“It is difficult to pinpoint the impact of demonetisation,” the Minister of State for Finance P Radhakrishnan said in a written reply to the Rajya Sabha. One year and 11 days later, the government is either shying away from disclosing the impact of demonetisation or the government perhaps does not want to admit the impact of the massive exercise which led to the invalidation of 86% of the total currency in the economy and left it in the lurch.
First of all, the economy in the first quarter of the current fiscal slumped to a three-year low of 5.7%. Although the GST destocking was also one of the factors, demonetisation played the crucial role too. Moreover, post the note-ban, the cost of printing notes doubled to Rs 7,965 crore in the financial year 2016-2017 from Rs 3,421 crore in the financial year 2015-2016. The RBI had to halve its dividend payout to the government to Rs 30,659 crore for the fiscal ended June 2017, citing lower surplus.
According to the Centre for Monitoring Indian Economy more than 15 lakh jobs were lost in between January and April 2017 due to demonetisation. Even after demonetisation, whose principal aim was to flush out big currency notes, could only get only 12% of high denomination notes out of the system, the RBI data showed.
However, there were some benefits too. The government managed to track some shell companies, which were involved in tax evasion, and the income tax base has widened too, but the on the impact of demonetisation on the economy, the government is mostly mum.
The overall growth of the Indian economy is dependent on many factors, including the rate of capital formation and
savings and utilisation of technology, among others, said P Radhakrishnan said when asked whether Indian economy was stagnant due to demonetisation.