Rs. 1000, Rs. 5000 and Rs. 10000
notes, a rather rarity in those days, were demonetised. Understandably,
the common people were not at all affected. Yet, it triggered chaos and
long queues before the banks. Only three days had been allowed for
exchange of old notes.
The then RBI Governor, I G Patel, had very interestingly noted:
such an exercise seldom produces striking results. Most
people who accept illegal gratification or are otherwise the
recipients of black money do not keep their ill-gotten earnings
in the form of currency for long. The idea that black money or
wealth is held in the form of notes tucked away in suit cases
[sic] or pillow cases is naïve. And in any case, even those
who are caught napping—or waiting—will have the
chance to convert the notes through paid agents as
some provision has to be made to convert at par notes
tendered in small amounts for which explanations
cannot be reasonably sought. But the gesture had to be
made, and produced much work and little gain.
Governor Patel, additionally, indicated that for some people in the Janata
government the demonetisation was a measure specifically targeted
48
Demonetisation: One Year After 5
against the allegedly corrupt predecessor governments or government
leaders.
The outcome, apparently, was nothing to talk of.
48
Whose Idea, This Time?
While, in absence of any definitive info, it is hard to pinpoint wherefrom
the idea emanated this time. One can only engage in informed
speculations.
But, even then, one is on a far surer ground as regards whose idea it was
not.
Raghuram Rajan, an economist of considerable international repute, who
was the Reserve Bank of India (RBI) Governor from Sept. 5 2013 to Sept
4 2016, i.e. almost up to two months before the declaration of
demonetisation, has since gone on record saying that on being asked he
had opined against the move both verbally and also in writing making out
that the short term costs of the measure would considerably outweigh its
long term gains. Yet, he had listed out a number of necessary steps to be
taken for best implementation in the event of his advice being ignored.
These also appeared to have been just overlooked.
"I was asked by the government in February 2016 for my
views on demonetisation, which I gave orally. Although there
might be long-term benefits, I felt the likely short-term
economic costs would outweigh them and there were
potentially better alternatives to achieve the main goals. I
made these views known in [no] uncertain terms," Rajan
wrote.
He added that he had handed over a note to the government
outlining the potential cost and benefits of demonetisation as
well as alternatives to achieve similar aims.
He further said: "If the government, on weighing the pros and
cons, still decided to go ahead with demonetisation, the note
outlined the preparation that would be needed and the time
that the preparation would take. The RBI flagged what would
happen if preparation was inadequate."
49, 50
51
His successor Urjit Patel was, at that time, quite new in his seat,
occupying it for just over two months. So, plausibly, he could have had
not played a major role here.
In any case, here is a report giving out the official RBI version of its role
in the decision making:
52
SO far, the Government has suggested that the decision to
withdraw 500-rupee and 1,000-rupee notes came from the
Reserve Bank of India. But in its submission to a
Parliamentary panel late last month, the RBI, agreeing with
6
the Government’s rationale behind the move, has made it
clear that it was the Government which “advised” it to do so.
“Government, on 7th November, 2016, [just the day before
making the announcement, not by the RBI, not by the Finance
Minister, but by the Prime Minister] advised the Reserve Bank
that to mitigate the triple problems of counterfeiting, terrorist
financing and black money, the Central Board of the Reserve
Bank may consider withdrawal of the legal tender status of
the notes in high denominations of Rs 500 and Rs 1,000,” said
the RBI in a seven-page note submitted on December 22
[2016] to the Parliament’s Department Related Committee of
Finance headed by Congress leader M Veerappa Moily.
Here is another interesting nugget from an analytical note:
But in this case, Central Board [is supposed to have] played a
crucial role as demonetisation happened on their
recommendation. That is [at least] what [the] law says as per
Section 26 (2) of RBI Act. Again repeating it:
53
(2) On recommendation of the Central Board the [Central
Government (in original text)] may, by notification in the
Gazette of India, declare that, with effect from such date as
may be specified in the notification, any series of bank notes
of any denomination shall cease to be legal tender…
I mean the whole exercise is so confusing. One knows that
just 2 persons from RBI (Governor and 1 DG) knew of the
exercise. They were part of the Central Board but not the
board. The Full Board as we know was informed by the
government at 6 PM on 8 Nov 2016. So [that] one can say:
“The Central Board based on government orders
recommended the government to declare that Rs 500 and Rs
1000 currency have ceased to be legal tender….”.
...
Previous two denominations [read: demonetisations] were via
ordinances and did not require RBI Board recommendation as
government ceased them via fiat. This time also it was fiat but
in a round about [sic] way.
As regards whose idea, there are (somewhat divergent) reports that one
Anil Bokil, a mechanical engineer turned financial theorist and currently
heading a Pune-based group Arthakranti Sansthan that advocates
financial reforms in India, had suggested it to an attentive Modi back in
2015.
As per his claim, he had put forward a, more than sixteen-year old fivepoint plan, including one of replacing all taxes by a single point 2% tax on
all transactions that should be routed only through banks.
Demonetisation: One Year After 7
None of the other points appear to have been paid any heed to. He had
also recommended scrapping of Rs.100 notes.
It makes a nice story for the media, but that's all as it appears.
54, 55, 56
Here is quite another story, apparently, planted by the regime's spin
doctors:
Prime Minister Narendra Modi handpicked a trusted
bureaucrat, little known outside India's financial circles, to
spearhead a radical move to abolish 86 percent of the
country's cash overnight and take aim at the huge shadow
economy.
57
Hasmukh Adhia, the bureaucrat, [then Revenue Secretary and
now appointed as Finance Secretary on Nov. 6 2017 ] and
five others privy to the plan were sworn to utmost secrecy,
say sources with knowledge of the matter. They were
supported by a young team of researchers working in two
rooms at Prime Minister Modi's residence, as he plotted his
boldest reform since coming to power in 2014.
58
When announced, the abolition of high-value banknotes of
500 and 1,000 rupees came as a bolt from the blue.
...
The 58-year-old served as principal secretary to Mr Modi from
2003-06 when he was chief minister of Gujarat, establishing a
relationship of trust with his boss and introducing him to
yoga.
...
Mr Adhia was named revenue secretary in September 2015,
reporting formally to Finance Minister Arun Jaitley. In reality,
he had a direct line to Prime Minister Modi and they would
speak in Gujarati when they met to discuss issues in depth.
...
Immediately after the address, Mr Adhia sent a tweet: "This is
the biggest and the boldest step by the Government for
containing black money."
The boast harked back to Prime Minister Modi's election vow
to recover black money that had resonated with voters fed up
with the corruption scandals that plagued the previous
Congress government.
Over more than a year, Prime Minister Modi commissioned
research from officials at the finance ministry, the Reserve
Bank and think-tanks on how to advance his fight against
black money, a close aide said.
...
8
Under Mr Adhia's oversight, the team of researchers
assembled and modeled [sic] the findings in what was, for it,
a theoretical exercise.
(A more elaborate and further touched up version has been repeated
later, on the eve of the first anniversary of demonetisation.)
So, here, a major credit is attributed to a trusted career bureaucrat - of
course of Gujarat cadre, having a PhD in yoga (currently) in the Finance
Ministry, not an economist, by any stretch. Presumably, to neutralise the
criticism that no independent expert input did go into, not even of the
Chief Economic Adviser Arvind Subramanian, and no due diligence was
undertaken in the run-up to the allegedly rash and reckless move.
Of course, at that time the story of completely ignoring the advice of
Raghuram Rajan, the preceding RBI Chairman and a noted economist,
was yet to become public.
59
60
Finally, it'd be worth taking note of an observation of an analyst carried
by the Times of India website on the first anniversary of demonetisation:
Evidence emerging over the last fortnight clearly indicates
that not a single economists [sic] of any significance has been
consulted while conducting this demonetization exercise.
61
A Noteworthy Critical Response to the Announcement
Within the very first week of the announcement, a number of well-known,
and not-so-well-known, social activists, including a few prominent Leftist
economists and other luminaries, came out with a fairly detailed critique
of the move - pretty harsh in tone.
62
It asserted, among other things:
Black money is generated through evasion of taxes on income
from lawful activities and money generated from illegal
activities. In the absence of steps to curb the generation of
black money, demonetization is a futile exercise, as it proved
to be in 1978.
And, further underlined:
In the last 5 years, IT raids have found that only 5-6% of
black money is kept in hard cash. Moreover, those who have
amassed sizable black money are equipped to find ways
around demonetization by converting their existing cash to
bullion, gold jewellery, real estate and foreign currencies
through brokers and middle-men. In fact, organized middlemen and touts have already emerged to convert black money
into white for a commission.
It listed out a number of instances allegedly establishing the
government's utter insincerity as regards the fight against black money.
It made a special mention:
Demonetisation: One Year After 9
A key campaign promise was to bring back black money
stashed abroad and deposit Rs 15 lakh each from the
proceeds in the account of every citizen. Why has the
Government not made public the names held by it of Indian
account holders in offshore banks?
It emphatically claimed:
It is evident that demonetisation will not achieve its stated
intent of eliminating black money but has thrown the entire
country’s economic system in disarray. Related developments
also call into question Government’s [very] intentions.
The RBI Annual Report
While speculations and debates were raging over the net outcome of
demonetisation, especially because of the RBI stonewalling various
queries on the issue from various quarters,
on August 30, the RBI
came out with its (routine) Annual Report (2016-17) .
And:
On page 195 of this year's Reserve Bank of India (RBI)
annual report lies the answer to the question many Indians
have been asking for close to 10 months.
63, 64, 65, 66
67
68
It puts rather blandly:
Until June 30, 2017, SBNs were received by the Reserve Bank
either directly or from bank branches/post offices through the
currency chest mechanism. Some of these SBNs are still lying
in the currency chests. The value of the SBNs received by the
currency chests has been credited to the banks’ account on
“said to contain basis”. Till such time these notes are
processed by the Reserve Bank for their numerical accuracy
and authenticity, only an estimation of SBNs received back is
possible. Subject to future corrections based on verification
process when completed, the estimated value of SBNs
[Specified Bank Notes] received as on June 30, 2017 is (Rs.)
15.28 trillion. ...
Therefore, the value of notes in circulation is subject to
adjustments to be made after the completion of the
verification process of the SBNs received as also for the notes
to be received from DCCBs [District Cooperative Banks] and
Nepalese citizens/ Financial Institutions.
67
It is quite noteworthy that only after the release of the Report, the RBI
shared this info with the Parliamentary Standing Committee on Finance:
Last week in its annual report, the RBI finally made public the
details of the junked notes that have come back into the
system putting the figure at Rs 15.28 (rpt) 15.28 lakh crore.
10
The same figure has now been shared with the Parliamentary
Standing Committee on Finance.
And, even then:
The RBI has told a parliamentary panel that it has "no
information" on how much black money has been
extinguished as a result of demonetisation of Rs 500/1,000
notes or about unaccounted cash legitimised through
exchange of currency post note ban.
69
Be that as it may, the sum and substance of the subject disclosure is
rather crisply captured here:
According to Reserve Bank of India’s (RBI) annual report
released Wednesday, 98.96% of Rs 500 and Rs 1000 notes
(by value) that were invalidated due to the demonetisation
exercise had been returned by the end of June.
...
The RBI annual report said that “subject to future corrections
based on verification process when completed,” the estimated
value of the banned notes it “received” was Rs 15.28 trillion.
This compares with the Rs 15.44 trillion of the invalidated
notes that were in circulation as of 8 November, according to
data provided by minister of state for finance Arjun Meghwal
to Parliament on 21 January.
