One November 8, 2016, when Prime Minister Narendra Modi announced demonetization the prime aim was to root-out corruption, get back the hordes lying abroad and India should shift to digital currency, slowly do away with cash transactions. Interestingly the entire thing turned out to be a false promise. Neither was there so much ill-gotten money abroad, nor did the government know where it was, nor how to bring it back. Importantly, notes in circulation (NIC) in value terms have increased by 64% as of October 29, 2021.
Data from RBI reports that NIC in terms of value shot up to Rs 29.17 lakh crore, surpassing the Rs 17.74 lakh crore recorded on November 4, 2016. Cash has remained the preferred mode of payment for the public even if it has been almost five years since the NDA government effected demonetization which goaded the public among many other things to go cashless.
Even though the demonetization in a way arm-twisted the public to fall back on digitized payments initially, a rise in cash in the system was seen, mostly due to a rush for cash by the public in 2020 soon after the government announced lockdown due to the Covid-19 pandemic. In the run up to the lockdown, people withdrew as much cash as possible to be able to seamlessly transact while buying groceries, medicines and other essentials.
Demonetization has miserably failed to yield any positive result for the country. It has only created a nightmare for the citizens, which has lasted for the last five years. Many businesses have collapsed, people have lost jobs, industries collapsed, and lives were lost. PM Modi had said that he was ready to be punished by the citizens if things did not work out properly in the initial 50 days of demonetization. But Modi has never taken the responsibility for the mess created by him through demonetization.
At the time of demonetization, long queues were seen outside the banks and ATMs to swap de-notified currency notes for new ones, so that life could continue. This situation persisted even beyond December 30, 2016, the last day for depositing old notes. Economic activity was severely dented for months. What was considered as a masterstroke turned out to be a disaster for the country. It is unfortunate that the entire country is now paying for the mistake of the Prime Minister.