The disastrous demonetisation

Six years ago, an out-of-the-blue announcement on demonetisation by Prime Minister Narendra Modi took the nation by surprise. It was packaged as a bold move to unearth black money, reduce counterfeit currency and choke terror funding. But it turned out to be India’s greatest economic disaster. The whole nation is still reeling from its effects and many have lost jobs and went into bankruptcy due to it.
As far as the merits of the move are concerned, note ban is probably the worst economic step in independent India. It has achieved none of the objectives it was supposed to achieve.

Instead, it had inflicted untold miseries on the people, crushed several businesses and destroyed the informal sector, throwing millions out of jobs.
Ironically, cash has again become the king. While the currency levels dropped significantly immediately after demonetisation, they bounced back soon to all-time high levels. If the government thought that banning high-value currency overnight would discourage the use of cash, it has been proven totally wrong. According to the latest RBI data on money supply which has been widely reported in the media, the currency with the public increased to Rs. 30.88 lakh crore as on October 21. The central bank data put the currency in circulation at Rs. 17.7 lakh crore on November 4, 2016.

It would be fallacious to claim that demonetisation did not adversely impact GDP growth.
There was an economic output loss of nearly Rs. 2 lakh crore in the year post-demonetisation. At least now, the NDA government must acknowledge that the note ban was a failure and apologize to the nation. The ill-conceived demonetisation has thrown the economy into disarray and cost jobs.