Demonetisation fails, `7.3 cr seized
Based on specific inputs, the Hyderabad police intercepted three vehicles on Wednesday morning and found `7.51 crore in cash. It was one of the biggest hauls after the election code of conduct came into play in TS, and was made a day ahead of the second anniversary of the demonetisation of high value currency notes.
The money was allegedly meant to be distributed as a bribe to voters in the elections. Police has so far seized `40 crore of unaccounted cash, confirming that one of the biggest sources of black money is political parties. Two years down the road since the `500 and `1,000 notes were scrapped, has the NDA government’s biggest strike against stash failed in its objective given that such ill-gotten money still exists as seizures testify?
Based on specific inputs, the Hyderabad police intercepted three vehicles on Wednesday morning and found `7.51 crore in cash.
According to the RBI, the currency in circulation increased to `19.6 lakh crore in October 2018 from `17.9 lakh crore on November 4, 2016.
Chief Economist of India Ratings & Research, Dr Devendra Kumar Pant, told this newspaper, “The RBI reported that 99.3 per cent of the banned money has been returned to the bank and now we see black money seized in different corners of the country. This indicates that there are loopholes still existing in the system. The generation of black money in the Indian economy has not died despite alteration and relaxation in the system.”
Satish Sha, professor of economics, said the exercise aimed at extinguishing black money received in the form of cash, has failed. Demonetisation was claimed to be the solution to the country's black money and counterfeit currency problems. Later it was labelled as a move to encourage digital payments. Now that the RBI report is out, and cash as a payment instrument is still dominating the payment space, it is unclear if demonetisation made the promised progress, he said.
In the past 24 months, cash withdrawals from ATMs have increased by eight per cent. Online transactions too have increased. Mobile banking transactions rose to
`2.06 lakh crore in August
2018 from `1.13 lakh crore in October 2016.
Despite this, there are still questions about whether the hardship to the public and damage to the small-scale cash-run businesses was worth anything.
BJP spokesperson Krishna Sagar Rao said the banning of high-value notes was the beginning of reform.
“Here are two issues to look into. The intent of the government was to reform governance. Eradicating black money is one of the facets of the demonetisation sphere, and to an extent it infused fear in the black market circuit, which is a good outcome. It has also resulted in the increased tax net. The grey market still operates but the government has made a beginning,” Mr Rao said