The Hitavada - - THEOPINIONPAGE -

TWO years ago, the sud­den move by the Gov­ern­ment to de­mon­e­tise cur­rency par­tially left the na­tion stunned and rather an­guished as mostly the com­mon peo­ple faced the un­fore­seen prospect of hav­ing to make do with­out cash for some time. Farm­ers, too, were hit hard as they did not have cash in hand to deal in the post-har­vest mar­ket. ‘Chaos’ was one word that dom­i­nated peo­ple’s think­ing for some time as every­body grap­pled with the new con­di­tion when new cur­rency notes were not fully avail­able to the peo­ple and the old notes stood banned and ban­ished. Al­le­ga­tions flew wild even as the Gov­ern­ment de­fended the de­ci­sion by putting for­ward many gains that the move would bring about. Two years later, it can be said with con­fi­dence that the move of de­mon­eti­sa­tion has had its many ben­e­fits in­clud­ing a mas­sive ex­pan­sion of the in­come tax pay­ing pop­u­la­tion, as is clear from the stout de­fence put up by Union Fi­nance Min­is­ter Mr. Arun Jait­ley. He has proved on the strength of sta­tis­ti­cal data that the move of de­mon­eti­sa­tion proved suc­cess­ful in many ways, in­clud­ing pro­tect­ing the tag that In­dia is the fastest-grow­ing in the world for the fifth year in a row.

Of course, noted econ­o­mist and for­mer Prime Min­is­ter Dr. Man­mo­han Singh has an­other view -- that the prob­lems that de­mon­eti­sa­tion cre­ated in its wake are still un­rav­el­ling. That view has a strong po­lit­i­cal un­der­tone which even a child can un­der­stand. As an Op­po­si­tion party, it is al­most a com­pul­sion on the Congress that its lead­ers would try to blast ev­ery move the Gov­ern­ment made. Let alone that, on ev­ery eco­nomic pa­ram­e­ter, the de­mon­eti­sa­tion move has proved all crit­ics wrong and has shown how the na­tion has ben­e­fit­ted in countless ways, in­clud­ing re­moval of black-money from cir­cu­la­tion to a great ex­tent.

The eco­nomic gains form only one part of the big story, how­ever. An­other as­pect of de­mon­eti­sa­tion is that the move shocked the slum­ber­ing econ­omy into an in­stant state of alert­ness, some­thing the Gov­ern­ment had been fail­ing to achieve for a long time. So hope­less had the con­di­tion be­come that the peo­ple never took the Gov­ern­ment se­ri­ously when­ever it talked of eco­nomic re­forms and the ac­com­pa­ny­ing so­cial res­ur­rec­tion from the ill­ef­fects of poor eco­nomic man­age­ment. De­mon­eti­sa­tion turned ev­ery­thing topsy-turvy and woke peo­ple up with a start. The most crit­i­cal gain of this boost of alert­ness among peo­ple was that vast per­cent­ages of peo­ple worked ever harder to re­store their eco­nomic sta­tus to the pre­vi­ous nor­mal level. Nat­u­rally, this added to an over­all re­fur­bish­ment of the eco­nomic process that helped ul­ti­mately in keep­ing the na­tion’s over­all com­pet­i­tive spirit in­tact. In turn, that helped the In­dian econ­omy to re­tain its tag as the world’s fastest-grow­ing econ­omy.

There is ev­ery rea­son to be­lieve Mr. Jait­ley’s state­ment that de­mon­eti­sa­tion pro­duced a mas­sive spurt of 80% in the num­ber of peo­ple fil­ing in­come tax re­turns, mas­sive in­crease in dig­i­tal trans­ac­tions, avail­abil­ity of more funds for the ben­e­fit of the poor and for in­fra­struc­ture devel­op­ment. Those with an an­tag­o­nis­tic po­lit­i­cal may have some other ar­gu­ments to for­ward, but the of­fi­cial num­bers are cred­i­ble enough to be be­lieved to­tally.

The worst part of de­mon­eti­sa­tion was the im­me­di­ate neg­a­tive im­pact on the com­mon man. He was left with no cash for a fairly long time and had no so­lu­tion to the prob­lem. Once that ini­tial chaotic state was over, things start­ing fall­ing into their re­spec­tive slots, giv­ing peo­ple a sense of re­turn to com­fort­able pos­ses­sion of cash with them. For the eco­nomic elite, noth­ing seems to have changed since they some­how man­aged to ‘buy’ new money from the banks where bankers’ moral­ity came in se­ri­ous ques­tion for hav­ing helped the elite in clan­des­tine man­ner to ex­change their old money with the new one. That did not talk of fail­ure of de­mon­eti­sa­tion move, but of the bank­ing sys­tem that had been manned by peo­ple with sus­pect in­tent. Seen in ret­ro­spect two years af­ter, the move of de­mon­eti­sa­tion ap­pears to have ben­e­fit­ted the econ­omy more than not.

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