Demonetisation report card: Pass or fail?

By: Nikita Kochhar
Updated: 08 Dec 2016 01:42 PM
New Delhi:  The central government’s demonetisation scheme which was implemented with a vision ‘to eradicate the black money issue in the country’, now hangs on a different ideology. Akin to Prime Minister Narendra Modi’s speech on November 8, where he clearly said that “Demonetisation of Rs 500 and RS 1000 is being done with an aim to remove black money".

As the perils related to demonetisation are escalating, the government seems to be changing its reasoning as well. Now, the ‘digital India’ vision is being used as a tool to justify demonetisation.

ABP News' senior journalist Sheela Rawal spoke to various former Governors of Reserve Bank of India and all of them had a different take on the same.

Vimal Jalan, Former RBI Governor:

“Black money has already been converted into gold, property, and foreign exchange. How will the black money in its cash form return to the country? He added saying, “In order to reduce the cash crunch problem, the government should introduce a new note of a small denomination between 100 and 500 and 2000”. He also believes that the “exchange of old notes in banks should continue for 6 months at least”

Usha Thorat, Former RBI Governor:

“The value of black money stacked in foreign banks has been zeroed after demonetisation”. Eighty percent (80%) of money needs to be changed”. She also said that, “It would take at least two more months to normalise the situation in the country”

D Subbarao, Foreigner Governor, RBI:

“There is no credible figure of stored black money. World bank gave a figure of Rs 37.5 lakh crore of black money in 2007, which is 23.2% of the GDP. The 16% of tax was not levied on this money, that is why it got turned into black money”.

KC Chakrabarty, Former Governor, RBI:

“If situation doesn’t normalise, it won’t be good for GDP. Even today the country runs on cash. The transactions in most of the country happen in cash, and if sufficient amount of cash isn’t available in the market, this would certainly lead to fall in GDP”.

There is no exact figure of how much black money is stacked. Even RBI Governor Urjit Patel’s statement on Wednesday clearly stated that “there is a crunch of cash”.

In order to solve this mushrooming problem, the government needs to send money with an emergency action plan in the remotest areas of the country.