Demonetisation revisited: Best of HT articles you must read
The RBI annual report for 2016-17 revealed that 99% of the Rs 500 and 1000 currency notes removed from circulation after demonetisation have been returned. Here are six articles from the Hindustan Times archives that are worth reading 10 months after the decision.Updated: Sep 07, 2017 17:55 IST
It’s been almost ten months since demonetisation, and much has been written on the subject. The Reserve Bank of India’s annual report for the financial year 2016-17 revealed that all but 1% of the Rs 1,000 and Rs 500 denomination banknotes invalidated on November 8 had been returned by the end of June.
Here are six articles from the HT archives that are worth re-reading now, in that context.
On February 7, the PM spoke in Parliament on demonetisation. Given that this was the first time he spoke on the issue in the House, one expected he would support his claim with hard data and empirical evidence. Unfortunately, he didn’t. He didn’t because he can’t.
The temporary proscription of currency notes of higher denomination was aimed at rendering the stocks of black money and counterfeit currency worthless. What is noteworthy is that it neither makes any difference to the generation of black money through myriad channels, nor does it touch that part of the stock of black money held in other forms of assets like benami properties in land and real estate, gold, foreign currency, offshore bank accounts, etc.
The logical and only consistent long-term way of eliminating black money in any sphere is to promote transparency and coaxing citizens to move away from cash (to e-cash).
The political consequences of the Prime Minister’s decision were unknown. Cleverly positioned as a moment of rare enforced quality when the rich had to line up with the poor, demonetisation initially appeared to draw widespread approval. But the entrenched inequities were never going to be impacted by notebandi.
Half way through his tenure, Narendra Modi had, like Indira Gandhi, perhaps sensed the need to shake up the system, consolidate his image as a strong leader and snatch away the political discourse from his opponents.
Demonetisation will directly affect real estate and land markets where cash transactions are rampant. Ostentatious consumption, incurred from ill-gotten and black economy activities, will also be curbed, thereby encouraging savings and capital formation.