Long-term pain or gain?

One year after demonetisation, the Indian economy is still hurting People fear government’s decisions

Demonetisation has proved to be a goalpost changer, and nothing more than that. It was a missile shot at black money and corruption, but ended with Prime Minister Narendra Modi saying he will give allowances to pregnant women!

It seems that the aim of the process was not decided and Mr Modi came up on November 8 to announce that `500 and `1,000 currency notes would be banned and he declared that it will stop the flow of black money. After a few days, his statement changed and he told the nation that demonetisation was affecting terrorism, and at last gave a ridiculous reason — to give compensation to pregnant women. This clearly states that the government itself wasn’t sure of its action.

A decision which affected the Indian economy and its 125 crore people was taken as an adventure sport by the Prime Minister.

After a year, the Reserve Bank (RBI) of India data has proven that 99 per cent of the money was deposited in the banks and it was indeed a failure.

The RBI paid only `30,663 crore as dividend compared to `65,880 crore a year ago, and the note ban was one of the key reasons for lower profits.

On the expenditure side, the RBI spent `7,965 crore on printing new currency notes in 2016-17, more than double the `3,420 crore spent a year ago.

In its efforts to quickly remonetise the economy, the RBI issued 29 billion currency notes in 2016-17 compared to 21.2 billion a year earlier.

GDP growth, from 9.2 per cent in the last quarter of 2015-16 has slipped down to 5.7 per cent, but no one in the government is admitting the fact. A Ficci survey on manufacturing showed that a staggering 73 per cent of respondents said they are unlikely to hire any additional workforce over the next three months. This was mildly lower than the 77 per cent of respondents showing a similar concern earlier.

Slow hiring may put more pressure on the market even as job losses continue to be a major concern in the post demo net is at ion era. According to another study, the government’s demonetisation exercise is estimated to have wiped away around 1.5 million jobs.

Besides many discomforts to the people of India, we all would have accepted it if there could have been a single benefit to the nation. On the contrary, only losses have incurred. None of us can erase those difficulties we faced a year ago. There is a psychological threat in the minds of the people regarding the uncertainty of government decisions. The writer is an AICC secretary