70
The significance of 99.96% of banned notes amounting to Rs. 16,000
crore coming back to the banks, which, with the possibility of some more
amounts lying with the various DCBs and Nepali citizens, even if not the
amounts still lying with Indian citizens for a variety of reasons, coming
back to the system, may still further go up, even if only marginally,
comes out rather starkly when read together with the following:
Following Prime Minister Narendra Modi’s surprise
announcement of the invalidation of old high-value currency
notes on 8 November, estimates suggested that around Rs 3
trillion would not return to the banking system because it was
unaccounted or black money. While defending demonetisation
in the Supreme Court in November, then attorney general
Mukul Rohatgi said around Rs 4-5 trillion would probably not
find its way back into the system.
There are also other reports endorsing the same narrative.
70
71
So, against an anticipated Rs 4-5 trillion (i.e. 4-5 lakh crore), or at least 3
lakh crore, only an amount of Rs. 16,000 crore, which may still get a bit
further reduced, has eventually not come back.
No amount of spin is going to alter this core fact.
Let's not forget, it's the AG, the highest law officer of the Union
Government, who had claimed before the highest court of the land that
Rs. 400-500 lakh crore is expected to be extinguished because of
demonetisation.
Demonetisation: One Year After 1
1
And, it eventually turned out to just Rs. 16,000 crore.
That's the essential unvarnished fact.
There were, of course, very many other unofficial estimates.
Here is one by the India's leading pink paper, known to be generally
supportive of the incumbent regime's economic policies:
According to initial estimates, a significant chunk of the Rs. 15
lakh crore in high-denomination currency was not expected to
come back into the system. But that estimate has been
steadily scaled back with some pegging the returned amount
at as much as Rs 10 lakh crore. This hasn’t been
independently verified.
In any case, the unreturned amount is likely to be less than
early estimates as the government has allowed a settlement
option at 50% tax for unaccounted income. Some estimate
that amount of unreturned notes will be Rs 3-4 lakh crore.
72
Seizure of Fake Currency
In his late evening address to the nation on Nov. 8 last year, announcing
the momentous decision of demonetisation, the Prime Minister had clearly
identified fight against fake currency as one of the three (or four) drivers
listed by him on that occasion.
And, this is also a claim that is the easiest to evaluate.
The Reserve Bank of India (RBI) on Wednesday said detection
of counterfeit notes in 2016-17 was 20.4 per cent higher than
the previous year. Barring Rs 100 notes, the detection of
counterfeit notes increased across denominations — notably
Rs 500 and Rs 1,000 — during 2016-17, the RBI said in its
Annual Report. The value of fake demonetised Rs 500 and Rs
1,000 notes was around Rs 41 crore. According to the RBI,
2,56,324 Rs 1,000 notes valued at Rs 25.63 crore were
detected during FY17. It reported that 3,17,567 Rs 500 notes
valued at Rs 15.87 crore were detected.
73
Interestingly, even the new Rs 2,000 notes, issued after
demonetisation, are already being counterfeited. The report
says 638 fakes of this denomenation [sic] were detected.
74
Not only that:
In the nearly one year since Rs 2,000 and new Rs 500 notes
were introduced, their counterfeit versions have improved
from easily identifiable in the beginning to “highest quality” in
recent times, according to [the Department of Revenue
Intelligence] officials who track FICN (fake Indian currency
notes) cases.
...
12
... [According to a senior DRI official,] “(c)urrency seized just
after demonetisation were of low quality, visible to the naked
eye, but the quality of the notes recently seized have
improved and a common man now cannot immediately
distinguish whether it is fake or genuine.”
Yet another, still more recent, report further confirms this trend.
75
76
Two points, here, need be noted.
One, of Rs. 15.28 lakh crore which came back to the banks out of a total
of Rs. 15.44 lakh crore demonetised, the value of fake notes actually
detected is only Rs. 41.50 (= 25.63 + 15.87) crore.
That's too measly a sum, just 0.0027% of the notes returned, in terms of
value.
It's regardless of the various estimates of fake notes circulating in Indian
economy.
77, 78, 79
Here, one has to keep in mind that, at any given point of time, the
overwhelming bulk of the fake notes would be in circulation as the
creators of these notes, regardless of their specific motive(s) - plain
(illicit) financial gain or sabotaging the Indian economy or both or
whatever else, would have no interest in keeping these notes piled up on
their tables.
So, these would, mostly, be in the hands of unsuspecting possessors.
And, there is no reason to suspect that these people, quite unaware of the
counterfeit nature of these notes, shied away from rushing to the bank
branches to deposit these back along with the rest of the demonetised
notes, as everybody else did.
Only those directly linked to the fake note network would scrupulously
stay away.
The second point of interest is that:
638 counterfeit notes of new Rs 2,000 notes [amounting to
Rs. 12.76 lakh] ... were also detected.
(And, the quality of counterfeiting has considerably improved over the last
one year making it difficult for a lay person to tell a fake note from a
genuine one.)
So, the inescapable conclusions that follow are:
One, the quantum of fake notes circulating in the Indian economy is too
miniscule to justify the hugely disruptive demonetisation.
Two, even then, demonetisation has made actually little, if at all any,
impact on generation and transmission of fake notes.
The Other Two, of the First Three, Goals: How Have
These Fared?
Demonetisation: One Year After 1
3
These two goals as enunciated by the Prime Minister on the momentous
evening of November 8 last year are to:
strengthen the hands of the common man [read government]
in the fight against [I] corruption, [II] black money.
As corruption is a generic term, we'd first take up the issue black money.
Fighting (or Eliminating?) Black Money
Black money is generated through evasion of taxes on income
from lawful activities and money generated from illegal
activities.
62
It has been pointed out by umpteen number of knowledgeable
commentators that only a minor fragment of the black money is held in
hard Indian currency.
As far back as in 1978, the then RBI Governor, I G Patel, as regards the
efficacy of the demonetisation undertaken then had opined, as already
pointed out above:
The idea that black money or wealth is held in the form of
notes tucked away in suit cases [sic] or pillow cases is naïve.
48
Here is a more contemporary observation by a knowledgeable
commentator:
people do not hold all their black money in the form of cash in
their homes. They convert it into gold and real estate, and
move it abroad to tax havens. From there it comes back
through Foreign Institutional Investors (FIIs) and is invested
in the stock market as well as debt market.
He further illustrates and buttresses his argument by providing in a
tabular form the figures related to the outcomes of the search and seizure
operations carried out by the Income Tax Department over a period of six
years (2006-07 - 2011-12) and summarises as under:
If we look at data for the period of six years of close to
24,000 seizure and search operations, cash formed 4.9 per
cent of the undisclosed wealth. Also, the proportion varied
from 3.7 per cent to 7.4 per cent over the years.
What this data tells us is that people who have black money
do not store it in the form of cash. There are better ways of
storing that wealth.
80
Here is another:
Cash recovery has been less than 6% of the undisclosed
income seized from tax evaders, shows an HT analysis of data
from tax raids from financial year 2012-13 onwards.
81
14
Apart from the fact that demonetisation was in no way, repeat no way, a
move towards bringing back allegedly stashed black money in foreign
banks, as had been promised by the PM aspirant Modi, the data cited
above underline a big basic flaw in conceptualising demonetisation as the
most effective way to fight black money.
Be that as it may, as had been pointed out earlier, the then Attorney
General of India, Mukul Rohatgi, had informed the Supreme Court of
India:
around Rs 4-5 trillion (4-5 lakh crore) would probably not find its
way back into the system.
71
The leading pink paper of India, the Economic Times, known to be
generally supportive of the incumbent regime's economic policies, almost
a month after demonetisation, carried a speculative report as regards a
possible government move to issue an ordinance to enable the RBI to
extinguish, i.e. cancel, the demonetised notes that are not returned by
December 30.
In this it propositioned:
Only when the unreturned currency is cancelled can it be
made available to the government, possibly via a dividend
paid by RBI. Once this is done, the government could consider
the amount so recovered for its budget that’s scheduled to be
presented on February 1.
In this specific context, it further noted:
According to initial estimates, a significant chunk of the Rs 15
lakh crore in high-denomination currency was not expected to
come back into the system. But that estimate has been
steadily scaled back with some pegging the returned amount
at as much as Rs 10 lakh crore [emphasis added]. This hasn’t
been independently verified.
In any case, the unreturned amount is likely to be less than
early estimates as the government has allowed a settlement
option at 50% tax for unaccounted income. Some estimate
that amount of unreturned notes will be Rs 3-4 lakh crore
[emphasis added].
82
Based on such unreal estimates, which would soon turn out to be simply
absurd, there were also inspired speculations in the media that every Jan
Dhan account, at least those with zero balance, would be credited with Rs
10,000.00, or some such sum, out of the windfall gain.
83, 84, 85
On the ground, rumours that Rs 50,000 or Rs 75,000 would be deposited
were reported by a sceptical reporter.
86
What a grand example of wild daydreaming!
But must be quite reflective of the anticipations in the official circles in
those days, as testified by the AG's remark before the Supreme Court.
Demonetisation: One Year After 1
5
Hence, the demonetisation, clearly, turned out to be a huge flop as far as
mopping up of black money is concerned, in terms of the original
projections and hopes raised.
That did not, however, stop the spin doctors of the regime from going on
an overdrive to prove that white is black.
A report in the Times of India, the leading national newspaper of India,
which very much unabashedly reads like an unedited government
handout carried on the day after the release of the RBI Report, boldly
proclaims:
The Government had expected all the SBNs [Specified Bank
Notes] to come back to the Banking system to become
effectively usable currency.
87
The obvious question, apart from the stark mismatch with the
expectations aired earlier, that arises is that if the government's
intention, all the while, was to make the black money come back to the
system then what was the need for so much of secrecy and drama , or
why the District Cooperative Banks were not being allowed to return the
SBNs accepted by them from Nov. 10-14 2016 , till they were
specifically barred, why ordinary Indian citizens have been debarred from
returning these notes to the RBI till March 31st this year, beyond 30th
December last, thereby trashing the original commitment by the Prime
Minister himself?
88
89, 90
91
92
On the day of the first anniversary of demonetisation, the Indian Express,
a leading national newspaper, has carried an article by a prominent
member of the freshly formed Economic Advisory Council. The author,
Surjit S. Bhalla, tells us with a straight face, in a way echoing the
handout, in the very caption of the article:
It (demonetisation) is an acknowledged political success and
early ‘returns’ indicate an economic success story as well.
93
94
Now the reworked refrain is essentially twofold.
One, with almost all the SBNs (Specified Bank Notes) having come back,
the tax base has expanded.
Two, the operation unearthing black money has really started now and is
in full swing with the identification of the suspicious amounts deposited.
We'll, in the following, examine both the claims, one after the other.
Expanded Tax Base (and Gain)
In a front-paged report, evidently based on official inputs, carried by the
Indian Express, on this November 7, i.e. the eve of the first anniversary
of demonetisation, it is claimed:
95
16
Tax compliance also got a boost in the months following
demonetisation. A scrutiny of tax department data available
until June 30, 2017 shows that for financial year 2016-17,
1.26 crore new taxpayers, including return filers and nonfilers making tax payments, were added to the tax base of the
country.
The total number of all returns, electronic as well as paper,
filed during the entire financial year 2016-17 was 5.43 crore,
17.3 per cent more than the returns filed during 2015-16. The
number of e-returns of individual taxpayers filed till the due
date of August 5, 2017 increased to 2.79 crore from 2.22
crore returns filed during the corresponding period last year,
an increase of about 25.3 per cent.
...
