New Delhi, November 19: The aftershocks of Rs 500 and Rs 1000 currency notes are here to stay for at least six months, says economists. For India is cashless.
As long as there are limitations being set by the Narendra Modi led government on cash transactions, eruption in demand of goods is bound to affect the economy.
The central government’s demonetisation drive is projected by the Prime Minister Narendra Modias as a mission to combat supply of black money and corruption. PM as well as his clan of ministers, have emphasised on the secrecy and preparedness of government for this surgical strike on currency well in advance.
Now the big question is: Will demonetisation curb black money and weed out corruption? Was the mission to ban currency was a big secret?
Eyebrows are raised on SECRECY part as India is primarily a cash economy and 78 % of transactions in India are held with cash. Indians are cashless. Businesses are at standstill. Weddings are canceled. Supreme court has directed government to look at issues of people and called it a crisis like situation for the nation.
Read More: Stories of Demonetisation Chaos
Amid all this chaos, here are two pertinent questions that spark the controversy — was a big secret of demonetisation shared with friends in advance?
- Why was a record spike noted in bank deposits in the July-September?
As per Firstpost, There has been an increase of close to Rs 6 lakh crore in bank deposits in the three months leading up to September — the highest ever recorded quarterly jump in the past 19 years.
Now banks have been reporting a negative growth in deposits, and the economy was in a standstill phase from quite some time. A sudden splurge of deposits in the previous months of demonetisation can not be ignored.
The government of India owes an explanation on a sudden increase in bank deposits in July-September quarter, just before the currency ban.
Former DGM with the State Bank of India Naresh Malhotra also noted that “Certainly, there is an issue here as to what is the source of these deposits. There needs to be an explanation from the RBI.”
While when CNBC-TV18, first reported the spike in bank deposits, Finance Minister Arun Jaitley tried to down play the issue. He said it was because of the payment of arrears in the Seventh Pay Commission. The payments may have been channeled into the bank accounts showing the surge.
But Jaitely faux played whole thing. As, total of these arrears which were Rs 70,000 crore along with other inflows plus subsidies can not surpass Rs 1,50,000 crore, forget the figure of 6,00,000 crore in question here.
At the time when not much of the economic activity is seen, there is no rise in employment or wage increase in the private sector, no fresh private investments or savings with corporations and individuals, lowering foreign remittances, such a spike in bank deposits is a big question.
- How come RBI Governor Urjit Patel’s signature appears on the new note?
Next question talks about common sense. Well our ministers revealed that printing of new denomination notes began in August-September. New RBI governor Urjit Patel took over the office on September 5. Now how did Urjit patel’s signature appear on the new Rs 2,000, and Rs 500 notes.
Is it possible that Patel’s signature could be used in currency notes while Raghuram Rajan was serving the office? Or, the government just started printing notes in September and the claim is a false one to boast off its preparedness in advance.
The mob, rush at banks and ATMs and seeking time for ATM caliberation as the new note did not fit the machine were enough to embarrass the government over its decision.
Besides stories of snarling queues at banks and ATMs, deaths due to stress or cash crunch, cash unavailability at banks have become a daily affair since demonetisation took place. across Had the government put in some efforts in finding out reactions of post currency strike, there would have been lesser suffering and chaos everywhere.