People on note ban: What did we gain?

RESERVE BANK OF INDIA REVEALED THAT ALL BUT 1% OF DEMONETISED BANKNOTES WAS RETURNED TO THE BANKING SYSTEM

THIRUVANANTHAPURAM/BHOPAL: The thought of demonetisation sends shivers down NK Gopi’s spine. The 53-year old papad-maker of temple town Guruvayoor in Thiruvananthapuram recalls how he was forced to shut the shop for many days after the government’s shock recall of ~1000 and ~500 notes. Eight months on, doubts about benefits of demonetisation still linger.

“It seems it was a thoughtless decision. What did we achieve? All say in the long term it is good for the country. If present is not perfect how can you think about future? I hope the government will not try an experiment like this in future,” he says.

Demonetisation was billed as a one-shot fight against black money and tax freeloaders. But the move hobbled the economy and gobbled up thousands of jobs.

This week, the Reserve Bank of India revealed that all but 1% of demonetised banknotes was returned to the banking system, putting a question on the efficacy of the move that was widely blamed for angry farm protests in June that claimed several lives. A day later, the economy slowed down to its lowest growth rate in three years.

Last year, HT tracked people from various walks of life across the country to investigate how they were coping with a life bereft of cash. This week HT went back to the same people to ask if their lives were back to normal. Sunil Ghatiya was one of hundreds of farmers agitating for better crop prices and a loan waiver in Madhya Pradesh this June. A soyabean trader, Ghatiya blamed demonetisation notes for “finishing off the market” as the government wanted cheque payments.

Two-and-a-half months later, Ghatiya feels the situation has improved, but slightly. “The problem of liquidity remains, and the farmers still want cash for their produce,” he says. Ghatiya also questions the merit of demonetisation.

Vegetable farmers such as Nek Singh in Punjab’s Patiala said that adverse effect still lingered. “Traders who used to deal in cash earlier can’t function the same way. Plus there’s a limit of ~2 lakh cash dealing, it has made vegetable trade impractical,” he said.

But Ramesh Mistry in the West Bengal’s Sunderbans sounded a differing note. The SBI banking correspondent, who is the only source of fresh currency notes for residents of the remote region, says the situation is back to normal. “The long queues have vanished and people are now getting notes of smaller denomination. Several notes which were black were destroyed. I support this move.”