On last November, 8 our Prime Minister Narendra Modiji on the national television announced about his governments move of demonetizing Rs 500 and Rs 1000 notes. This means that notes of these denominations no longer remain legal-tender denominations of currency. In other words Rs 500 and Rs 1000 notes from the midnight of November 8,2016 became a mere piece of paper if not exchanged with new prevalent notes within the stipulated period of time as fixed by the Union Government . Let us now analyze the political, social and economic impact of demonization respectively on India.
Taking proactive action on Black Money has been a dominant issue in Indian politics since a long time. Moreover the issue of black money has been a game changer for our Prime Minister Narendra Modiji during the 2014 Lok Sabha elections. In other words mandate that the NDA led alliance got in 2014 Lok Sabha elections has a lot to do with taking action against Black Money that are staggering both within and outside the country. Since winning the elections he has been criticised by the opposition parties of being having so called resilient, lackadaisical or a somewhat casual approach towards trapping black money by his government. Though he introduced the Voluntary Declaration Scheme for black money in 2016-17 Union Budget yet, it too has been criticized as a loop sided approach by the opposition parties. In such a scenario, the move of demonetization of Rs 1000 and Rs 500 notes mainly proves two things politically. Firstly, Modiji led NDA government's respect for the mandate of 2014 Lok Sabha elections in which bringing black money was a trump card in the mandate. Secondly, it proves that Modiji is bold enough against black money or in the issue of wiping of black money from the Indian society. Modiji's action of demonetization has political, implications for the next Lok Sabha elections although it is a bit early to comment on it. But it may turn the election wave towards the saffron brigade in the upcoming elections in the New Year which also includes the big state of Uttar Pradesh. Another political implication of demonetization in India is that ,the issue of black money on which the NDA government was cornered by the opposition parties it seems from last November 8 that Modiji has turned the tables and it is now time for the opposition parties to show their credentials right.
I think, it was never earlier seen in the Indian society such a resolve or proactive approach of cooperation and harmony towards a move that the Government of India has taken during its tenure as could be seen after the demonetization move. Since the day of the announcement of governments move of demonetization, the whole society irrespective of caste, creed ,colour and race has turned into a 'land of queues', as it has become a common site before any commercial establishments like Banks, Post Offices ,etc., where people are depositing and exchanging old Rs.500/- and Rs.1000/- notes with newer denominations or newer denominations of Rs.500/- and Rs. 2000/-.This proves the Indian societies whole hearted support to the move of demonetization of the Government of India. Moreover, it reflects the point of view of both the ruler and the ruled, which is a sincere resolve in the Indian society of that of cleansing the whole society of the menace of black money by wiping of both unused, hidden, hoarded monies to name a few in this regard and thereby cleansing the menace of corruption at large from the Indian society. It also is a pointer towards the fact that, Indians want respite from social anarchy and chaos associated with the menace of black money. Since the demonetization move of the Government of India, there has been a record of unearthing of hoarded money in various nooks and corner of the country. I think, earlier no such amount of hoarded money being unearthed as that has been done after last November 8. This can be said to be a collective success of the whole system of administration collectively with the people of India. I think, in our society for the first time after independence, when the poor and the needy are having a sound sleep with dreams of a better future ahead while on the other hand the rich and the influential are having sleepless nights with the panic button fully on in their minds for possessing hoarded money with most of them. This can be said to be the greatest social impact of demonetization on India and the same can be in the long run may have the potential to bridge the gap between the haves and the have-nots.
Out of the total currency in circulation in the Indian economy, Rs 500 and Rs 1000 notes account for 86 % of it. Therefore our financial institutions coupled with the general masses have a herculean task of exchanging 86% of the total currency in circulation before it can be finally used. This is happening at a time when about 90% of monetary transactions are taking place through cash. Thus in such a scenario the Reserve Bank of India has a big task of preparing new Rs. 500/- and Rs.2000/- notes and giving relief to the cash starved people of India. Moreover in the last few days it has been seen, with the arrival of Rs 2000 notes it has been seen that for the lower middle class people of the country to hold Rs. 2000/- note is more problematic then not to have it. This is because change of Rs. 2000/- notes is very rarely available in a cash starved market that is prevalent now. I think since last November 8 ,Indians due to the availability of only Rs.2,500/- daily via ATM and Rs. 24,000 through cheque per week, we Indians have become firstly, more calculative and economical in spending through cash and secondly, we have diverted to cash-less transactions via Posh machines ,PAY Tm ,Internet Banking to name a few in this regard. Thus cash dependence in our economy has even if to a minimal extent has decreased and slowly and steadily we are diverting to a cashless economy. This phenomenon of cashless economy means convenient transfer of money, less tax-evasion and more digitalization of the Indian economy. The demonetization process has curtailed hawala transactions, cross-border terrorism instances, anti-social activities related with money, naxalite and terrorists related activities within the country as these elements have been left with less cash to do anarchy in the society. The overall economic impact of demonetization on Indian economy can be summed up by the saying "money is as, money does".
In a nutshell,it can be said about the various sectorial impacts of demonetization that even if anyone is ideologically against the move of demonetization ,but in doing so he/she needs to appreciate the effort that the Government of India is putting to make our country corruption as well as black money free . In this regard, I would like to say that, demonetization should not be criticised looking at the political party who is doing it or who is at the helm of affairs in the Union government. In this endeavour, I think in this tough task in which we have set in the saying "when the going gets tough the tough gets going" is very relevant in today's scenario
- JNANDEEP BORA