Destruction by demonetisation: How PM Modi fooled people

On November 8, 2016, Prime Minister Narendra Modi unleashed havoc on the economy by scrapping 86 per cent of the cash in circulation. This act of ‘financial fascism’ was justified as a short-term hassle for long-term gains.

One year down the line, the suffering inflicted on the citizens of India has been in vain as none of the promised gains of demonetisation have come to fruition. In fact, it has destroyed the economic health of the then fastest growing economy, setting us back by several years. A study conducted by All India Congress Committee (AICC) research department, separates wheat from the chaff.

Highest ever black money detected?

One year down the line, the suffering inflicted on the citizens of India has been in vain as none of the promised gains of demonetisation have come to fruition. In fact, it has destroyed the economic health of the then fastest growing economy, setting us back by several years.

A study conducted by All India Congress Committee (AICC) research department, separates wheat from the chaff.

Highest ever black money detected?

The government claimed to have done scrutiny of suspected 18 lakh accounts and cash deposits worth ₹2.89 lakh crore under investigation. It also claimed to have detected 4,73,003 suspicious transactions besides an undisclosed income worth ₹29,213 crore and maintained that black money amounting to ₹16,000 crore did not return post demonetisation whereas advance data analytics tools identified 5.56 lakh new suspect cases.

The study, however, accused BJP of resorting to tax terrorism by targeting normal taxpayers. “Why can't the BJP government go after bigger conglomerates like Adani, Vedanta etc. who owe India almost Rs 1 lakh crore each?” it questioned, adding that UPA conducted less than half the number of searches and surveys and yet ₹1,01,181 crore of undisclosed income was detected in 2013-14.

“Against an expectation of ₹4-5 lakh crores, a meagre ₹16,000 crore did not return to the system. Shame on the government and RBI to have come up with a move that has such a huge social, economic and monetary cost,” it said and added, “RBI's profits halved and printing cost doubled - ₹30,000 crore lost and ₹21,000 crore invested in printing and storing new notes.”

Unprecedented increase in tax compliance?

The government claimed that 56 lakh new tax payers added due to demonetisation, advance tax collections of personal income tax grew at 41.79 per cent over same period of last year and personal income tax under self-assessment tax grow at 34.25 per cent over same period last year.

On the other hand, the study revealed that 76 lakh new taxpayers were added in 2014-15 (Finance Ministry Annual Report), corporate tax and customs duty collection increased by a meagre 6.7 per cent and 7.4 per cent respectively, which shows the government going soft on the big businesses while waging a war against individuals and small firms.

Slew of benefits to the country?

Modi government claimed that deposits in the banking system increased by around ₹3 lakh crore; additional liquidity helped reduce interest rates by 100 basis points and digital payments increase by 56 per cent from 71.27 crore transactions in October 2016 to 111.45 crore transactions in May 2017.

But the study found that SBI slashed interest rates on savings account to 3.5 per cent for accounts less than ₹1 crore balance – common man affected while the richer lot and corporates still enjoy higher interest rates; bank credit growth fell from 12.1 per cent in September 2016 to 5.4 per cent in March 2017; cash withdrawals have returned back to the pre-demonetisation levels.

It stated that UPI-based transactions are just 1 per cent of cash-based transactions even today. “Total amount of ₹7421 billion under card payments is just over 5 per cent of total retail payments of ₹1,39,611 billion,” the study maintained.

Curb on counterfeit currency?

On the government claimed that new currency notes are “high-security” notes – and cannot be counterfeited, the study argued that ₹762,072 fake notes have been detected this year compared to 632,926 pieces a year ago. “Moreover, 638 counterfeit notes of ₹2000 and 199 of ₹500 denomination have already been detected in the system,” it commented.

Terror & left-wing extremism

Reacting to government claims that terror funding has choked and Naxal incidents have dropped, the study pointed out 33 per cent rise in terrorist incidents between November 2016 and August 2017. “Left wing insurgency is steadily dropping every year since 2010 – from 1180 in 2010 to 314 in 2014 to 161 in 2016 – due to the policy direction taken by UPA in 2009.”

(This was first published on 04 Nov 2018)