28 February, 2021

The Cash Demonetisation Economy

A year on, the bluff has been called on the stated objectivesof demonetisation, especially tackling black money. A few grains of positives cannot stand up to the wrecking ball it took to the Indian economy.

The Cash Demonetisation Economy

It has been copping much of the blame for the maladies afflicting the Indian economy, and it is at the faultline of all economic debates. In many ways, November 8, 2016 would go down as a watershed day for the economy. In one stroke, the government had launched a demonetisation of large denomination currency notes of Rs 500 and 1,000 in a bid to counter black money, counterfeit notes and funding of terror.

One year later, a cross section of the economy is still smarting from the sharp blows of that exercise: the GDP is severely hit, the manufacturing sector significantly affected and small and medium sectors worst hit. Whether demonetisation would achieve its objectives was a pertinent question from the earliest days; now, with the tenebrous air about the economy, they have gained a picquancy.

Economists and monetary experts have criticised the move as being unplanned and badly executed, as people across India had to endure months-long hardships—serpentine queues for withdrawing cash, sometimes lasting for days, were the norm, as remonetisation was slow and...

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