Latest News

    • Home
    • National
    • The Remarkable 100 Per Cent Failure Rate Of Modi's Demonetisation
    The Remarkable 100 Per Cent Failure Rate Of Modi's Demonetisation
    Monday, September 3, 2018 IST
    The Remarkable 100 Per Cent Failure Rate Of Modi

    In all of India's economic history, it's hard to find anything quite as indefensible as demonetisation. In fact, its irrationality is world-beating - Narendra Modi promised to put us on the world map, and he has - just not the way we expected. Even bad economic policies, most of the time, "succeed" in some way or the other - they may achieve some of their aims, even if at a very high cost. It's truly rare to come across a policy that fails on every possible yardstick, including those imaginatively invented well after the decision was taken.
     

     
     

    But demonetisation seems to have achieved this near-impossible feat. Of course it didn't wipe out black money. We know that now the RBI has confirmed that 99.3 per cent of the demonetised cash was returned. No giant windfall gains accrued to the government thanks to people refusing to return cash. Gautam Adani or Anil Ambani did not have to stand in ATM lines to withdraw spending money. The growth of digital payments has not seen a structural, sustainable increase. People are still throwing stones in Kashmir. And morally, I doubt that we are a significantly more honest nation now than we were on November 8, 2016.
     
    It's true that Arun Jaitley and others repeatedly stress that direct tax revenue has increased sharply - but they compare this to the NDA's poor performance in the two years prior to demonetisation. Go back a little further, to 2013-14 or 2010-11, and the growth in direct taxes over the past two years doesn't seem unusual at all. In fact, as NIPFP's Rathin Roy, a member of the PM's Economic Advisory Council, has put it, "the growth and buoyancy of direct tax revenue in the 2014-17 period is lower than in any sub-period this millennium." This is just another example of the government choosing its base years cleverly in order to claim incredible success.
     
    It may be natural, now, and look back at all those pathetic attempts to rationalise or defend an obviously irrational step with contempt. But spare some pity for all the columnists, economists, CAs and assorted experts who were convinced that, after all, any decision must have some positive fallout if they could just find it. How were they to know that this was that one special policy which would actually have nothing good about it at all? Let me confess that I was among them: while thinking that demonetisation was an awful step, I thought it would at least get people to put more of their money in banks. But, as the RBI also confirmed this week, Indian households are holding more of their savings in cash and not less. In fact, they haven't held this high a proportion of cash for six or seven years. So, yes, I was wrong. I assumed that taking people's cash away meant they would not want to hold so much cash again. But in retrospect, it seems obvious that in fact it is now banks that people will not trust, and not cash. I guess that's what happens when you tell them that they don't have access to their own accounts any more unless they stand in lines longer than first-day-first-show at a Salman Khan movie.
     

     
     

    The one argument left for defenders of demonetisation to trot out - since it depends entirely on things that haven't happened yet and may never happen - is that now we know which accounts cash was deposited in, and we will be able therefore to track down people with giant hauls of unaccounted cash. First of all, this is unlikely to work. Think about it - people clever enough to come up with a system to change all their cash under those circumstances are mostly going to be clever enough to not do it under their own names. And secondly, even the attempt to chase up the cash will have a dangerous effect on the economy. 

    Seriously, the only defence of demonetisation left for the BJP's WhatsApp economists is that it opens up the potential for a raid raj. This is such clever economic policy-making that not even Indira Gandhi came up with it, and I thought she had found every way possible to harass taxpayers and reduce growth.
     
     
    So, where's the accountability for the worst economic policy decision of all time? The Governor of the Reserve Bank who signed off on demonetisation - although management of the currency is the RBI's domain - has redeemed himself by clearly revealing the size of the demonetisation disaster. The Finance Minister - who may not even have been in on the planning of the measure - is reduced to writing angry blog posts defending demonetisation. And the government just appointed S Gurumurthy, one of the intellectual giants behind this brilliant plan, to the board of the Reserve Bank of India - so no accountability there either. As for the Prime Minister himself, whom all of us heard saying we should hang him or set him on fire or something if he was proved wrong about demonetisation - well, it joins the long list of things - being tough on China, 'Make in India', the Ganga clean-up, bringing back black money from abroad, and so on - that the Prime Minister never seems to talk about any more.
     