The benefits of addition of new taxpayers, however, did not
translate into a rise in tax payments, as was stated in the
second volume of the Economic Survey, which was released in
August. The Survey stated that the growth of taxpayers postdemonetisation was significantly greater at 45 per cent as
against 25 per cent than in the previous year.
“The addition amounted to about 5.4 lakh taxpayers
[emphasis added] or 1 per cent of all individual taxpayers in
just a few months,” it said. The addition to the reported
taxable income of these new taxpayers, however, was about
Rs 10,600 crore. “The tax base did expand after
demonetisation. It is, however, interesting that the average
income reported of the new taxpayers — Rs 2.7 lakh — was
not far above the tax threshold of Rs. 2.5 lakh[emphasis
added], so the immediate impact on tax collections was
muted,” the Survey authored by Chief Economic Adviser
Arvind Subramanian said.
If we keep aside the increase in number of taxpayers and rather focus on
additional amount of actual (income) tax payable on account of enhanced
reporting, the following emerges.
5.4 lakh additional tax payers are to pay tax each on an (average)
amount of Rs. 20,000 (= Rs. 2.7 lakh - Rs. 2.5 lakh) @ 5% , the lowest
tax slab.
That works out to just Rs. 54 crore. What a princely sum!
96
This had been noted, in slightly different words, in an earlier analysis as
well:
The latest Economic Survey estimated that demonetisation
added 5.4 lakh new taxpayers in the financial year 2016-17.
However, the average income quoted by these new tax payers
is only Rs 2.7 lakh, which would mean that they were required
97
Demonetisation: One Year After 1
7
to pay tax for an income of Rs 20,000 only, as income upto Rs
2.5 lakh is granted exemption.
Interestingly, the Chairman of the Central Board of Direct Taxes (CBDT)
has in an interview posited:
As a result of organised efforts under operation clean money,
both tax collections as well as the tax base have shown a
growing trend post-demonetisation. There is increase of
17.6% in number of ITRs filed under all categories till October
30, with 23% increase in ITRs filed by individuals. The
increase in number of ITRs and tax collection [emphasis
added] shows the positive effect of demonetisation.
98
The point to be noted is that while giving out figures related to increase in
number of ITRs filed, there is just no mention of how much of additional
tax has actually been paid and collected. Quite strange, considering the
fact that the taxpayers are to pay their due taxes, as calculated by them,
while filing the income tax returns.
Not too strange, of course, if the relevant figure is Rs. 54 crore or of that
order.
Operation Unearthing Black Money
The ministry is probing deposits of over $1 billion [i.e. about
Rs. 6,500 crore] made by around 20,000 companies during
the cash ban last year, while its Serious Fraud Investigation
Office is investigating 1,505 companies for allegedly violating
the Companies Act. It is examining another 809 listed
companies, found untraceable by SEBI, to check their status,
existence of their offices and directors, the minister said.
99
And, the Chairman of the CBDT informed, presumably on Nov. 7 this
year:
Apart from taking punitive actions, tax department has shared
data of over 22,000 beneficiaries identified in the enforcement
actions, evading income of over Rs 13,300 crore through
1,155 shell companies. Criminal prosecution complaints were
filed in 47 cases and actions for criminal prosecutions in more
than 100 cases of entry operators/ beneficiaries identified is
under way.
He did further add:
During this year we have selected less than 1% cases for
scrutiny [emphasis added, obviously the department is
constrained by its limited resources, if not anything else as
well] out of returns filed in last year, accepting 99% cases
[emphasis added]. This shows that the department largely
97
18
believes in tax payers and cases are taken up for scrutiny only
where there is prima facie evidence of tax evasion.
A Press Information Bureau (PIB), a Union Government wing, on August 1
2017, in a press release, informed as under:
100
There was no official estimation of quantum of black money in
India. However, post demonetization, the Income Tax
Department (ITD) conducted searches in 900 groups of
persons during November 2016 to March, 2017 leading to
seizure of Rs 900 crores and admission of undisclosed income
of Rs 7961 crores. During the same period, 8239 surveys
were conducted leading to detection of undisclosed income of
Rs 6745 crores. Information of various kinds of wrong-doings
by about 400 persons was also shared with other law
enforcement agencies such as Enforcement Directorate and
Central Bureau of Investigation for appropriate action.
Further, during the current financial year (01.04.2017 to
30.06.2017) the ITD has conducted searches in 102 groups,
seizing assets worth Rs. 103 crore. The persons searched
have admitted undisclosed income of Rs. 2670 crore. During
the same period surveys conducted in 202 cases (01.04.2017
to 31.05.2017) led to detection of Rs. 150 crore as
undisclosed income.
The Department has also launched ‘Operation Clean Money’
on 31st January 2017 with the mission to “create a tax
compliant society through a fair, transparent and nonintrusive tax administration where every Indian takes pride in
paying taxes”. Broad outcome of the operation so far is as
under:
i. About 18 lakh persons whose cash transactions did not
appear in line with their tax profile were identified and
approached through email/sms.
ii. More than 9.27 lakh responses were received giving
information on 13.33 lakh accounts involving cash deposits of
around Rs.2.89 lakh crore. Out of this record number of 5.27
lakh responses were received in the first 12 days of the
operation.
iii. Advance data analytics tools were deployed which further
identified 5.56 lakhs new cases and about 1 lakh those cases
in which either partial or no response was received in the
earlier phase. Besides, about 200 high risk clusters of persons
were identified for appropriate action.
Demonetisation: One Year After 1
9
This was stated by Shri Santosh Kumar Gangwar, Minister of
State for Finance in written reply to a question in Rajya Sabha
today.
These claims have been duly picked up, and sensationalised, by the
nedia.
101
More or less very similar claims have been made in a more recent
communication, apparently mass emailed on November 10 2017, by the
Prime Minister’s Office (PMO).
102
That's, undoubtedly, all very good as far as it goes.
What, however, in this context, one ought to keep in mind has been
pretty succinctly captured by an analyst:
The amounts under investigation so far, however, constitute a
drop in the ocean. Yes, demonetisation delivered leads, but
establishing criminal evasion and ensuring that the corrupt
are punished is a monumental effort. Plus, the tax
department’s past record of proving evasion is unlikely to be
giving offenders nightmares. The faulty system is skewed in
their favour. Procedures are time-consuming; there are
limitations of administrative and judicial capacity, handicaps
the government seems to be grossly underestimating. It could
well be years before any serious large-scale clean-up is
accomplished, representing at best a promise of a deferred
payback from demonetisation [emphasis added].
Another challenge is that of measurement. Although the chief
goal of demonetisation was to place a check on black money,
the central theme of the Prime Minister’s policy agenda, the
government has no official estimate of the size of the black
economy. Unofficial estimates range from a third of the white
economy to as much as the country’s GDP. Without an official
estimate, it is impossible to meaningfully evaluate by how
much demonetisation successfully down-sized the black
economy, if at all.
103
But, by far the most enlightening revelation has come from none other
than Bhalla, a senior functionary of the regime and also its consistent
backer.
At a moment of unusual candour, he has noted, with a palpable degree of
resignation:
In my view, it is very positive that all the cash got returned
because now the black money can be identified as black. This
is [now entirely] up to the tax authorities and a legitimate
legal process is underway. Only if [emphasis added] the
income tax authorities are with the anti-corruption
94
20
programme will DM be a grand success. Everyone knows that
the Indian tax authorities have been accomplices in tax
evasion. If they change, India will change for the better,
faster [emphasis added].
He has, though, provided no clue whatever why the Indian tax authorities
would change post-demonetisation.
Any comment on the implications of Bhalla's observation would be rather
superfluous.
All in all, the actual outcome of the much trumpeted actions, as listed
above, lies very much in the womb of some undefined and uncertain
future.
And, the past track records do not leave much room for optimism.
Fighting Corruption
As had been pointed out above, corruption is a rather generic term.
In case of demonetisation, the demon of corruption was meant to be
worsted via the elimination of black money, in turn, achieved through
demonetisation.
In the foregoing, the fight against black money has already been dealt
with, in considerable details.
Here, additionally, we'd list out just five landmark facts exemplifying the
actual attitude of the incumbent regime towards corruption, as distinct
from its customary shrill rhetoric.
I. First, let's have a look at the plight of the The Lokpal and Lokayuktas
Act, 2013.
The Act was eventually passed by the previous UPA government, after
much feet shuffling, under the impact of the huge anti-corruption
campaign led by Anna Hazare, which had received the full-throated
support of the BJP, in December 2013 and came into force on Jan. 16
2014.
Almost three and a half years have elapsed since Modi taking over power
as the Prime Minister of India.
Yet nothing has been done towards selecting the Lokpal, let alone making
the actual appointment, despite specific directive issued by the Supreme
Court of India in April this year.
104
105
II. The business-politics nexus is widely acknowledged as a major driver
of corruption and black money in India.
Here’s a terse comment, to that effect, by a former Chief Election
Commissioner of India:
Money power is the only unsolved problem in Indian elections,
the root cause of all corruption. If a candidate spends crores
on an election, he will collect a lot more once in office —
106
Demonetisation: One Year After 2
1
through government contracts, licences, quotas, extortion,
etc.
Transparency and accountability is understandably a major tool to combat
it.
III. Yet, in the very midst of all the loud claims as regards fight against
corruption and black money, the incumbent regime tweaked the relevant
rule to let corporations anonymously donate unlimited amounts of cash to
the political party of their choice.
That too was done as a part of the Finance Bill, to dodge effective
oversight by the Rajya Sabha and, then again, through a last moment
amendment
to escape any meaningful deliberations on this specific
move even in the Lok Sabha.
107
108, 109
IV. The BJP had, of course, even earlier reversed its previous stand to
oppose the plea for applicability of the Right to Information (RTI) Act soon
after coming to power at the Centre.
110, 111
V. Recent disclosure of the Paradise Papers has again put the spotlight
on such disclosures, by private agencies, and the inaction or evasive
actions on the part of the Indian government:
Congress said Liechtenstein documents, and Panama and
Paradise papers have named 2,432 account holders and the
government should disclose those names.
112
113
Though a recent report, dtd. Nov. 19 2017, claims, quoting unidentified
official sources, that the IT Department has now slapped criminal charges
under the new anti-black money Act and launched fresh assessment of
stashed offshore income against over half-a-dozen Indian entities in the
(Panama Papers) list, yet the identities of those presumably charged
remain undisclosed.
So, this report, authentic or not, makes hardly any impact on the overall
picture of lack of governmental actions in this regard.
114
Demonetisation to Fight 'Terrorism'
It's hardly any wonder that the government would claim remarkable
success even on this front.
Unsurprisingly, this is almost solely based on the claim that
demonetisation has hit the terrorists by depriving them of the funds to
carry out their nefarious activities and very thin, if at all any, actual
evidence.
The headline of a news report carried by the India Today on the occasion
of the first anniversary of demonetisation is a typical illustration:
Arun Jaitley calls demonetisation a success, says terrorists hit
by fund shortage
115
22
Rather interestingly, the actual report does not at all touch upon the issue
of "terrorism".
The then Defence Minister, Manohar Parrikar, had also made similar
claims soon after demonetisation. Here is an analytical note tearing apart
his arguments and listing out the string of actual instances of numerous
terrorist attacks committed in the immediate wake of the move:
Demonetisation’s Strike on Terrorism is another Blatant Lie by the
Government.
116
Now, a communication, apparently mass emailed, by the PMO (Prime
Minister's Office) has claimed:
Stone-pelting incidents in Kashmir came down by 75% from
the previous year as one of the multi-dimensional benefits of
DEMONETISATION!
As if stone pelting in Kashmir Valley was supposed to continue for eternity
but for the demonetisation.
