As a citizen of India, I thought that it would be good to discuss how demonetisation has affected our social lives and the nation’s economy.
Demonetisation is the act of stripping a currency unit of its status as a legal tender. It occurs whenever there is a change in a nation’s currency.
In November 2016, the Indian government decided to demonetise the ₹500 and ₹1000 notes – the two biggest denominations in the currency system back then. These notes accounted for 86% of the cash circulating in the country back then.
The reasons behind demonetisation were: removing black money from the country, stopping corruption, stopping the circulation of funds for terrorism, curbing the menace of fake currency and more. In short, the intention was to send a clear message that the government is well inclined towards working for the development of people.
Ever since it was implemented, various economists have voiced their concerns over the move, For instance, according to Kaushik Basu, “Demonetization was ostensibly implemented to combat corruption, terrorism financing and inflation. But it was poorly designed, with scant attention paid to the laws of the market, and it is likely to fail. So far its effects have been disastrous for the middle- and lower-middle classes, as well as the poor. And the worst may be yet to come.”
Now, I would like to discuss how demonetisation had affected the daily social lives of common people like you and me. There were various challenges which were faced by common people, due to the lack of money in ATMs and banks which made us stand in queues for depositing or withdrawing money. Despite waiting for hours, we were often unable to get cash.
Personally speaking, I had to stand in queues repeatedly over 2-3 consecutive days before I was finally able to get some cash from the bank. Just think of all those old people and people with disabilities and how they managed in those days of severe crunch!
Another problem faced by old, uneducated people was caused by the introduction of online transaction and modes of payment in restaurants and places of utility.
Another impact of demonetisation on India’s economy was rightly predicted by our former Prime Minister, who had predicted that demonetisation would result in a 2% drop in the GDP growth rate. Relevant data shows that India’s GDP growth rate has slowed down to 5.7%.
This has led to a fall in agricultural production. Small scale industries have faced losses, unemployment has risen, and wages have not been paid to employees and labourers in various sectors. These have all directly or indirectly affected the social and economic lives of the citizens too.
According to a recent update from RBI, 99% of the currency is back with the bank. This begs the question of where the black money is – for which demonetisation was undertaken, after all. If 99% of the currency is back, it can be assumed that the black money will now be transformed into white. In such a context, demonetisation just seems to be a scheme to convert black money into white, and this should rightly anger common people like us.
Although the objective of demonetisation may have been good, the authorities should have consulted economists and other eminent people more thoroughly before taking this step. After all, the people who lost their near and dear ones won’t get them back. The loss to the country, socially or economically, will also take time to recover.
Featured image used for representative purposes only.