    So, I ask again, where should we look for accountability? Whom can we blame this extraordinary disruption, this bizarre decision, on? I know - perhaps we should wait a few years. And then we can blame it on Nehru.
     

     
     
     
     
     

    Related Topics

     
     
     

    Trending News & Articles

     Article
    Here is the full list of 827 porn websites banned by the DoT

    While the Uttarakhand High Court has asked to block 857 websites, the Ministry of Electronics and IT (Meity) found 30 portals without any pornographic content. ...

    Recently posted . 61K views . 1 min read
     

     Article
    Class XII Boys Raped 16-Year-old in Dehradun School After Watching Porn on Phone: Police

    The four boys as well as five school officials, including the director and principal, were arrested after the incident. The minors were presented before the Juvenil...

    Recently posted . 8K views . 1 min read
     

     Article
    Sept 27,2001 Rahul Gandhi and his girl friend Veronique,was arrested in Logan airport in Boston

    Rahul was having an Italian passport and was carrying suitcase full of dollars. Some say it was about was it $2 million. Rahul and his girl friend was th...

    Recently posted . 7K views . 7 min read
     

     Article
    TOP 10 GYM EQUIPMENT BRANDS IN INDIA 2017

    True – Tr...

    Recently posted . 6K views . 83 min read
     

     
     

    More in National

     Article
    PM Modi for strengthening BJP at roots, promoting young leaders

    HIGHLIGHTS   *PM Modi called for strengthening BJP at its roots for a win in the 2019 general election...

    Recently posted. 549 views . 2 min read
     

     Article
    Pak Foreign Minister Identifies Fighter Pilots Who he Says Shot Down Two IAF Jets

    Qureshi officially identified Wing Commander Nauman Ali Khan as the Pakistan Air Force pilot who shot down the second Indian fighter jet in the dogfight last week, ...

    Recently posted. 463 views . 1 min read
     

     Article
    Students are overburdened, NCERT syllabus to be cut to half: HRD minister

    Union minister Prakash Javadekar today said the government has decided to half the NCERT syllabus as students did not find time for other activities as they were ...

    Recently posted. 612 views . 1 min read
     

     Video
    Amazing!! - Change for a better India



    Recently posted . 980 views
     

     Photo
    Ever Wondered How India Looks From Space



    Recently posted . 1K views
     

     Reviews
    Top Schools in Delhi-NCR



    Recently posted . 1K views . 126 min read
     

     Reviews
    Top 10 Companies to Work For in India



    Recently posted . 1K views . 34 min read
     

     Article
    ATM cash withdrawal limit: How much SBI, HDFC, PNB, ICICI Bank customers can withdraw

    State Bank of India (SBI) has halved the maximum amount an account holder can withdraw per day

    Recently posted. 842 views . 0 min read
     

     Article
    PM Modi Launches Projects Worth Over Rs. 1,550 Crore In Odisha's Balangir

    He also inaugurated the 15 km-long Balangir-Bichhupali railway line laid at a cost of Rs. 115 crore in Odisha's Balangir today.  

    Recently posted. 496 views . 1 min read
     

     
     
     

       Prashnavali

      Thought of the Day

    Yesterday is gone. Tomorrow has not come yet. We have only today. Let us begin.
    Anonymous

    Be the first one to comment on this story

    Close
    Post Comment
    Shibu Chandran
    2 hours ago

    Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

    November 28, 2016 05:00 IST
    Shibu Chandran
    2 hours ago

    Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

    November 28, 2016 05:00 IST
    Shibu Chandran
    2 hours ago

    Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

    November 28, 2016 05:00 IST
    Shibu Chandran
    2 hours ago

    Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

    November 28, 2016 05:00 IST


    ads
    Back To Top