This day, last year, majority of us Indians were going haywire after news that 500 and 1000 rupee notes were to be banned past midnight. The news broadcast on television in the evening hours had everyone unsure and anguished. The coming couple of months went by in complete mayhem and chaos for the common man. Targeted to get black money out of the way, millions and millions of poor and low income people suffered in the mad rush to exchange notes into trade-worthy denominations. Reportedly over hundred people perished in the process to get their money changed.
The news created a real scare that in 50 days’ time 86% of India’s currency in circulation would be invalid. It was the poor public at large that suffered the cash crunch as never before. A panicked citizenry queued up passively to hand over worthless notes in exchange for the valid sanctioned amounts. Demonetization was said to reduce bribery and end black money with the hope that India would shift to a digitized monetary system that was traceable and taxable.
And so began a spate of government sponsored advertisements for people to adopt digital mode of banking transactions! But the fact of the matter is that incomes in our country are decidedly below the tax threshold in the first place. This then left the laboring workforce and low income groups to bear the brunt of the scrapping the 500 and 1000 rupee note overnight. Apart from the reported deaths, people suffered in more ways.
It is true that ours is a cash-driven country. Despite the push to open bank accounts, as yet a certain segment does not have bank accounts. Even new bank accounts that were opened remain bare and reportedly only 15% use their accounts to make or receive payments. Even the vast middle class of account holders in India does not use credit or debit card. Bank tellers still continue to undertake transactions. Online shopping in India is done in cash too! Nearly 70% of e-commerce runs through COD or cash on delivery!
It was the poor rural folk that were most hard hit and who suffered the most. It was a struggle for them to keep up with their lives and occupations. Agriculture relies on availability of ready cash in rural areas and left with little or no resources at hand, cultivation and marketing of produce relapsed for the longest time. The ensuing helplessness was self-defeating. Elsewhere too demonetization caused utter chaos. It is a moot question whether demonetization was worth the price Indians had to pay. What remains in the mind of people is the feeling of disparagement they were made to undergo to draw out their own hard earned money.
In the final count it appears that the Indian economy that was known to be one of the fastest growing economies in the world has slowed down after the demonetization shocker. Growth figures, both official and unofficial show a slowdown. This is surely a cause for concern. More disconcerting is the fact that former Prime Minister Dr. Manmohan Singh, a reputed economist in his own right, states that the attempt has scaled down nearly 2% of our Gross Domestic Product. National think-tanks and policy-research institutions make grim assessments of the fallouts of demonetization. The spectre continues to haunt us even after a year has gone by.