In any case, here is a very different account offered by none other than
India's Chief of the Army Staff:
Stone pelting in Kashmir has come down "to some extent"
said Indian Army Chief Bipin Rawat today (Nov. 10 2017).
The army chief said that combined efforts of the Indian Army,
BSF, CRPF, and the J&K Police has helped.
"Solution to this can't be achieved overnight. Government,
intelligence agencies, state administration all are making
efforts. Will be successful if things go in this direction, can say
this with belief," he added.
No mention of demonetisation, just none!
117
118
And, at any rate, stone-pelting cannot be counted under the category of
terrorism.
Furthermore, P Chidambaram, a senior Congress leader and former Union
Finance and Home Minister, has recently testified:
"As of November 10, the number of infiltrations, the number
of militants neutralised, the number of civilians killed and the
number of jawans martyred, all are larger than the numbers
for the corresponding period in 2016."
And, this public testimony, by no Tom, Dick or Harry, remains
uncontradicted.
119
Subsequently Added Objectives
Formalisation of Informal Sectors and Less-Cash Economy
The proponents of demonetisation have (now) given a new
spin [emphasis added] (as almost 99 per cent of the Rs 15.44
lakh crore of the demonetised currency returned to
government's coffers). They portray the return of the notes as
Demonetisation: One Year After 2
3
a success. They claim that those with black money were
forced to deposit their illegal hoards in the banks and they can
now be caught by the tax department and made to pay
additional taxes. This, the argument goes, would expand the
tax base. Further, they argue that the idle black money is now
in the banks and that would lead to efficiency because the
cash-to-GDP ratio would decline. They believe there is a
formalisation of the informal economy and that the economy
is moving towards a less cash economy. These are the longterm benefits even if there was short-term pain [emphasis
added].
120
It's on November 27 2016, eighteen days after the launch of
demonetisation, the PM had made his first public appeal to the nation
through his monthly radio programme Mann ki Baat, the youth of India in
particular, to take a pledge to become part of a çashless society for a
corruption less, black money-free India.
121
This was done against the backdrop of common people's dire struggle to
cope up with the severe cash crunch, badly affecting their daily lives,
triggered by demonetisation.
From that point onward, moving towards a cashless economy was, by and
by, added as another virtuous goal of demonetisation.
The cashless would, however, in view of its sheer absurdity as highlighted
by the critics of demonetisation, be, after a rather short while, modified
to less-cash.
122
123,
124
This does not, however, necessarily rule out, or for that matter rule in,
the possibility that this goal had already been in the minds of those
launching demonetisation.
125, 125a, 126
One may, here, like to recall the full front-paged ads in leading
newspapers that the leading e-wallet company Paytm came up with, on
the very morning following the announcement, congratulating PM Modi.
127
But, to be sure, the goal of moving towards a cashless, or rather lesscash, economy did figure nowhere in the November 8 speech.
Its subsequent addition, whatever be the driver(s), strongly suggests an
admission, even if only indirect, of the failure of meeting the originally
announced goals. (So is, arguably, Jaitley’s branding
of
demonetisation, on the eve of its first anniversary, as ethical and moral
decision.
127a
128, 129
Similarly, the goal of formalising the informal sectors of the Indian
economy would also be added while on the go.
24
And, it gained considerable traction with a World Bank report, reported
widely by Indian media in early June, strongly championing the cause of
demonetisation as a driver for formalising the informal economy.
130
The twin objectives of moving towards a less-cash economy and
formalisation of informal economy are fairly interlinked.
A formal economy provides a better ecosystem for the emergence of a
less-cash economy and, conversely, a less-cash economy provides a
nudge towards formalisation.
Before we proceed to examine the success or otherwise in meeting these
two goals, it is necessary to briefly look into their essential rationale and
desirability.
Manmohan Singh, in a recent interview, in his characteristic soft tone
has put it this way:
We are a nation of small and medium enterprises. There are
certain characteristics inherent in these small and medium
businesses. They tend to be less organised, more informal
and use cash as the primary mode of transaction. The
underlying economic policy objective in our country should be
to find ways to help these small businesses become larger
which will then help us reap the efficiencies of scale
economies. But we need to be able to achieve these
objectives without any disruption to these small enterprises in
their current form. Objectives such as a less cash or digital
economy are laudable pursuits. But we also need to get our
economic priorities right. It is unclear that these goals of
cashless economy will indeed help small enterprises become
larger and achieve scale efficiencies. That should be our
priority. These small and medium enterprises are the
backbone of India’s economy and labour markets.
He has further added:
In India, we refer to an informal economy as one that is not
officially registered, is outside the tax net but plays an
important role in the economic value chain. I do not think
India is unique among emerging economies in its share of the
informal economy. Given our size of the overall economy, the
absolute size of the informal economy seems very large. The
value created by the informal sector will be captured in the
form of income, wealth or consumption effects. Hence, we
must be cautious about sweeping generalisations about the
informal economy and passing moral judgments about the
entire sector.
Having said all this, it is very important for a nation such as
ours to build strong state capacity to lift our standards of
governance. This is possible only when we increase our share
of tax revenues. If formalisation of the informal sector means
131
Demonetisation: One Year After 2
5
widening of the tax base, it should be welcomed. But the
means is as important as the ends.
(Never mind the irony of Manmohan Singh mouthing the need to protect
small and medium enterprises.)
Prior to that, Raghuram Rajan had put it rather crisply:
“One has to be careful on separating intent from cost,” Rajan
said. “Intent is to reduce the extent of non-compliance with
taxation, which in the long run would be good in terms of
generating more revenue. The problem is at what cost?”
Rajan asked.
132
Here is a more hardline view:
The informal sector, however, is not an aberration in our
growth process. It is an integral part of the process of
transition from a traditional economy to a modern economy.
While it may not pay taxes and is largely dependent on cash,
it plays an important role in providing jobs to millions of firsttime workers and to millions of others who are moving out of
agriculture to the non-agricultural sector. It provides the first
exposure to many of these illiterate and low-skilled workers to
the new economy. At the same time, it is also the biggest
agency which does the painful task of re-skilling the majority
of these workers—much more than any government scheme.
Any attempt to reduce the role of the informal sector is only
going to make the transition arduous and difficult for the
economy.
But in the rhetoric of ‘everybody is a thief’, the real casualty
are the informal enterprises. Attempts at forcing informal
enterprises to become formal may kill the golden goose which
has been taking care of the transitional pains of the economy
by providing jobs. It has also acted as a sponge, creating
incomes and demand when the agricultural sector was in
stress. The short-term benefit of formalisation of the economy
is at the cost of long-term loss of the crucial agency of the
informal sector. The net benefits to the economy through
income generation, employment creation and re-skilling of
labour by the informal sector far outweighs any short-term
benefits of tax collection through a process of forced
formalisation.
The need of the hour is to protect and nurture the informal
sector and handhold it to become formal in the process of
growth rather than through surgical strikes a la
demonetisation.
133
Yet another of broadly the same genre:
In public discussion, ‘formalisation of the informal’ emerged
as a new rationale for Demonetisation 2016 after the event.
134
26
Demonetisation and then digitalisation of monetary
transactions would compel, it was argued, the informal sector
to be henceforth more tax compliant. It was also argued that
the introduction of the Goods and Services Tax (GST) would
only strengthen this process. It is indeed well-known that in
large sections of the informal sector—real estate, retail and
wholesale trade, and professional services—payment of taxes
is often not the norm. Demonetisation and digitalisation may
drag these economic agents into the formal sector and lead to
greater tax compliance. However, the fundamental problem
with the ‘formalisation of the informal’ argument is that the
much larger informal sector that ekes out its livelihood on the
margins does not avoid paying taxes, it just earns too little to
fall into the tax bracket. Formalisation of production by the
tiny enterprises in industry, road-side service establishments,
and by small- and medium-sized farmers would not lead to a
gain to society. It would, in fact, put an additional burden on
these producers who are already struggling by earning low
incomes.
The foregoing, if nothing else, at least clearly demonstrates that the view
put across by the said World Bank report, also very much shared and
propagated by the proponents of the incumbent regime, is by no stretch
an uncontested one.
In fact, there is a large body of opinions, arguably no less informed than
that of the World Bank, which strongly holds that coerced formalisation of
India's informal economy, which is estimated to employ 90% of India's
workforce,
poses the very palpable and serious danger of proving
traumatic for the sector and would, in that event, trigger large scale
misery and, maybe, even social unrest. Notwithstanding the lure of better
tax compliance and resultant enhanced tax revenue going to the
government coffers.
But then, it could very well be that the real aim is just that: Destroy the
micro, small and medium enterprises to clear the field for indigenous and
global corporates.
135, 136
125a
Apart from that, analysts after analysts have shown that there obtains no
definite correlationship between the cash-to-GDP ratio and either
corruption or development.
A most recent example is: Demonetisation Has Failed to Tackle Black
Money by Karan Thapar. And, also noteworthy: Economic Rationale of
‘Demonetisation: Scrutiny of the Government’s Claims' by Vineet Kohli
and R Ramakumar.
137
138
Here are two insightful short excerpts from the Karan Thapar's article:
I. The country with the highest cash to GDP ratio is Japan
with a figure of 19.40%. It also happens to be one of the least
Demonetisation: One Year After 2
7
corrupt. Almost at the bottom is Nigeria, with a cash to GDP
ratio of 1.55%. It’s one of the world’s most corrupt.
According to the same ranking, Singapore, Switzerland, Hong
Kong and the whole of the Eurozone have cash to GDP ratios
significantly above India’s. They’re also significantly less
corrupt. On the other hand, Argentina, Colombia, South Africa
and Brazil have cash to GDP ratios that are around half or less
India’s but they’re perceived to be as corrupt.
The truth is the cash to GDP ratio is not a test of corruption or
corruptibility because how much cash you hold doesn’t make
or tempt you to be corrupt.
II. The total value of digital transactions according to the NPCI
in November 2016 was [Rs.] 94 lakh crore. They reached a
high point of 149 lakh crore in March 2017 and then fell to
107 lakh crore in July 2017. In August, they were almost the
same at 109 lakh crore. However, in September, they rose to
124 lakh crore but collapsed in October to 99 lakh crore. The
October figure is accurate only until the 29th of that month.
Much the same is true of the volume of digital transactions.
They were 671.49 million in November 2016, rising to 957.50
million in December, before falling to 862.38 million in July
and, thereafter, remaining stable. In October they were 863.9
million.
So, the NPCI data shows that in value terms, digital
transactions in October 2017 were almost exactly what they
were in November last year [emphasis added]. In volume
terms, however, they increased by nearly 42% between
November and December but, thereafter, declined
significantly and flattened out.
More importantly, the NCPI data includes all debit and credit
card usage as well as pre-paid instruments and NEFT. It also
includes Bhim and UPI, e-wallets and Paytm.
The second one, obviously, deals with the level of success in bringing
about digitisation of Indian economy, regardless of its merit or otherwise,
via demonetisation.
139, 140
As regards formalisation of informal sectors, it is necessary to note here,
right or wrong, the GST is the tool to effect it.
Demonetisation is at the utmost, a rather superfluous, auxiliary measure.
And, there is no hard evidence to suggest any significant formalisation of
the informal sectors of the economy over the last one year.
Shoddy Implementation
28
Despite the much well-orchestrated projection of a super-efficient Mody a Rambo Modi, over the last few years, the implementation was nothing
less than shoddy making the resultant chaos even more chaotic.
It clearly spoke of lack of preparations and well thought out plans
notwithstanding fabricated claims to the contrary.
