On 8th November 2016, Narendra Modi announced through televised speech that the currencies of Rs.1000/- and Rs. 500/- will not be a legal tender from the midnight onwards. By making such a dramatic announcement, the Prime Minister pushed the panic button and thrown the country into utter chaos. He declared that this serious step has been taken to curb the black money, stop the circulation of counterfeit currencies and to put a halt to the flow of black and counterfeit currencies to the militants especially in Kashmir and North Eastern states. It is the time to do the post-mortem of this huge announcement as it completed about one year.
The recent report from the Reserve bank of India reveals that almost 99% of demonetized currencies have returned to the banks. It was the calculation of the government that out of Rs.15.44 lakh crore of invalid currencies of Rs.1000/- and Rs.500/- Rs.3-4 lakh crores will not return to the banks and that will be ‘profit’ for the Government. But the recent report from the Reserve Bank of India reveals that 99% of demonetized currencies have been returned to the banks so far. If we calculate the Indian currencies abroad particularly in Nepal and Bhutan and the collections from the cooperative banks add to these 99%, more than 100% invalidated currencies has been return to the Bank. It means enormous black money has been whitened through this process. Even after the deadline of exchanging the currencies, the old currencies worth rupees crores and crores have been detected by the financial investigation agencies and police from different parts of the country. It means there are centers still working in exchanging the old invalidated currencies. There is no doubt that the nation will know the unprecedented corruption occurred due to this exchange of currencies. It is also a fact that the target of demonetization was to fill the corporate coffers with cash and to recapitalize the banks, which are facing severe capital crunch due to mounting NPAs.
The second target was to curb the counterfeit currencies. It is proved now beyond doubt that immediately after the introduction of new currencies of Rs. 2000/- and Rs. 500/-, counterfeit currencies of the new brand notes have been detected by the police across the country especially from Gujarat and West Bengal. The government has finally agreed that the counterfeit new currencies are very much in circulation. The hurriedness of printing new currencies has compromised the quality of currency notes, which facilitated the criminals to print counterfeit notes.
The third argument was to stop the flow of black money to the militants. It is also proved that the tension and killings in Kashmir were escalated even after the demonetization. Now everyday military personals and militants have been killed due to attacks and counter attacks. Therefore, all the three targets claimed by the Prime Minister have been ended with no result and pushed the country into deep economic crisis and paved path for huge corruption. Moreover, it has now proved that due to demonetization the GDP has gone down by 2.2%. The effect of this economic growth down reflected in the manufacturing, agriculture and other labour intensive production centres. More than 2.5 million people have lost their jobs and livelihood. In short, the demonetization has broken the backbone of Indian economy, which is highly cash driven.