After 5 Years of Demonetisation, Cash Still Remains The King

On November 8, 2016, Prime Minister Narendra Modi announced demonetization just with the space of 4-hour notice. The Modi Government banned all the Rs 500 and Rs 1000 notes of the Mahatama Gandhi series and issued new Rs 500 and Rs 2000. The main motive behind demonetization was to curb black money, reduce cash flow in the country's economy and increase digital transactions.

During the first 50 days of demonetization, it was asked to exchange old 100 Rs and 500 Rs notes and 1000 Rs notes. In exchange for that, people were getting Rs 2000 notes initially. There was a limit to withdraw only 4000 rupees, and for that, there were long queues outside bank branches and ATMs.

What was the main objective behind demonetization?

The primary purpose of demonetization was to reduce black money and fake notes in the market and increase digital transactions. But the RBI reports statistical reports to say something else. The cash transaction has been increased 57% more in the market. When demonetization was announced, it was undoubtedly troubling the country's citizens and making them stand in long queues, waiting for their turn to exchange the amount whose limit is already set. Some people have savings in cash; they were not allowed to exchange it frequently.

Still, after five years of demonetization, cases have been reported where illiterate, rural, poor people saved their money and have no information that their life savings of old notes are equal to mud now. In a recent case in Tamil Nadu, a poor man requested a collector to exchange his life savings of Rs 65000, which he earned through begging in the district. There are multiple cases reported where people lost their money to demonetization. But does this serve the idea of fighting with black money and increasing cash flow in the economy?

Has demonetization served its purpose?

It is still a big no as the RBI statistical reports stated that cash had been increased 57% more. The share of higher value notes in cash is higher than earlier. Before demonetization, the cash flow in India was Rs 18 Lakh crore, and after the pace of five years, it is 28.3 lakh crore. There is a drastic increase in it. Even after five years of demonetization, the reduction of cash flow and increased digital transactions didn't fulfil its purpose. The GDP growth stats say something else. It is still going to fumble comparing it with 2017 to 2020.

Demonetisation was not a wise decision as it affected the unorganized actor of the nation drastically, not achieving any of its goals at its best.

Also Read: Punjab CM Charanjit Singh Channi Confers Proprietary Rights To 269 Slum Dwellers