141
59
There were problems from the very word go.
The sizes of the new Rs. 500 and 2,000 notes, meant to replace the now
scrapped old Rs. 500 and 1,000 notes, were changed, for no apparent
good reasons.
That necessitated recalibration of the cassettes holding the notes to be
dispensed via more than 2.15 lakh ATM machines spread all over India
causing additional delay.
142
143
Then, going against the very grain of the move to eliminate black money,
the Rs. 1,000 notes were replaced by notes of still higher denomination Rs. 2,000.
Apparently, to hasten up the process of remonetisation.
But, during the initial days, these notes, in the absence of sufficient Rs.
500 notes in circulation, were virtually useless scraps of paper in the
hands of commoners who needed currencies to make small purchases for
day-to-day needs.
144
145
146
And, then the RBI kept on changing the rules only too frequently.
Between Nov. 8 2016 and the following March 31st the rules were
changed/reframed no less than 21 times, excluding the notifications
issued on Nov. 8 itself.
147
Arguably, the two most significant of these notifications were: (i) on
November 14, the RBI debarred the District Cooperative Banks from
accepting the scrapped notes and (ii) the withdrawal of facility, as had
been committed by the Prime Minister on November 8, to ordinary
resident Indians to exchange SBNs at RBI branches beyond Dec. 31 till
June 30th showing valid reasons for delay.
These changes caused a lot of additional difficulties for a large number of
people and also for the District Cooperative Banks as the RBI had refused
to accept the scrapped notes received by them since demonetisation till
Nov. 14th.
148
149
All these only go to show the sheer shoddiness of the implementation
process further exacerbated by serious inadequacies in advance planning
and due diligence.
Quite interestingly, a leading and extremely vocal and voluble BJP MP,
Subramanian Swamy, even if known for being a sort of loose cannon, had
also publicly aired such a view.
150
Demonetisation: One Year After 2
9
Nobel laureate Richard Thaler, one of the very few eminent economists
applauding the idea of demonetisation, would also note that the rollout
was deeply flawed.
151
The Negative Outcomes Following Demonetisation
The list is rather long.
The main points are, however, summarised as under.
I. In a heavily cash-dependent economy, overnight scrapping of 86% of
all currencies threw life of a common Indian into utter turmoil.
A funny Tamil song in video format, released recently, provides an
effective peek into that profoundly unfunny situation.
152
II. More than 100 people reportedly died standing in the queues.
153
III. An estimated 1.5 million jobs were lost in first four months of 2017.
154,
155
IV. Disastrous effects on the MSMEs, the unorganised sector, in particular.
Here're a few fragments of noteworthy observation.
A. The unorganized sector in India will be the worst hit by the
November demonetization of high value currency, while lots of
industries in the organized sector would be impacted by the
shortage of cash required to run business, a market analyst
said on Monday. "The unorganized sector is expected to bear
higher brunt of demonetization. Within the organized space, a
lot of industries would get impacted owing to the sucking out
of daily liquidity needed to run the business," Centrum Wealth
Research said in a report.
156
B. The above propositions (including the one that the growth
rate of the informal sector would be even lower than overall
because of the predominant use of cash in sales and purchase
in this sector, and its overwhelming dependence on informal
cash credit) are not just based on armchair theorising, but are
supported by newspaper reports and independent surveys. In
Ranchi, a survey led by Jean Drèze (Delhi School of
Economics and University of Ranchi) reports a 45% decline in
earnings of small shopkeepers/businesses; in Amritsar,
Prateek Sibal (Paris Institute of Political Studies) reports a
similar figure of 46%. In Delhi, a survey of small shopkeepers
and casual labourers by Vyom Anil (Jawaharlal Nehru
University) finds a much larger drop in average income about
60%. Another study for Delhi, by social activist Harsh Mander,
points to a 60% cut in supply of jobs to labourers, a decline in
wages, and loss in profits for small shops.
30
In Mumbai, Deepa Krishnan (SP Jain Institute of
Management) and Stephan Siegel (Michael G. Foster School of
Business, University of Washington) report a very significant
loss of 44% in the earnings (relative to the pre-note ban
period) of the self-employed in slum areas. Some of the
surveys also indicate huge income losses for casual workers:
50-70% in Jaipur (conducted by PUCL Rajasthan), and 72%
among domestic workers in Delhi (by Vyom Anil). A larger
survey by India Development Foundation (IDF) covering nine
states asked owners of small and medium enterprises (SMEs)
whether there were output and job losses (Chaddha et al.
2017). With regard to output loss, 61% of respondents in
Telengana [sic], 94% in Andhra, and 80% in Gujarat
answered in the affirmative. For job losses, the corresponding
incidence was similar in Telengana [sic] and Gujarat, slightly
lower in Andhra, but very high in Uttar Pradesh (87.5%),
which also saw significant wage decline.
The income losses reported by these independent surveys are
large and mutually consistent. There is also no sign of
remission over the weeks since demonetisation; some
newspaper reports even suggest that the ban is biting more
with the passage of time and there are spillover effects on the
formal sector. These adverse changes have been accompanied
by a 60% spike in the demand for MNREGA (Mahatma Gandhi
National Rural Employment Guarantee Act) work in December
2016 (as per report of the Ministry of Rural Development),
confirming the accuracy of independent surveys, and
necessitating urgent policy action.
157
V. The District Cooperative Banks (DCBs) got financially crippled.
158
VI. In the latest financial quarter (April-June), the GDP has slipped by 2.2
percentage points, from 7.9% to 5.7%, year-on-year basis.
Subsequently, it is reported that :
India’s trade deficit widened to its highest in 35 months in
October (2017) as merchandise exports declined for the first
time in 14 months, government data showed.
Exports during October 2017 were valued at US $23,098.18
million as compared to $23,360.61 million during October
2016, registering a decline of 1.12%, according to data
released by the Ministry of Commerce and Industry on
Tuesday (Nov. 14 2017).
Imports, meanwhile, expanded at the slowest pace in 10
months, at 7.6%. Imports during October 2017 were valued
at US $37,117.01 million as compared to US $34,495.09
million in the same period in 2016.
159
160
Demonetisation: One Year After 3
1
VII. RBI profit dwindled and instead of ballooning dividend payout to the
government, as had been initially expected (discussed above), it actually
radically shrivelled.
Demonetisation was the one of the main reasons for Reserve
Bank of India's lower-than-usual profits. The government too
received a lesser dividend from the central bank as compared
to what it received in the previous financial year. RBI
transferred a meagre Rs 30,659 crore as dividend to the
government for the year ended June 2017, which is less than
half of what it gave to government a year ago, Rs 65,880
crore to be precise[emphasis added].
While income for the year 2016-17 decreased by 23.56 per
cent, the expenditure increased by 107.84 per cent. The year
ended with an overall surplus of Rs 30,659 crore as against Rs
65,876 crore in the previous year, representing a decline of
53.46 per cent.
The net income from domestic sources decreased by 17.11
per cent from Rs 52,157 crore in 2015-16 to Rs 43,232 crore
in 2016-17 mainly due to higher net expenditure on interest
on account of absorption of surplus liquidity in the banking
system post withdrawal of Specified Bank Notes [emphasis
added].
RBI incurred a total expenditure of Rs 7,965 crore on printing
currency notes in 2016-17 [emphasis added], [as against Rs.
16,000 crore not returned] which is more than double the Rs
3,420 crore spent year before that. The rise in cost of printing
could be attributed to printing of new currency notes during
remonetisation.
"The upsurge in expenditure during the year was on account
of change in the production plan of printing presses due to the
introduction of new design notes in higher denominations as
well as the requirement of larger volume of notes for
replacement of the demonetised currency," RBI said in its
annual report.
161
Conclusion
1. To begin with, demonetisation was a measure adopted going against
the express opinion sought and obtained from the then RBI Governor
Raghuram Rajan.
No recognised economist, not even the Union Government's Chief
Economic Advisor, was known to have been taken into confidence.
And, it was, of course, no move towards bringing back illegal money
allegedly stashed in foreign banks, as had been promised by Modi, as the
Prime Ministerial aspirant.
32
2. It was pretty shoddily implemented.
3. It has decisively failed to mop up black money as had been initially
projected and expected.
A miniscule amount of fake currencies was detected. And new fake
currencies are already back.
No visible impact on terrorism.
4. It has, of course, opened up the possibility of identifying sizeable
amounts of earlier undeclared black money and thereby, eventually,
jacking up tax revenue.
But the actual prospect, right at this point of time, remains pretty much a
big question mark.
More so, given the quantum of data/cases involved and the past track
record of the concerned departments, the IT, in particular.
Not only that, given the already established track record of the
incumbent regime, there is room for very reasonable apprehensions that
these cases may only be selectively pursued in order to blackmail, silence
and arm-twist.
162
5. As regards the subsequently added goals, no appreciable rise in
digitisation of economy.
Formalisation of informal sector has presumably been initiated under the
impact of GST, again badly planned. No appreciable impact of
demonetisation demonstrated.
It is yet another matter that the very desirability of forcing the pace of
these two goals, under current Indian conditions, remains a much
contested issue.
6. The actions by the regime, especially, in refraining from selecting and
appointing a Lokpal, even after three and half years, and allowing
uncapped anonymous corporate donations to political parties, that too
craftily dodging any effective parliamentary scrutiny, raise serious doubts
as regards its real intentions vis-à-vis fighting corruptions.
So, does the lack of actions as regards various so-called papers leaked by
private parties giving out details pertaining to a large number of Indians
and Indian entities parking money in secretive foreign bank accounts.
And, also the fact that the Gross NPAs (Non-Performing Assets – bad
unrecoverable loans, mostly lent to large corporates) of the Public Sector
Banks (PSBs), under the watch of the incumbent regime, rose from Rs.
234,583 crore, in June 2014, to Rs. 733,136 crore, in June 2017. A more
than three-fold rise, over a period of three years.
Even if we, for the moment, just opt to set aside the various alleged
scams,
of pretty serious nature, that have surfaced only recently
directly involving the Modi regime and the BJP National President, on the
163
164-167
Demonetisation: One Year After 3
3
ground that these charges yet remain to be duly established before a
court of law.
7. The impact on the economy, as a whole, at least on the short term,
was decidedly negative.
The impact on the unorganised sectors, employing about 90% of the
workforce, was just disastrous.
8. Day-to-day lives of ordinary Indians were severely affected.
More than a hundred reportedly lost lives.
Millions lost means of livelihood.
9. All in all, it appears to be primarily a political move, meant to reap
political dividends, with scant regard for actual economic consequences,
though packaged very much in those terms.
168
10. Finally, it also indicates a degree of readiness on the part of the BJP,
led by Modi-Shah duo, to tweak its traditional core constituency and, in
the process, even hurt the small and medium business - in the interest of
big money and also to occasionally play to the gallery of the Indian
have-nots, even if not all of them.
169
25 11 2017
Notes and References:
1. Ref.: Narendra Modi takes oath as India’s 15th Prime Minister, dtd. May 26 2014,
at .
2. Ref.: Everything you need to know about Lok Sabha Verdict 2014 explained in 40
charts, dtd. Jun 06 2014, at .
3. Ref.: How the BJP won this election, dtd. May 17 2014, at
.
4. Ref.: BJP's 31% lowest vote share of any party to win majority, dtd. May 19 2014,
at .
5. Ref.: BJP releases manifesto, promises to improve economy, end policy
paralysis, dtd. Apr. 7 2014, at .
6. Ref.: Policy Paralysis, dtd. Sept. 13 2013, at
.
7. Watch, e.g.: Shri Narendra Modi promises to people 15-20 lakh as BJP will bring
the black money back to India at
.
