In our earlier post we have shared our views based on getting response from various social media. Is demonetisation a success or failure?. In this post we are going to share top 10 reasons Why Demonetisation Is Successful In India. TOP ten effects of demonetisation on indian economy.
The government is probably doing better than it originally planned.
Top 10 reasons why Demonetisation is successful in india.
- Across India things have been quite orderly in the
banks and elsewhere. This is the fundamental test for chaos. Of course, there are huge crowds as 15 lakh crore rupees had to be exchanged in a mere 40 long days.
- There have been no major riots, strikes or bandhs. This the fundamental test to gauge people’s anger.
- There has been relative peace across the country in Kashmir and elsewhere since the demonetisation, proving the government stand that part of the violence was fueled by illicit cash. Of course, this alone would not eliminate terrorism, but bought some time: Demonetization is a body blow, not a death knell for terror funding
- There has been a massive spike in Netbanking and other cashless alternatives including, Rupay and UPI – ‘Net banking usage has gone up by 200%’ – Times of India / Demonetization has boosted RuPay card usage by seven times / Unified Payment Interface crosses 1 mn hits mark; value soars to Rs 457 cr
- There has been not much impact on agriculture – Sown area under Rabi crops increased despite currency crunch – while people knew that cities would do well with cashless economy, the worry has always been about rural India and it has been doing ok, despite the pain.
- There has been massive number of IT raids across the country and sort of vindicated the government’s move – as the black money hoarders tried to convert some got caught.
- Government has been quite victorious in almost every election held since demonetization. As BJPs winning streak continues in polls held post demonetisation, Congress wants to wait till Budget Session
- There is some semblance of normalcy at various places near the end of the 50 days: Cashless 7 weeks give way to easier times and Demonetisation effect: Improved business for many, far from normal for some.
- Very few countries would have been able to pull off this massive a project with little hiccups [the few rule flip flops that happened]. Other demonetization ventures either had to be pulled off [like in Venezuela] or have been quite small [like what happened in 1978].
- Getting the cashless payment charges to be at 0%. It is ridiculous that the banks charge for cashless transactions [that require far less handling cost than cash transactions] more than cash transactions. Cashless transactions keep more liquidity in the banks and they must thus waive all charges. Government must bring great regulations to keep it that way.
The government tried to bite something impossibly gargantuan – taking 87% of the currency off in a mere 50 days in a heavily cash centric economy. And it was directly impacting its core voting constituency – small traders. Surely the BJP leaders must have been very, very nervous 7 weeks ago. It no longer looks that scary. In fact, it got off a whole Parliament session fairly easy given the chaos within the opposition with statements like army coup, earthquake and massive loot, distracting a more logical criticism.
RBI can also now breathe easy that it no longer has to tweak or change any rule now that Dec 30 is passing and as the 500 rupee notes get out more in the next couple of weeks, there might be normalcy even in the smaller towns and villages by January.
With the storm passed, it is time to fix the after-effects and destruction. There are a sizable portion of people who will struggle to transition. I guess the government should focus now on:
Have a fiscal stimulus in rural India targeted at the poor. This is to compensate for the lower expenditures that the black money holders are doing.