Demonetisation has not dented the black economy, but it has damaged the white economy, especially the unorganised sectors.
Extracts from C. Rammanohar Reddy’s Demonetisation and Black Money that explore whether the note ban had any impact on the rich, how Digital India entered the narrative and the impact of the move on the poor.
This ‘moral cleansing’ project of the prime minister has played a big role in enabling him to break through caste barriers to create a larger social coalition.
The 60-page report looks at the impact of the note ban on growth, inflation and a wide range of organised sectors.
Despite the hardships, why do many people continue to back what most economists and analysts have termed a bad policy?
With little hope for normalcy even 100 days after the note ban, there is an urgent need for providing relief and compensation to those who have been most affected.
A drastic decline in residents’ employment opportunities and incomes since the note ban has added to the existing woes of hunger, malnutrition, poor sanitation and drainage congestion.
The political economist answers a range of questions on the note ban – painting a comprehensive picture of what demonetisation has done to democracy, agriculture, the ‘black economy’ and society.
Rishikesh, a popular tourist destination, has been hard hit by demonetisation. But political affiliations mean people aren’t willing to criticise the move, despite the impact on their livelihoods.
The RBI governor also stated that Rs 9.2 lakh crore has been introduced into the economy in the form of new notes since November 8.
An informal survey of local shop owners and workers in the city’s Company Bagh and Lawrence road areas reveals most people’s ambivalence about the policy.
Illiteracy, patriarchy and a lack of familiarity with technology make poor women highly vulnerable in a cashless economy.
Proponents of demonetisation say it was required for market correction. However, given the magnitude of government interference involved, it is likely to disrupt markets rather than correct them.
Rising non-performing assets and sluggish economic growth have led to a decline in corporate borrowing, inhibiting the anticipated lending bonanza to companies from banks after demonetisation.
While Arun Jaitley talks of increased tax collection, banks are battling historically-low credit growth and small and medium businesses are staring at drastically decreased revenues.
Petrol pump owners are protesting the imposition of a 1% service fee on all cashless transactions, saying they will lose twice of what they make in profits.
People have lost their jobs, small businesses are closing down and the agricultural sector has been hit hard as a result of demonetisation. The RBI must increase the supply of cash to curb further fallout.
On Saturday evening, Modi addressed the country for the second time after the demonetisation announcement. Here’s what he had to say.
While those in the villages cannot afford the bus trip that takes in the city, people who had migrated earlier are coming back to the village after being unable to work.
Most of the major beedi units have shut down in Jangipur, West Bengal, crippled by the cash shortage – leaving thousands of home-based beedi-rollers, mostly women, with no income
For those employed in the cash-intensive informal sector, even a temporary break in the set pattern of earning and saving could push them into a cycle of debt.
Although the BJP says demonetisation will target unaccounted money, it and other national parties have in the past failed to submit their income tax returns and disclose sources of donations.
Despite the hardships being faced by the working class due to the note ban, the rhetoric of fighting corruption and targeting the wealthy means they are bearing the pain in silence.
A move allegedly aimed at ending the generation of unaccounted income that has nothing to say about the funding of political parties is not credible.
Given the lack of government support and weak institutional lending mechanisms, a demonetisation-induced supply shock in the farming sector has hit the region hard.
The RBI’s decision to support the note ban and its flawed implementation have exacted a price from the economy in general but the poor in particular.
Not only are villagers unable to access timely medical care because of the lack of cash, nutrition levels are falling, making people more vulnerable to illness.
The impact of the contractionary demand shock triggered by the note ban will gradually radiate from cash-intensive activities to virtually every sector of the economy.
Demonetisation has hit every sector of the economy from construction to automobile at the same time and its ripple effects are likely to be felt for months to come.
The celebrated social theorist and political psychologist spoke to The Wire about Modi, demonetisation and the state of Indian democracy.
Under fire from some of its members, the chartered accountant organisation has deleted its earlier ‘don’t question the government’ fatwa.
A look back at how demonetisation has affected everyday lives and the country’s economy since it was enforced.
In the region marked by class and caste inequalities, where a cashless economy is a distant dream, there is some doubtful support for Modi’s move, but mostly concrete hostility.
A daily round-up on the human impact of demonetisation.
By first limiting and now disallowing the exchanging of old notes for new ones, the state is violating the right to property of those without bank accounts.
A daily round-up on the human impact of demonetisation.
Everything from the list of exempt transactions to exchange and withdrawal limits has been tweaked at least four times, all to address entirely foreseeable problems.
“It (demonetisation) undermines notes, it undermines bank accounts, it undermines the entire economy of trust.” Sen told NDTV.
Many of Varanasi’s famous looms have stopped running due to the cash shortage and the city’s small vendors are also struggling with falling sales.
Making India a less-cash economy will not necessarily end the generation of black money. It only means that the circulation of black income will take place differently.