8. Ref.: Boon or tragedy? Government, opposition parties battle it out on note ban
anniversary, dtd. Nov. 8 2017, at .
34
9. Ref.: Opposition to observe November 8, note ban anniversary, as 'black day',
dtd. Oct. 24 2017, at .
10. Ref.: Nov. 8 anti-black money day: Jaitley, dtd. Oct. 25 2017, at
.
11. Source: Modi's surgical strike on black money, dtd. Nov. 8 2016, at
.
12. Ref.: Here's The Full Text Of Modi's Speech On The Discontinuation Of ₹500
And ₹1,000 Bank Notes, dtd. Nov. 9 2016, at
.
13. Ref.:
India’s cash-to-GDP ratio was over 13% before the November 2016 note ban, which
is now estimated to be at around 11% of the GDP.
(Source: Cash in use 26% less than November 8 levels, withdrawals fall for fourth
week, dtd. Apr. 10 2017, at
.)
14. Ref.: Ninety seven per cent of retail transactions still cash-based, says USAID
report, dtd. Jan. 22 2016, at .
15. Also:
About 98 percent of all consumer payments in India use cash, and the high
frequency of handling forces the monetary authority to withdraw about 75 percent of
its notes in circulation in a typical year - more than the number of bank notes
collectively produced by all countries taken together with the exception of China.
(Source: What government plans to do with the old Rs 500, 1,000 notes, dtd. Nov.
23 2016, at .)
16. Ref., e.g.: Your money's no good: rupee note cancellation plunges India into
panic, dtd. Nov. 10 2016, at
.
17. Ref.:
Featured are summary views, solicited by The Tribune, on the government’s
demonetisation move from nine economists of impeccable credentials, differing
ages, a spectrum of ideological persuasions, and a variety of locations. We
encounter amidst this diversity of backgrounds a profound sameness of opinion, as
reflected in unanimous denunciation of the government’s action in sentiments and
assessments such as: “essentially political
move,...insensitive,…,gratuitous,..,appalling”; “firing cannonballs to kill mosquitoes”
[emphasis added]; “arrogance and insensitivity”; “an exercise in Manichean
economics”; “authoritarian quackery”; “heavy cost to the economy”; “frightening
abandonment of reason”; “throwing the baby out while retaining the bathwater”; and
“a cavalier or even cynical political calculation”Here’s a cross-section of scholarly
opinion.
(Source: Economists speak up on demonetisation, dtd. Dec. 5 2016, at
.)
Demonetisation: One Year After 3
5
18. Also: Demonetization: Winners, losers, and the utterly devastated, Dtd. Dec. 22
2016, at .
19. Ref.: '2011 Indian anti-corruption movement' at
.
20. Watch: Reality of 15 lakh promise by Narendra Modi, dtd. Feb. 12 2015, at
.
It has been uploaded by a self-confessed supporter of Narendra Modi, interspersing
the original video clip (ref. note 6 above) with textual commentaries.
21. Ref.: We'll bring back black money in 150 days: BJP president Rajnath Singh,
dtd. April 21 2014, at .
22. Watch: Will bring back black money in 100 days: BJP chief Rajnath Singh, dtd.
April 1 2014, at .
23. See: Timeline of black money issue and formation of Special Investigation
Team, dtd. Feb. 9 2015, at .
24. Ref.: How Vijay Mallya flew to London via Delhi, dtd. March 11 2016, at
.
25. Ref.: Sushma Swaraj, Vasundhara Raje helped me: Lalit Modi, dtd. June 17
2015, at .
26. Ref.:
In 2014, the Central government introduced amendments to the 2013 Act diluting
the stringent provisions of social impact assessment and consent clauses in the
2013 Act by the promulgation of the Land Acquisition Ordinance under Article 123
on the last day of December 2014. The provisions of the ordinance were sought to
be kept alive by repeated promulgation on April 3 and May 30 of 2015.
(Source: Cloud over Land Acquisition Act, dtd. Aug. 11 2017, at
.)
27. Ref.: From ‘Living Monument of UPA Failure’, Has MNREGA Become PM Modi's
Fav Tool?, dtd. Feb. 1 2017, at .
28. Ref.: Yours is a 'Suit-Boot ki Sarkar, Rahul Gandhi Attacks Government in
Parliament', dtd. April 20 2015, at .
29. Ref.:
The cloth, made by the longstanding manufacturers Holland & Sherry which supplies
much of Savile Row, has to be specially made at a minimum of nine metres – this is
enough for Allen’s company to make two suits, which would cost upwards of
£15,000 (more for cloth with gold thread).
(Source: Narendra Modi's style tip for world leaders: wear a suit with your name
written on it: For his recent meeting with Barack Obama, India’s prime minister wore
a suit with his name written in the pinstripes, dtd. Jan. 26 2015, at
.)
30. Ref.: Modiji on Rs 15 lakh returning to accounts was a political 'jumla': Amit Shah
to ABP News, dtd. Feb. 5 2015, at .
36
31. Watch: Modiji's statement on Rs 15 lakh returning was just a political 'jumla' :
Amit Shah to ABP News, dtd. Feb. 5 2015, at
.
32. Ref.:
.
33. Ref.:
.
34. Ref.:
The historic Central Hall of Parliament will host a midnight function on June 30 to
launch the sweeping tax reform of GST, reminiscent of India's tryst with destiny on
the midnight of August 15, 1947.
(Source: Midnight Parliament central hall event to mark GST rollout, dtd. June 19
2017, at .)
35. Ref.: Shooting in the dark: The Bullet Train project is economically unviable, will
not lead to a transfer of technology and serve only a minuscule proportion of rail
passengers by Anil Dharker, dtd. Sept. 23 2017, at
.
36. Ref.: Bullet trains: Far too costly for India by Yogi Aggarwal, dtd. Sept. 28 2017,
at .
37. Ref.: LIVE: Bullet train project signifies India’s progress, says Narendra Modi,
dtd. Sept. 14 2017, at
.
38. Ref.: PIB press release: India’s rank rises to 100 in World Bank’s doing Business
Report, 2018, dtd. Oct. 31 2017, at
.
39. Ref.: Ease of business ranking also represents ‘ease of living life’, says PM
Modi, dtd. Nov. 5 2017, at .
40. Ref.: Moody's Upgrade Endorsement Of Reforms, Says Finance Minister Arun
Jaitley, dtd. Nov. 17 2017, at .
Also relevant: Modi government should not cheer Moody's recent upgrade. Read
why by MC Govardhana Rangan and Joel Rebello, dtd. Nov. 22 2017, at
.
41. Ref.: India slips 3 notches to 100 on Global Hunger Index; trails N Korea, Iraq,
dtd. Oct. 15 2017, at .
42. Ref.: India falls to 108 on World Economic Forum’s gender gap index, dtd. Nov.
2 2017, at .
43. Ref.:
“Therefore, ahead of the 2019 hustings, we expect Modi's policy initiatives to evolve
around three ‘C’s -- combating corruption; completing existing policy priorities
(resolving NPAs, fine-tuning GST, completing infra projects etc; and communication
Demonetisation: One Year After 3
7
to highlight how his various initiatives are helping the common man, especially in
rural areas,” Saynal [read: Sanyal] says.
(Source: Modi May Shun Major Reforms Till 2019: Barclays’ Siddhartha Sanyal, dtd.
Aug. 13 2017, at .)
Also relevant:
“Closer to the polls, Modi might consider deploying his political capital more to boost
BJP's ‘[Hindu?] nationalist’ credentials rather than its ‘reformist’ image”, argues
Sanyal.
44. Ref.: Mr. Modi’s Perilous Embrace of Hindu Extremists by (The New York Times)
Editorial Board, dtd. March 23 2017, at
.
45. Ref.: Decoded! Why Amit Shah and Modi picked Adityanath as Uttar Pradesh
Chief Minister by Aman Dwivedi, dtd. March 19 2017, at
.
46. Ref.: Government bans sale of cows for slaughter at cattle markets, restricts
trade, dtd. May 26 2017, at .
47. Ref.: 'Garib hatao': How the poor are being tricked with demonetisation, dtd.
Nov. 22 2016, at .
48. Source: Digging through India demonetization history — 12 Jan 1946 (Saturday)
and 16 Jan 1978 (Monday) at
.
49. Ref.: .
50. Ref.:
.
51. Source: Short-term note ban costs to outweigh long-term benefits:Rajan, dtd.
Sept. 4 2017, at .
52. Source: Demonetisation: On Nov 7, it was Govt which ‘advised’ RBI to ‘consider’
note ban, got RBI nod next day, dtd. Jan. 10 2017, at
.
53. Ref.: Understanding RBI Board’s role in Demonetisation 2016… at
.
54. Ref.: Arthakranti Proposal: 5-Point Plan To Revolutionalise India, dtd. Nov. 10
2016, at .
55. Ref.: THE MAN WHO GAVE MODI THE IDEA OF DEMONETISATION SLAMS
IMPLEMENTATION, dtd. Nov. 22 2016, at
.
56. Ref.: 'This Is Not What We Suggested', Says Anil Bokil, The Man Credited With
The Idea Of Demonetisation, dtd. Nov. 22 2016, at
.
38
57. Ref.: Behind Notes Ban, Team Of 6 Worked Secretly At PM Narendra Modi's
Home: Report, dtd. Dec. 9 2016, at .
58. Ref.: .
59. Ref.: One year of note ban: The ultra-secret move that no one came to know for
several months, dtd. Nov. 7 2017, at
.
60. Ref.: Why is Chief Economic Adviser Arvind Subramanian Missing in Action? by
Hemindra Hazari, dtd. Nov. 30 2016, at .
61. Source: Who advised Demonetisation? by Brijesh Kalappa, dtd. Nov. 8 2017, at
.
62. Ref.: 'India: Citizens’ Statement on De-monetisation (November 15, 2016)' at
.
63. Ref.: House panel criticises RBI governor for inability to answer demonetisation
questions, dtd. Jan. 18 2017, at
.
64. Ref.: After 6 months, RBI still in dark on junked notes, dtd. May 10 2017, at
.
65. Ref.: Disclosing Reasons for Demonetisation Will Hurt India, Says RBI, dtd. Dec.
29 2016, at .
66. Ref.: No clue on note ban impact on black money: RBI, Sept. 4 2017, at
.
67. See:
.
68. Source: 'Viewpoint: Why Modi's currency gamble was 'epic failure' by Vivek Kaul
, dtd. August 30 2017, at .
69. Source: No clue on note ban impact on black money: RBI, dtd. Sept. 4 2017, at
.
70. Source: RBI says 98.96% of Rs 500, Rs 1000 notes returned after
demonetisation, dtd. Aug. 31 2017, at
.
71. See, e.g.: RBI says 99% of demonetised Rs 500, Rs 1,000 returned to banking
system, dtd. Aug. 31 2017, at .
72. Source: Demonetisation: Government may take ordinance route to cancel
unreturned currency, dtd. Dec. 7 2016, at
.
Demonetisation: One Year After 3
9
73. Source: Demonetisation: Value of Rs 500 and Rs 1,000 fakes around Rs 41
crore, says RBI Annual Report, dtd. Aug. 31 2017, at
.
74. Source: RBI Data Shows Amount Of Fake Currency Insignificant, dtd. Aug 30
2017, at .
75. Source: One year of demonetisation: Rs 2,000, Rs 500 fakes are now of ‘highest
quality’, dtd. Nov. 8 2017, at
.
76. Ref.: Fake Rs 2,000 notes seized: Here’s how similar they are to real currency,
dtd. Nov. 18 2017, at .
