3 years of Demonetisation: Core issues still prevail on ground

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Updated: Nov 06, 2019 6:17 PM

Terrorist activities in the last three years in India have significantly increased from the pre-demonetisation level of 2015.

demonetisation, notebandi, note ban, rs 200 new note, rs 500 new note, currency in circulation, demonetisation anniversaryDemonetisation was mainly aimed at curbing black money, per Narendra Modi’s highly watched address to the nation on the evening of 8 November 2016.

As India marks the third anniversary of demonetisation this week, Prime Minister Narendra Modi’s shock move has shown mixed results on many core purposes of its implementation. Demonetisation was mainly aimed at curbing black money, per Narendra Modi’s highly watched address to the nation on the evening of 8 November 2016. Among the other objectives of the move were eliminating counterfeit currency, stopping terrorism, and boosting digital payments. While digital payments skyrocketed in India since November 2016, India has not marked a significant improvement in the status of black money. In fact, the Rs 2,000 note, introduced to curb black money, has itself been stopped from printing for the same reasons. Altogether, the digital payments surged but cash is still the king. Meanwhile, terrorist activities in the last three years in India have significantly increased from the pre-demonetisation level of 2015.

How India fared on various fronts since Demonetisation

Digital payments: Boosting digital payments while reducing the cash in circulation in the economy to curb black money and counterfeit currency was one of the core objectives of the government. Years later, though the digital payments undoubtedly rose at the highest pace in the world, cash, on the other hand, is still the king.

“Cash, contrary to perception, has not gone down except in the brief phase post demonetisation. During this time, digital transactions took off and reached great volumes but as cash came in, the digital volumes slipped. So while digital transactions are still more than double of what it was before, the cash in circulation is also quite strong,” Ramaswamy Venkatachalam, MD-Banking and Payments, FIS, told Financial Express Online.  

Among other reasons, there have been a few high profile reports of people being defrauded and this too pushed some demographics of customers to shun all the digital payment modes and thus increasing cash demand, Ramaswamy Venkatachalam added.  

Also Read: UPI payments shot up 8.7 folds in one year; these reasons still keep cash in game

Black money: One of the major goals of the Narendra Modi-led government to call demonetisation was to curb black money in India. The RBI introduced high-value denominations of Rs 500 and Rs 2,000 for the same cause, restricting the older notes of Rs 500 and Rs 1,000 from circulation. However, in around two-and-a-half years, the government stopped the printing of the newly introduced Rs 2,000 notes, citing increasing black money as the reason behind it. Stacks of high denomination notes were found in multiple tax raids even last month.

Also Read: Rs 2,000 note introduced to curb black money, hoarding stopped from printing for same reasons 

Counterfeit currency: Compared to the pre-demonetisation level of counterfeit notes, the present number is much appreciable. In the year 2015-16, more than 4 lakh fake notes of Rs 500 and Rs 1,000 were captured. This number reduced to 45,400 fake notes of Rs 500 and Rs 2,000 in 2018-19. However, the number of fake notes among the new design notes of Rs 500 more than doubled with an increase of 121 per cent whereas those of Rs 2000 increased by 21.9 per cent over the previous year during 2018-19, according to the latest annual report of RBI.

Terrorism: It was believed that stopping the high-value currency from circulating will restrict funds used for terrorist activities which will gradually decrease the terrorist activities in the country. But, on the contrary, the number of such incidence rose in the years 2016, 2017, and 2018, compared to 2015. While 728 people died in terrorist activities in 2015; the number of casualties rose to 905, 812, and 940 in such activities in 2016, 2017, and 2018, according to the South Asia Terrorism Portal (SATP) data.

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