While the Opposition observed the first anniversary of the scrapping of Rs 1,000 and old Rs 500 currency notes on Wednesday as a “black day” to highlight the pain it inflicted on the masses and small industries, and the job losses and GDP growth slowdown it caused for no commensurate gains, the government and BJP unapologetically celebrated the occasion, the latter as “anti-black money day.” The day saw a heightening of a verbal slugfest over the note ban between government managers and the critics of Prime Minister Narendra Modi. The prime minister reiterated that demonetisation was a “decisive battle” 125 crore Indians fought against black money and won. He said he “bowed” to the people of India for supporting the measures taken by the government against corruption and black money.
In a series of tweets, Modi also posted short films on his twitter handle to showcase the benefits from the withdrawal of the nearly 87% of the currency in circulation in the intervening night of November 8-9 last year following a televised address by him. According to Modi, the move formalised the Indian economy and ensured better jobs for the poor, while cleansing the financial system. However, writing for London-headquartered Financial Times, Congress vice-president Rahul Gandhi launched a frontal attack on the note ban, calling it a “big scam” and a “tragedy”. He said the livelihood of millions of honest Indians were destroyed due to the prime minister’s “thoughtless act”. “Modi’s reforms have robbed India of its economic prowess,” he wrote, reiterating that it had wiped out 2% of GDP and “ruined” the lives of millions of workers.
On their part, industry chambers were also divided over the impact of demonetisation on businesses and the economy. While Confederation of Indian Industry director-general Chandrajit Banerjee said demonetisation is “now translating into results such as increase in tax base, lower cash to GDP ratio, and rise in digital transactions”, PHD Chamber of Commerce and Industry president Anil Khaitan said that the (adverse) “effects of demonetisation are still persisting as demand in the economy is still lacklustre and business firms are still not enthusiastic in production process”. Khaitan added: “Demonetisation drive has impacted the businesses directly or indirectly in terms of impact on demand and sales. The impact…is majorly seen on small businesses as they are highly driven by cash transactions.”
Reacting to finance minister Arun Jaitley’s statement that demonetisation was “an ethical drive and moral step”, his predecessor P Chidambaram said on Wednesday asked in a series of tweets: “Was it ethical to heap misery on millions of people, especially 15 crore daily wage earners?”… Was it ethical to destroy 15 lakh regular jobs during Jan-April 2017?… Was it ethical to force thousands of micro and small businesses to close down?… Was it ethical to damage vibrant industrial hubs like Surat, Bhiwandi, Moradabad, Agra, Ludhiana and Tiruppur?… Was it ethical to give an easy way for converting black money into white as now discovered by government?”
The Trinamool Congress observed a “black day” throughout West Bengal to mark the anniversary with party leaders and state ministers leading protest marches and workers burning effigies of Modi. Party supremo and chief minister Mamata Banerjee described demonetisation as “DeMoDisaster” and turned her Twitter display picture black. On his part, Gandhi also attacked the way the goods and services tax (GST) is being implemented. “Bureaucratic and complex, it (GST) has devastated livelihoods, creating a modern day ‘licence raj’ that imposes rigid controls and gives vast powers to government officials,” he said.
GDP growth came down from 7% in Q3FY17 to 6.1% in Q4FY17 and further to 5.7% in Q1FY18. While statisticians point out that when the informal economy is better represented, the growth rates could be revised further downwards, the jury is still out on whether the note ban’s adverse effect on the economy has withered away or if the economy has indeed bottomed out.