77. Ref.: Fake notes more than double of what was estimated: RBI, dtd. Aug. 30
2017, at .
78. Ref.: Secret study pegs value of fake notes in circulation at Rs 400 crore, dtd.
Nov. 15 2016, at .
79. Ref.: ANSWER (a), on p. 1 at
.
(As per the answer provided by the concerned Minister of State in the Lok Sabha,
on, presumably, Aug. 5 2016, the combined value of seized counterfeit Rs. 1,000
and Rs. 500 notes in the year 2015 was Rs. 32.78 crore.)
80. Ref.: Demonetisation: How Much of Black Money is in Cash by Vivek Kaul, dtd.
Dec. 13 2016, at
.
81. Source: Why govt’s demonetisation move may fail to win the war against black
money, dtd. Feb. 16 2017, at .
82. Source: Demonetisation: Government may take ordinance route to cancel
unreturned currency, dtd. Dec. 7 2016, at
.
83. Ref.:
After demonetising Rs 500 and Rs 1,000 notes, the government is considering
depositing Rs 10,000 in the Jan Dhan accounts, particularly those with zero balance.
This grand, populist gesture of turning a political jumla into a tangible benefit for
people, could be carried out before the crucial elections in Uttar Pradesh, Punjab
and Goa.
There are nearly 25 crore Jan Dhan accounts in the country, of which nearly 5.8
crore are zero-balance accounts.
Depositing Rs 10,000 in zero balance Jan Dhan accounts is expected to cost the
government nearly Rs 58,000 crore. Analysts have calculated that the government’s
demonetisation move will result in a windfall of Rs 3 lakh crore to the RBI which it
will pass on to the government.
Highly placed sources said that after targeting black money hoarders, the
government “has to send a signal to poor farmers, among others, that the benefits
are being passed on to them.” A reward for their hardship, perhaps.
40
This step, if taken, could be a game-changer and impact Assembly elections
expected to be held by April next year.
(Source: Age Exclusive: Jan Dhan accounts may get Rs 10,000, dtd. Nov. 20 2016,
at .)
84. Ref.: Government to credit Rs 10,000 in every zero balance Jan Dhan account,
dtd. Nov. 20 2016, at .
85. Ref.:
(I)mplementation (of demonetisation) has been badly bungled, and will hit economic
growth for two or more quarters. In a worst-case scenario, this will mean a serious
recession. Voters willing to tolerate temporary travails could turn savagely against
Modi if a sinking economy crushes employment. Without new reforms,
demonetisation cannot kill black money, which will soon boom again.
Yet Modi could emerge in total triumph, by combining imaginative accounting,
populism and good economic sense. ...
Nevertheless, not all hoarders of high-value notes will be able to exchange or
launder them by December-end. Nobody knows how large this un-encashed hoard
will be. I suspect it may be 20% of the total, worth Rs 3 lakh crore.
...
What will Modi do with this windfall? He can transfer a whopping Rs 10,000 into
each of 250 million Jan Dhan accounts that have been opened since he came to
power. This will absorb Rs 2.5 lakh crore, leaving Rs 50,000 crore for other
purposes like infrastructure. He could also hold a lottery to distribute part of this Rs
50,000 crore to all other citizens, giving every voter a chance to benefit from the
bonanza.
(Source.: Now, Modi can turn kala dhan to Jan Dhan by Swaminathan S Anklesaria
Aiyar, dtd. Nov. 27 2016, at
.)
86. Ref.: Rs 50,000 or Rs 75,000? Allahabad poor debate rumour that government
will put cash in their accounts, dtd. Nov. 30 2016, at
.
87. Source: Tax collection up since demonetisation, says government, dtd. August
31 2017, at .
88. Ref.:
(T)he note ban would not eliminate black money. The same objective could be
achieved even with the old notes circulating for two or three months and citizens
being given enough time for replacing the old notes.
(Source: The fish, crocodile and note ban by T M Thomas Isaac, dtd. Nov. 9 2017,
at .)
89. Ref.: Government asks banks to deposit junked notes at RBI by July 20, dtd.
June 22 2017, at
.
90. Ref.: RBI refuses to deposit Maharashtra cooperative banks’ Rs200 crore in old
notes, dtd. July 22 2017, at .
91. Ref.:
Demonetisation: One Year After 4
1
Making another serious observation on the government's demonetisation deadline
that stopped people from exchanging their old notes beyond December 30, the
Supreme Court today said the government can't deny citizens, who have valid
reasons, the right to swap the scrapped notes.
(Source: SC asks govt to explain why 'genuine people' can't exchange old Rs 500
and Rs 1000 notes, dtd. July 4 2017, at
.)
92. Ref.:
9. There may be some who, for some reason, are not able to deposit their old five
hundred or thousand rupee notes by 30th December 2016.
10. They can go to specified offices of the Reserve Bank of India up to 31st March
2017 and deposit the notes after submitting a declaration form.
(Source: Here's The Full Text Of Modi's Speech On The Discontinuation Of ₹500
And ₹1,000 Bank Notes, dtd. Nov. 9 2016, at
.)
93. Ref.: Meet the five members of PM Narendra Modi’s Economic Advisory Council,
dtd. Sept. 26 2017, at .
94. Ref.: No Proof Required: Demonetisation and its contents, dtd. Nov. 8 2017, at
.
95. Ref.: One year of demonetisation: Tax compliance better, more funds for banks,
dtd. Nov. 7 2017, at
.
96. Ref.: New Income Tax Slabs and Rates for Financial Year: 2017-18 at
.
97. Ref.: WAS DEMONETISATION WORTH IT AT ALL? by Basant Potnuru, dtd.
Sept. 19 2017, at .
98. Ref.: ‘With increasing use of data analytics tools, tax department’s capabilities of
data mining have increased manifold’, dtd. Nov. 8 2017, at
.
99. Source: India Unearths $1 Billion of Suspicious Cash in Corruption Crackdown,
dtd. Oct. 24 2017, at .
100. Ref.: Recovery of undisclosed income post demonitization at
.
101. Ref., e.g.: EXCLUSIVE Demonetisation: How crores of undisclosed cash
moved into lakhs of bank accounts, dtd. Nov. 15 2017, at
.
102. Ref.: [Political] [Demonitisation] Got this mail from the PMO today., posted on
Nov. 10 2017, at
.
42
103. Ref.: Discordant notes: a year after demonetisation by Puja Mehra, dtd. Nov. 8
2017, at .
104. Ref.: .
105. Ref.:
The Supreme Court on Thursday (April 27 2017) directed the government *to
immediately implement the Lokpal and Lokayuktas Act and appoint a Lokpal*
[emphasis added].
The statutory post of Lokpal has been vacant since the law was enacted in 2013.
A bench comprising justices Ranjan Gogoi and Navin Sinha rejected the
government’s contention that a Lokpal cannot be appointed because certain
amendments to the law are pending before Parliament.
“There is no justification to keep the enforcement of the Act under suspension till the
proposed amendments are carried out,” the court said.
(Source: Supreme Court directs govt to implement Lokpal and Lokayuktas Act, dtd.
April 27 2017, at
.)
Also see: Anna Hazare says Narendra Modi averse to appointing a Lokpal, dtd. Oct.
02 2017, at .
106. Source: At Stake In Chhattisgarh by S Y Quraishi, dtd. Dec. 31 2015, at
.
107. Ref.:
An omitted proviso and a tweaked sub-section, buried deep in a money bill passed
in Parliament’s recently concluded Budget Session, has fundamentally altered
India’s democracy by letting corporations anonymously donate unlimited amounts of
cash to the political party of their choice.
...
... (C)ritics say removing funding caps and disclosure norms will buy corporations -both Indian and foreign -- disproportionate influence over regulatory policy, and offer
a lucrative tax-free conduit to launder money through India’s 2,041 registered parties
– most of whom have never fought an election and exist only in name.
(Source: Finance Bill: Minor legislative tweaks prompt major fears for democracy’s
future, dtd. April 14 2017, at .)
Also relevant is the fact that the Rajya Sabha had duly noted the dangerous
implications of the amendment enabling uncapped anonymous donations to political
parties.
But the Lok Sabha, where the BJP enjoys brute majority, summarily, by voice vote,
rejected the five amendments, including one reversing this provision, passed by the
Rajya Sabha.
Ref.:
Parliament on Thursday [March 30 2017] approved the Finance Bill 2017 after the
Lok Sabha rejected five amendments moved to it by the Upper House with regard to
curbing more powers to taxmen and a cap on donation by companies to political
parties.
...
The government had yesterday faced major embarrassment in the Rajya Sabha as
five amendments moved by the Congress and the CPI(M) to the Finance Bill were
adopted and approved by the House.
...
Demonetisation: One Year After 4
3
The Rajya Sabha also approved an amendment that there should be a cap of 7.5
per cent of net profit of the last three financial years for donation to political parties. It
also approved a provision to disclose the name of political parties to which
contribution has been made by a company.
(Source: Parliament approves Finance Bill 2017 in its original form; Lok Sabha
rejects amendments by Rajya Sabha, dtd. July 18 2017, at
.
108. Ref.: It's a tragedy the media failed to see how Finance Bill endangers idea of
India, dtd. March 24 2017, at .
109. For a reasoned analysis of the implications, see: The Big Corporate Takeover
of Political Funding, dtd. May 14 2017, at
.
For another revealing analysis of the sinister implications of this move: The danger
of electoral bonds by G Sampath, dtd. Nov. 20 2017, at
.
110. Ref.: BJP reverses stand on bringing parties under RTI, dtd. Aug 1 2014, at
.
111. Ref.: Can’t bring political parties under RTI, Centre tells Supreme Court, dtd.
Aug. 24 2015, at .
112. Ref.: Why Paradise Papers Matter: Two Explanatory Notes, posted on Nov. 6
2017, at
.
113. Source: Paradise papers: Congress dares PM to sack Jayant Sinha, Left says
black money fight has failed, dtd. Nov. 7 2017, at
.
114. Ref.: Panama papers: I-T slaps criminal charges under new anti-black money
law, dtd. Nov. 19 2017, at .
115. Ref.: Arun Jaitley calls demonetisation a success, says terrorists hit by fund
shortage, dtd. Nov. 8 2017, at .
116. Ref.: Demonetisation’s Strike on Terrorism is another Blatant Lie by the
Government by Saquib Salim, dtd. Dec. 3 2016, at
.
117. Ref.: [Political] [Demonitisation] Got this mail from the PMO today., posted on
Nov. 10 2017, at
.
118. Ref.: Stone pelting incidents have come down 'to some extent': Army Chief
Bipin Rawat. dtd. Nov. 10, at .
44
119. Ref.: Modi Government Likely To Get Corruption Tag As UPA-II:
Chidambaram, dtd. Nov. 19 2017, at .
120. Source: Calling black white by Arun Kumar, dtd. Sept. 8 2017, at
.
121. Ref.: Narendra Modi urges youth to lead move to a cashless society, dtd. Nov.
28 2016, at .
122. Ref.: BJP launches drive to raise awareness on cashless transactions, dtd.
Nov. 29 2016, at .
123. Ref.: Arun Jaitley Says Cashless Economy Is A Less Cash Economy And Not
Fully Cashless One, dtd. Dec. 15 2016, at .
124. Ref.: Tweet by Amit Shah, posted on De. 17 2016, at
.
125. For an impressively argued concise list of assessed motivations, ref.: Death By
Demonetisation by Satya Sagar, dtd. Nov. 17 2016, at
.
