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Enumerate the political social and economic impact of demonitiztion on India

Demonetization literally means devoiding an economy from a series of currency as legal tender. This is the second attempt in independent India with the objective of withdrawing black money and transforming physical economy into digital one. India is a developing country with majority finding hard to earn a living, 22% people are below poverty line (BPL) and 2.4 % are rich and many people are wage earners. On this basis, it is not desirable or possible to find America (a reflection of developed countries) in the meager ones who toil every single day for a piece of bread at night.

The constitution draws its power from the people and all the decisions taken by the trusted Govt. institutions tends to impact people's lives directly, mostly the under privileged half. The Govt. must be sensitive to the mob than technology and pay heed to the preamble that ours is a socialist country, not capitalist. Even if it tends to be one, the change has to be gradual after the hi-hiatus between the rich and the poor is bridged.

Political Impact

Our constitution imposes a proper nexus for the passage of a bill to limit authoritarian majority rule. Every element is orderly arranged in a civilized society. To bring an end to marriage as a legal institution, a couple has to undergo certain procedures though the emotional foundation may have ceased long before. This is basically to prevent hasty decisions. In 1978, demonetization was effected with an ordinance with the same objective only to regret it and roll back the decision due to inconveniences caused to the common people. History serves as a lesson to move ahead in future.

This time there was no legislation involved or Section 26(2) of the RBI Act, 1934 followed properly, no grace period given and the announcement was made with immediate effect. Moreover, many PILs have been filed stating this step against article 19(1) (g) [Right to freedom of profession] of the Indian Constitution as this step has disrupted livelihood of many indeed. It has led to political stagnation and instability as the ruling party failed to execute the plan properly and our country is engulfed in an enormous hue and cry for justice and restoration of old notes. The winter session of the parliament has been vigorously disrupted due to the boycott of sittings by the opposition parties. Above all, a new political party with anti-demonetization agenda was about to rise but ultimately flopped.

Social Impact

We can seldom find any local retail outlet with digital payment system. Generally, people keep some cash at home for emergency purposes and for day to day requirements. Demonetization has made people think twice before buying an important item due to cash crunch, thereby decreasing both the income of the local traders or retailers and the living standard of the common people. Neither all people use cards for the purpose of payment nor everybody go to the super market for daily necessities. Rural villages are the worst hit. Neither are they well versed with electronic system nor do they have a bank to exchange their hard earned cash at hand. In a word, they are trapped. Social arrangements like marriage ceremony, etc. suffered on a large scale. Religious institutions are also not allowed to deposit cash due to increased donation. For a poverty striken economy like India, the Govt. is supposed to be pro-poor. The present scenario portrays a fragmented livelihood.

Economic Impact

All the above sufferings have affected the economy as a whole with banks and ATM's overcrowded and sometimes showing public power to the innocent employees. Indian economy is mostly run by consumption expenditure. Snatching away the right to consume as per choice will not solve the problem of unaccounted money overnight, rather complicate the issue. This problem of undisclosed income was traced long back and many initiatives like voluntary disclosure of income scheme (VDIS), the black money (undisclosed foreign income and assets) and imposition of tax act, 2015, benami transactions (prohibition) amendment act, 2016 are taken, which are showing positive results. It is better to make the existing efforts effective than disturb the 98% for the dishonest 2%.

- Drisha Sobhakar