Demonetisation, Modi Govt’s ‘Surgical Strike' on Black Money, Missing in Centre's White Paper. As Are Jobs.

The 59-page document, titled ‘White Paper on the Indian Economy’, mentions black money only once. It says that the Modi government will 'undertake measures to unearth black money and to discourage recourse to it'.

New Delhi: While the Narendra Modi government on Thursday (February 8) tabled a white paper in the Lok Sabha, detailing how it had restored the health of the Indian economy from the “fragile state” which it had inherited from the UPA years, the document makes no mention of its demonetisation exercise, which was described at the time as a “surgical strike” on black money.

Also missing from the comparative analysis of performance between the UPA and NDA years is employment and jobs, presumably because the data suggests the past decade has not been a good one when it comes to job creation.

The 2016 demonetisation decision, which was announced by Prime Minister Modi to tackle the “disease of black money”, led to countrywide hardship, especially for the poor and those living in rural India. In one month since the decision, the media reported that 82 people had died as a consequence of it.

However, the 59-page White Paper presented in parliament on Thursday  on the Indian Economy’ makes no mention of this ‘notebandi’. It details the list of corruption scams by the UPA government between 2004 and 2014, but does not mention how demonetisation helped tackle the “disease of black money”.

Also missing, terms like ‘cash in circulation’.

In fact, the term black money finds mention only once.

“We continue to undertake measures to unearth black money and to discourage recourse to it,” says the paper.

Also read: How the Black Money Was Brought Back to India

It does, however, give a list of corruption cases under the UPA and says “decision-making came to a standstill due to corruption and scandals in defence , compromising defence preparedness.”

In Congress’s ‘black paper’ that was also released on Thursday, hours before the Centre’s white paper, demonetisation does find mention.

“Seven years after PM Modi’s disastrous demonetisation, the economic effects continued to haunt the country,” says the Congress’s document, titled ’10 Saal Anyay’.

“None of the ever-changing goals of the exercise have been met. Black money remains, and there is no evidence that demonetisation affected it. Corruption abounds as the BJP’s 40% sarkar in Karnataka showed. The country did not even become cashless. Cash in circulation has increased between 2016  and 2023; [it] has more than doubled from Rs 16 lakh crore in 2016 to Rs 34 lakh crore in 2023. The Reserve Bank of India (RBI) data showed that from October to January 19, currency leakage from bank deposits to cash was as much as Rs 1.2 lakh crore. As a share of the country’s GDP, cash has increased to 12.7% in 2023 from 11.6% in March 2014.”

“The costs of this blunder were severe. More than 15 lakh jobs were estimated to be lost in the first four months of 2017, mainly in small businesses and the informal sector. Over a hundred people died standing in line to change bank notes. The Modi government has still not learnt the lesson – the scrapping of Rs 2,000 note is yet another painful reminder,” it adds.

In January last year, the Supreme Court, while hearing 58 petitions challenging the decision, held that it was valid.

While ruling in favour of the Union government, the Supreme Court judgment, authored by Justice B.R. Gavai, said that demonetisation had “a reasonable nexus with the objectives” like eradicating black marketing, terror funding, etc. that it sought to achieve. “It is not relevant whether the objective was achieved or not,” he added.

Also read: Why Demonetisation Will Not Eliminate Black Money or Corruption

In 2016, economist Pronab Sen wrote in The Wire that demonetisation had “penalised virtually the entire informal sector, and perhaps damaged it permanently.”

In 2017, a year after demonetisation, RBI data showed that Rs 15.28 lakh crore out of the Rs 15.44 lakh crore in currency that was rendered invalid on November 8, 2016 had come back into the Indian banking system. This implied that 98.96% of Rs 1,000 and Rs 500 notes that were banned as a result of demonetisation were returned to the central bank by the end of June 2017.

In December 2018, the Modi government also referred to this data in Parliament when it informed the Lok Sabha that it has not studied or assessed the ‘impacts and after-effects’ of demonetisation.