At the height of a year of major troubles for one and all after demonetisation, the mood of the nation is best reflected in a statement by its key implementer and Finance Minister Arun Jaitley.
His claim is that the next generation will hail the benefits of this highly controversial step of the NDA government; the obvious admission being that Indians of the present generation have taken this as a bitter pill. It’s commonly acknowledged by now that demonetisation 2016 has shattered the economy, broken the back of the poor and worked to the disadvantage of the small businesses.
The figures speak for themselves. Economic growth has plummeted by a worrisome two per cent — from a near eight per cent to less than six — sending jitters down the spines of the captains of Indian business and industry.
The resultant cooling down of both farm and industrial activities has not just hurt production but also aggravated the joblessness. Imports from China this past year showed a 23 per cent increase in the aftermath of demonetisation, rising starkly by a whopping Rs45,000 crore on the back of a fall in industrial production in the past one year.
Put together, a nation that was firmly on the growth track for the past many years has seen a reversal of the process, effectively putting it on life support.
The sense of achievement felt initially by many Indians was of negative satisfaction which made them think they tasted blood that oozed from their owners, their superiors and anyone else who was considered rich by them. Now that has started dissipating and the sense of despondence is widespread and runs deep and wide.
This is evident also in the qualified response from one its primary proponent to queries about the effects of the note ban. Anil Bokil of the ArthaKranti of Pune, that gave a presentation of the need for the governmental step to the Prime Minister a while before the high-value note ban now admits things have not gone the way he expected it to.
He puts the blame on “partial implementation” of his idea, like the government not heeding his call to introduce a banking transaction tax that could replace all other taxes. In other words, there are fewer advocates today for demonetisation then there were on 08 Nov 2016.
Of course, this is not counting those few illogical voices which still persist because of the political benefits they dream might come their way if they keep on insisting it is a success. They can safely be ignored.
The demonetisation announced through a nationally televised address by Prime Minister Narendra Damodardas Modi this day a year ago has shattered the market mechanisms in multiple ways from the word go.
With lack of proper planning before the demonetisation push, the money circulation system as a whole remained paralysed for months. Banks had no cash to dispense with, ATM machines took a long time for reformatting so as to adjust to the size and worth of the new notes, banking managers failed to catch up with the situation and several banks diverted new notes for select entities at the cost of the requirements of the common man, people spent hours together in front of cash dispensing machines and bank counters to be able to get only small amounts of cash.
The resultant slowing down of markets caused harrowing times for one and all. The nation virtually ground to a halt in most respects. The two per cent fall in economic growth, feared by former prime minister Manmohan Singh in the wake of the November 8 measure, has proven to be real.
Prime Minister Modi had said the main aims of the demonetisation of high value currency — Rs 500 and Rs 1,000 denominations that formed nearly 90 per cent of the total notes in circulation — were to check the black money menace, eliminate an estimated 10 per cent fake notes in the hands of the people and stop (fake and real) currency flow from Pakistan by way of terror financing.
Measures at multiple levels to check the generation and flow of black money are continuing but with virtually no results. There may be are more curbs on cash money circulation now but that is only helping keep the economy in a crippled state.
While the world is trying to revive from a general economic downtrend, India is still busy inflicting self damage on its financial system which had stood strong in worse times earlier.
Nothing as yet goes to show economic recovery is near at hand. Also, another stated aim of demonetisation that seemed to have been an after-thought, namely to create a cashless economy through increased resort to e-transactions and use of ATM cards, has not met with success in any major way.
Those who had temporarily shifted to such modern modes in the immediate aftermath of demonetisation due to lack of currency notes in banks and ATMs have largely reverted to cash transactions — mainly when it came to small cash deals.
The achievement level on restraints effected on cash transactions of big sums, which are now allowed only through cheques or e-transfers are yet to be noticed and measured.
Admittedly, PM Modi drew personal applause and his party won the assembly polls in states like Uttar Pradesh in recent months by presumably creating an impression that demonetisation was for public good, and that he and his government are pro-poor and anti-rich.
The public mood, however, seems to be changing of late. The ill effects of demonetisation, and of the GST that followed, are now increasingly felt. The road to 2019 is bound to be an uphill climb for both the PM and the BJP, with a harried nation licking the wounds of these measures that were either poorly conceived or badly implemented.