Three years ago, on this day, November 8, 2016, The Prime Minister of India, Narendra Modi announced "Demonetisation", Invalidated almost 86% of the total currency in the form of high-value notes - Rs. 500 and Rs. 1000.
The three main targets which PM sought for the demonetization move were:
1. To curb the black money revolving in the economy in the form of cash transactions
2. Terminate cash-based corruption
3. Killing Fake currencies
After three years the demonetization announcement was made, an online survey conducted share the facts that around 66% of the people said that it gave a negative impact on the Indian economy and labor employment. While 33% of them said to blame it for economy slowdown and the government is finding it tough to handle the situation.
Economy experts shared that demonetization hit badly the unorganized sectors which caused loss of job employment and opportunities. People residing in villages experienced massive loss of earnings.
Around 42% of the people shared that this move benefited the tax net and caught a large number of evaders. The cash transactions used in businesses and for individuals has declined to such an extent after the demonetization was announced. This gave rise to transactions other than cash ones and also digital transactions have increased in the past 2 years.
Aftermath of Demonetisation Announcement
People waited in long queues at the ATM machines and Bank branches to withdraw cash and also to deposit the invalidated currencies (Rs. 500 and Rs. 1000 notes) in exchange of valid currencies.
A total of Rs 15.41 lakh crores (including Rs 500 and Rs 1,000 notes) in circulation were collected as on November 8, 2016, out of which notes worth Rs 15.31 lakh crore were returned to the banking system. Around Rs. 10,720 crore of the currency which was not useful or junked did not return to the system.
What We Have Learned?
There is no material evidence that demonetization has reduced black money in the system. Fake currencies of around Rs. 28.1 crores were seized in 2017 which was more than the previous year's number at Rs. 15.9 crores.
Spike in the digital money can be seen and people resorting to transacting online. But cash transactions are also in use so the impact seems to be neutral.
People are posting on Twitter remembering demonetization disaster with the hashtags