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1st anniversary of demonetisation: A year on, Indians rekindle their romantic liaison with cash
A year has passed since the night of November 8, 2016, when the Pradhan Sevak of the country stepped on stage to perform the greatest magic acts of all time by promising 1.25 billion Indians that black money won't exist anymore.

With bated breath people of the nation glued to their TV sets heard the speech spanning 2423 words which Prime Minister Narendra Modi delivered in flat 25 minutes. PM Modi declared in his speech that currency notes of Rs 500 and Rs 1,000 shall no longer be legal tender from midnight.

Repercussions were bound to happen with such a sudden and unforeseeable move. On the following day, serpentine queues of people were spotted outside banks in cities across the country for depositing cash in denominations of 500 and 1,000 rupee notes which had become pieces of paper overnight. Demonetisation - a term rarely heard or discussed before became a stark reality for every Indian, rich or poor alike.

PM Modi sold his move of demonetisation to the nation with three goals - end of black money, halting the circulation of counterfeit notes and also putting an end to terror funding. Bewitched by 'Modi magic', the nation bought the PM's dream.

However, a year after the applause following Modi's speech faded none of the targets of demonetisation seem to have been achieved in terms of tangible gains. The demonetisation bubble burst when the Reserve Bank of India in August this year announced that 99 per cent of the demonetised currency notes had returned. It means that the Modi government's assessment that at least 3-4 lakh crore rupees of unaccounted read black money won't come back to the RBI went terribly wrong. But the question, 'where's the black money?,' still looms large in the minds of Indians.

Narendra Modi is now under immense pressure to explain whether his demonetisation move was worth the economic pain suffered by the common man of the country. Moreover, with the GDP dropping and the country within the grips of an economic slowdown hasn't helped matters for the Prime Minister either. Truly, PM Modi must be feeling like Muhammad Bin Tughlaq, the Sultan of Delhi (1324-1351 AD) who committed a blunder by trying his hand at demonetisation by driving out gold and silver coins and replacing them with copper and brass coins. As a result of his ill-thought move, fake currency started circulating with every second house in Muhammad Bin Tughlaq's sultanate turning into a mint for copper coins which ultimately led to devaluation of the currency. History does have lessons for all, doesn't it?

Perhaps the basic fact ignored by PM Modi while toying with the idea of demonetisation was that all black money is not cash and all cash is not black money! Cash forms a very small fraction of black money with most of it existing in the form of assets. And honestly, in a cash-based economy like India, taking 88 per cent of the currency (Rs 15.44 lakh crore) out of circulation overnight was never a good idea in the first place, as it has been echoed by eminent economists from across the world.

Where does the country stands today one year into demonetisation? Was it gain or only pain?

A latest report from news agency AFP claims that it's business as usual in India's black money markets, a year having passed since demonetisation. As per the report, cashless sales have dropped by 13 per cent from the peak of December 2016, when cash was hard to come by. Moreover, mobile banking figures of August 2017 stand at $16 billion, indicating a sharp drop of 20 per cent from the highs of November 2016.

"Was it worth it? Certainly not. It brought huge pain and disruption. People lost lives, lost their livelihoods," said Sunil Sinha, principal economist at India Ratings & Research.

As per the Centre for Monitoring Indian Economy (CMEI) around 1.5 million jobs were lost in the post demonetisation period of January-April 2017. According to CMEI business too took a hit as well with sales of end consumer products such as of two-wheelers remaining low.

A year after demonetisation and huge campaigns encouraging people to go cashless, cash is back with a bang in the Indian economy, especially after the introduction of the Goods and Services Tax (GST) which has proved to be a booster in encouraging traders to avoid billing and selling goods in cash.

Was there any need for demonetisation?

Well, that is a hypothetical question which perhaps only one man in the country has an answer to, PM Narendra Modi. As for my assessment, politically, may be yes, but economically, I would say, definitely no!

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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