It has been over 30-days since the announcement of "historic" demonetisation decision. Surprisingly, a majority of people in the country have suffered the "pain" silently, nullifying the opposition's threats of cash riots and chaos.
Announcing the government’s decision to demonetise old Rs 500 and Rs 1000 currency notes on November 8, Prime Minister Narendra Modi had asked 50 days of “temporary hardship” from the citizens for the “festival of integrity and credibility”.
“There comes a time in the history of a country’s development when a need is felt for a strong and decisive step. For years, this country has felt that corruption, black money and terrorism are festering sores, holding us back in the race towards development… Let us ignore the temporary hardship, let us join this festival of integrity and credibility,” PM Modi had said.
Justifying the removal of so much cash from Indian Economy, the PM had said, “The magnitude of cash in circulation is directly linked to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways.”
It has been over 30-days since that “historic” decision. Surprisingly, a majority of people in the country have suffered the “pain” silently, nullifying the opposition’s threats of cash riots and chaos. Yet, for scores of people, the note ban has resulted in unexpected hardships.
According to the opposition parties, over 80 people have died due to demonetisation. However, there is no official data on the total number of deaths. Thousands of daily wagers and migrant workers have lost their jobs in the country. In the absence of any credible data, one cannot yet ascertain the exact negative effect of demonetisation on urban and rural employment.
Several media reports have documented how people are struggling to get their hands on cash, adversely affecting their monthly payments and businesses. The government certainly cannot take people’s silence for granted for long.
Economists like ex-PM Manmohan Singh have predicted around 2% dip in GDP of the country. But there are several others who claim the negative impact of demonetisation on GDP growth would be minimal or only for a short period of time. The loss would be covered soon when the money presently deposited with banks would come out in the market.
The government, however, doesn’t intend to flood the market with the same amount of cash as earlier. For this reason, Modi government is pushing digital transactions and, almost in a mission mode, forcing the citizens towards a cashless economy.
Finance minister Arun Jaitley on Thursday said, “Dealing in cash has economic costs, so the government is promoting payment by credit, debit cards and e-wallets.”
On November 8, PM Modi didn’t say the government aims to make cash-abundant Indian economy cashless on a short notice. But he did mention the cost of over dependence on cash. Jaitley said: “Dealing in cash has economic costs, so the government is promoting payment by credit, debit cards and e-wallets.”
The overwhelming mood in the country is still in support of demonetisation. A number of experts are expecting positive changes. However, it seems highly unlikely that all ATMs will become cash-abundant like earlier by the end of PM Modi’s 50-day target.
The urgency with which the government is promoting digital transactions is a sufficient hint in this regard. Second, as said earlier, the government doesn’t intend to print the same amount of cash as it used to do earlier.
Queues at ATMs may, however, ease up to some extent soon, if more people start doing digital transactions.