125a. Also noteworthy, the view proffered by a very eminent grassroots activist:
This is an anti-poor policy. This decision by Narendra Modi will in no way help to
curb black money. Everyone knows this, including the prime minister himself.
Modi has a list of 2,000 people whose net worth is upward of $1.3 trillion. Why
doesn't he go after them? If he wants to catch those that mint black money and
evade taxes, go after them. Surgically strike them instead of going after the entire
population of 120 crore.
...
(The agenda is to) move everyone to what they call a 'plastic economy'. To force the
masses - a huge percentage of which has no access to banks, don't have accounts
and deals only in cash - to shift to online transactions. [Emphasis added.]
We are now entering a new world, the world of 'cashless' economy. But small
traders, vegetable vendors, labourers, farmers or sanitation workers don't live in this
world. Only the rich inhabit this new world. Everyone swipes their card in this new
world and uses Paytm. I did not know till yesterday what Paytm is.
And those who don't conform to the rules of this new world are being punished. This
is only to make richer even richer and to punish the poor for being poor, by keeping
them out of major financial activity.
If you remember, the list of billionaires shot up after the 1990 reforms. After this
move, you can expect the same to happen, on a much larger scale.
(Source: Agenda driving Modi govt's demonetisation move is clear: activist Bezwada
Wilson, dtd. Nov. 20 2016, at .)
126. Quite a different view, from Satya Sagar, again pretty neatly argued, would,
however, be put across by C Rammanohar Reddy, an economist and author of the
book Demonetisation and Black Money..
Ref.: Hiding a catastrophe, dtd. Nov. 6 2017, at
.
127. Ref.: Tweet by Prashant Bhushan, posted on Nov. 9 2016, at
.
127a. Ref.:
Speaking at an event organised by “Lokshahi Bachao Abhiyan”, where former
Gujarat chief minister Suresh Mehta was also present, (Yashwant) Sinha said,
Demonetisation: One Year After 4
5
“Demonetisation was considered so important that the PM decided that he himself
will announce it, instead of allowing the RBI Governor or the Finance Minister to do
it. While announcing it through an hour-long speech, he mentioned black money 74
or 75 times. Fake currency and terrorism were also mentioned, but no where [sic]
was digital and cashless economy mentioned [emphasis added].”
(Source: Demonetisation has caused a loss of Rs 3.75 lakh crore, economy
standing on one leg: Yashwant Sinha, dtd. Nov. 15 2017, at
.
128. Ref.: Demonetisation anniversary: Note ban ethical, moral decision, says Arun
Jaitley, dtd. Nov. 8 2017, at .
129. Ref.: No moral halo: Demonetisation needs to be examined and debated,
primarily and above all, for its economic merits and consequences., Indian Express
Editorial, dtd. Nov. 8 2017, at .
130. Ref., e.g.:
The World Bank report is of the view that demonetisation has the potential to
accelerate the formalisation of the economy.
Informal economy accounted for over half of India's GDP as of 2008-09 and 82 per
cent of non-agricultural employment.
"Demonetisation promotes a reallocation of resources from the informal to the formal
economy ... Many firms that had been reluctant to formalise now adopted digital
payments, moving a step closer to formalisation, thanks to the demonetisation
exercise," it added.
Formalisation is ultimately a positive transformation that can lead to greater
efficiency, World Bank said, adding that India's low aggregate productivity is in part
due to the prevalence of a large number of informal unproductive firms.
(Source: Successful Demonetisation To Help Increase Revenue In Long Run: World
Bank.dtd. 2016, at .)
131. Ref.: Demonetisation: Manmohan Singh To Modi - Time For Politicking Over,
Let’s Rebuild The Economy, dtd. Nov.. 6 2017, at
.
132. Ref.: A ‘Jhatka’ To Push Formalisation In The Economy Could Come At A Cost:
Raghuram Rajan, dtd. Sept. 8 2017, at
.
133. Ref.: Demonetisation, inequality and informal sector by Himanshu, an
Associate Professor at Jawaharlal Nehru University, dtd. Nov. 6 2017, at
.
134. Ref.: An extract from 'Demonetisation and Black Money' (by economist C.
Rammanohar Reddy), dtd. March 20 2017, at .
135. Ref.:
More than 90% of the workforce in India is working as informal labour. These
workers, who are without any written contract, social security benefit and security of
tenure, have seen their numbers swell in not just the unorganized sector, which is
almost entirely informal, but also in the organized sector. According to the 2011-12
employment and unemployment survey of the National Sample Survey Office
(NSSO ), nearly 50% of workers are employed as informal workers. The share of
workers in the private organized sector is as high as two-thirds of all employment.
46
Increasing recourse to contractual workers by the organized sector is a trend that
has gained momentum in the last decade, swelling the ranks of informal workers.
But the informal sector, which contributes to almost half of national income and
employs more than 90% of all workers, remains neglected in most policy initiatives.
It was also the biggest sufferer in the demonetization drive last year but has
bounced back since then. Despite its overwhelming contribution to the economy and
employment, it is generally seen as parasitic with no contribution to tax income of
the government and also because it is unregulated.
(Source: Is informal the new normal? by Himanshu, dtd. May 22 21017, at
.)
136. Ref.:
About 370 million workers constituting 92% of the total workforce in a country were
employed in the unorganized sector as per NSS Survey 1999-2000. It plays a vital
role in terms of providing employment opportunity to large segment of the working
force in the country and contributes to the national product significantly. The
contribution of the unorganised sector to the net domestic product and its share in
the total NDP at current prices has been over 60%. In the matter of savings the
share of household sector in the total gross domestic saving mainly unorganised
sector is about three fourth.
(Source: Indian Informal Sector: an Analysis by Dr. Muna Kalyani, p. 80/81 in the
'International Journal of Managerial Studies and Research (IJMSR)', Volume 4,
Issue 1, January 2016.)
137. Ref.: Demonetisation Has Failed to Tackle Black Money by Karan Thapar, dtd.
Nov. 11 2017, at .
138. Ref.: Economic Rationale of ‘Demonetisation’: Scrutiny of the Government’s
Claims by Vineet Kohli and R Ramakumar, dtd. Dec. 31 2016, at
.
139. Ref.: One year after demonetisation, cash is still king by Roshan Kishore, dtd.
Nov. 8 2017, at
.
140. Ref.: India’s dream of going cashless is just that…a dream by Nupur Anand,
dtd. Nov. 13 2017, at .
141. Ref.: Modi’s Himalayan Miracle by Abheek Barman, dtd. Nov. 26 2013, at
.
142. Ref.:
According to the Reserve Bank of India (RBI) data, India had 215,039 ATMs at the
end of June 2016. This was 182,687 at the end of December 2014, and 205,328 at
the end of 2015, which is a growth of over 12%.
(Source: 19.71: Number of ATMs per 100,000 adults, dtd. Dec. 14 2016, at
.)
143. Ref.:
The process of demonetisation involves the recalibration of ATMs all across the
country since the size of the newly introduced Rs 2000 note is different from that of
the notes currently in circulation. There are about two lakh ATMs in India which need
to be recalibrated.
(Source: Demonetisation: The recalibration of ATMs and what it entails, explained,
dtd. Nov. 24 2016 at .)
Demonetisation: One Year After 4
7
Also ref., e.g.: Rs 500, Rs 1,000 notes banned: What is ATM Recalibration and why
it could take 2-3 weeks, dtd. Nov. 2016 at .
144. This is how one of the very few eminent economists who had supported
demonetisation would react:
(Nobel Laureate) Professor (Richard) Thaler didn’t mince his words in his response.
He replied, “The concept (of demonetisation) was good as a move to a cashless
society to impede corruption but the rollout was deeply flawed and the introduction
of the Rs 2000 note makes the motivation for the entire exercise puzzling [emphasis
added].”
(Source: Demonetisation roll-out deeply flawed, introduction of Rs 2000 notes
puzzling: Richard Thaler, Nobel Laureate by Sam Jawed, dtd. Nov. 18 2017, at
.)
145. Ref., e.g.:
In the initial days of remonetisation, RBI had focused on Rs 2000 notes to quickly
increase currency in circulation.
(Source: RBI stops printing Rs 2000 notes, focus now on new Rs 200 notes, dtd.
July 26 2017, at .)
146. Ref.:
If lower denomination notes (Rs 500 and below) are the focus, why did the
government/ Reserve Bank of India flood the system with Rs 2,000 notes in the days
that followed demonetisation when general public was reeling under severe cash
crunch? The Rs 2,000 notes did little help to ease the misery of the common man
and small traders, since there was no change available in the markets.
(Source: Forget U-turn on Rs 1,000 notes, why did govt launch Rs 2,000 notes in
the first place? by Dinesh Unnikrishnan, dtd. Feb. 22 2017, at
.)
147. Ref.: Demonetisation: A look at the changing rules for withdrawals and
deposits, dtd. March 31 2017, at .
148. Ref.:
The Reserve Bank of India has today (Nov. 14 2016) clarified that District Central
Cooperative Banks (DCCBs) can allow their existing customers to withdraw money
from their accounts upto Rs 24,000 per week upto November 24, 2016. However, no
exchange facility against the specified bank notes (Rs 500 and Rs 1000) or deposit
of such notes should be entertained by them [emphasis added].
(Source.: Here’s how RBI changed, reworked demonetisation guidelines, dtd. Dec.
19 2016, at .)
149. Ref., eg.:
The Supreme Court on Monday issued a notice to the Narendra Modi-led central
government, asking it to explain why it junked the November 8 notification which
stated that an opportunity will be given to those who are unable to deposit
demonetised notes by December 30 [emphasis added].
"For those who are unable to exchange their Specified Bank Notes on or before
December 30, 2016, an opportunity will be given to them to do so at specified offices
of the RBI, along with necessary documentation as may be specified by the Reserve
Bank of India," the November 8 notification had said.
...
48
"The Prime Minister's speech and the notification that followed clearly said that any
person who is unable to deposit the old notes before 31 December 2016 can do so
at specific branches of RBI," the lawyer for petitioners argued.
(Source: SC issues notice to Centre on plea against RBI's refusal to accept banned
notes, dtd. Nov. 6 2017, at .)
150. Ref.: MODI’S KEY AIDE BLAMES POOR PLANNING FOR INDIA’S
CURRENCY CRISIS, dtd. Nov. 13 2016, at .
151. Ref.:
"The concept was good as a move to a cashless society to impede corruption but
the rollout was deeply flawed and the introduction of the Rs 2000 note makes the
motivation for the entire exercise puzzling," Thaler said.
(Source: Demonetisation rollout 'deeply flawed', says Nobel winner Richard Thaler,
dtd. Nov. 19 2017, at .)
152. Ref.: 'No cash!': Simbu's 'Demonetization Anthem' takes a dig at note ban and
GST: The song appears in his upcoming film 'Thatrom Thookrom'., dtd. Nov. 11
2017, at .
153. Ref.: Here are the 105 people who died in 45 days of demonetisation by Shilpa
Shaji, dtd. Dec. 22 2016, at .
154. Ref.:
About 1.5 million jobs were lost during January-April 2017. The estimated total
employment during the period was 405 million compared to 406.5 million during the
preceding four months, September-December 2017.
These estimates are based on consecutive Waves of CMIE’s Consumer Pyramids
Household Surveys (CPHS). These are all-India household surveys over a sample
size of 161,167 households that included 519,285 adults. The most recent Wave
was conducted over the four month period of January through April 2017. This was
the first complete Wave post demonetisation. Demonetisation began in the middle of
the preceding Wave which was conducted from September through December
2017.
(Source: 1.5 million jobs lost in first four months of 2017 by Mahesh Vyas, dtd, July
11 2017, at