The exercise of demonetizing around 87% of all circulating currency note supply taken by Narendra Modi and RBI last November has resulted into nothing but overall disaster for the economy. In his televised speech on 8th November, 2016 Narendra Modi talked about three main goals of the whole demonetization exercise, and they were:
- Curbing financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms , drugs and other contrabands into India; and
- For eliminating Black Money which casts a long shadow of parallel economy on our real economy
At that time Modi government was expecting that the substantial amount of black money that people were hoarding will never return in the banking system and that will become a windfall gain for RBI which it can then transfer in the government account. Now that 10 months have passed and data are coming in, what is the outcome of this exercise? Did this exercise bring back any windfall gain to RBI which it transferred to the Modi government? Did a substantial amount of black money never returned to the RBI vaults? Did the fake currency notes stopped circulating in the economy? Did the terrorism financing stopped and so terrorism stopped?
Even after 10 months of this exercise the Indian central bank RBI has yet to release full figures, but in their annual report, released few days ago, the RBI said that total 99% of all banned notes have returned in the system: India received a total of Rs 15.28 lakh crore in banned 500 and 1,000-rupee currency bills, the RBI said, which means 99 per cent of the banned cash has been legally returned in the eight months since demonetisation. The one per cent that has not returned to the RBI adds up to around Rs 16,000 crore. This means the demonetization exercise failed in unearthing any black money. In fact, people were able to convert their black money into white using the demonetization exercise itself! After this news came out, the finance minister Arun Jaitley was seen changing objectives of this whole exercise to hide his government’s failure by saying that, that was not the objective of demonetization…it was not an exercise to confiscate money but to nudge India towards digitization, ending anonymity of cash. Basically the government is now saying that the whole aim of demonetization was making India a ‘cashless digital economy’ and not curbing corruption and black money as originally stated by them.
Did RBI receive any windfall gain which it then transferred to the Modi government? Not at all. In fact, the recent data released by RBI show that instead of getting any windfall gain, RBI has made losses and it is only transferring Rs 30,659 crore, less than half the amount Rs 65,876 crore it transferred last year, dividend to the government this year implying lesser non-tax revenues to the government. This means, demonetization exercise turned out to be very costly for the government! It cost more money to RBI to print new currency notes and bring back old notes in the system than any so-called benefit of demonetization exercise!
Demonetization has also failed in curbing terrorism as can be seen in the on-going almost daily insurgent attacks on Indian nation state forces in places like Kashmir, North-East etc. The data released by the South Asia Terrorism Portal shows that, after demonetization exercise in year 2017 132 security personnel and 139 civilians have died in Jammy and Kashmir region itself. The three years of Modi government has turned out to be more deadly for the security forces compared to past years of Manmohan Singh government.
And, the fake currencies of even the new currencies introduced by the government started circulating in the economy during the demonetization exercise itself.
Not only this, the latest GDP data released by the Central Statistics Office (CSO) show that the first quarter GDP growth rate of the Indian economy has hit the lowest in last 3 years of 5.7% only, which is the slowest pace of growth under the Modi government. The demonetization exercise and then implementation of GST last July has hit the Indian economy hard. This was expected because when government fiddles with 87% of economy’s money supply, increases taxes on its people incessantly and also makes tax compliance so complicated that no one knows what is going on, the economy is going to tumble. Businesses survive and thrive in an environment of secure property rights and lower future uncertainty. When the economy gets one shock policy move after another in the form of demonetization and GST, it creates an environment of extreme suspicion and uncertainty among the business community. They start expecting more such shock policy moves from the government and stop any big present or future investment plans, which results into economy almost halting.
All in all, demonetization has resulted into total disaster for the Indians and their economy. The present BJP government is not ready to accept its failures and make corrections, but is busy making excuses. In such an environment expecting anything positive in future is going to result into disappointment only. We must brace-up for even worst situation in future because the world itself hasn’t got out of the deep depression that started in 2007.
One thought on “The Demonetization Disaster”
The Entire DEMO EXERCISE is a GIGANTIC FRAUD AND A DISASTER OF THE BRAIN OF NARENDRA MODI
1.Even the RBI initally accepted the disaster – but later went along like all lackeys and Indian weasels.as under: The minutes of the RBI Board Meeting which took place just a few hours BEFORE the execution of the DEMO DRIVE stated as under:
• “It (demonetisation) is a commendable measure but will have short-term negative effect on GDP for the current year,” read the minutes of the RBI board meeting.
• “Most of the black money is held not in the form of cash but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets,” the board observed in its 561st meeting held in Delhi.dindooohindoo
2.THERE HAS BEEN NO IMPACT OF DEMO ON SO CALLED TERROR IN INDIA AS THE NUMBER OF THESE ATTACKS AND THE CASUALTIES OF INDIAN SOLDIERS AND CIVILIANS HAS INCREASED AFTER THE DEMO DRIVE
3.THERE HAS BEEN NO IMPACT OF DEMO ON SO CALLED DRUG TRADE IN INDIA AS THE NUMBER OF THESE SEIZURES AND THE HAS INCREASED AFTER THE DEMO DRIVE
4.AS PER THE RBI REPORTS THE COUNTERFEIT CURRENCIES OF RS 50 AND RS 100 NOTES HAS INCREASED BY 50% AS THE COUNTERFEITERS HAVE FOCUSSED THEIR TECHNOLOGY ON THESE NOTES.THAT IT BECAUSE THE COUNTERFEITERS ARE TAKING TIME TO PERFECT THE COUNTERFEITING OF THE RS 500 AND RS 2000 NOTES AND ITS SUPPLY CHAIN OF PRINTING, DISTRIBUTION, STOCKING AND DISSEMINATION
5.THE GOI/RBI STATISTICS ON COUNTERFEIT RS 500 AND RS 2000 ARE MISLEADING.THESE NOTES ARE NOT COMING INTO THE BANKING SYSTEM AT THE SAME FREQUENCY AS IN 2017.IF THE NOTES DO NOT COME INTO THE BANKS THE FAKES ARE NOT DETECTED.THEREFORE THE RBI STATISTIC IS FALSE AND MISLEADING
6.AS PER RBI REPORTS,THE FLOWS OF RS 2000 NOTES INTO THE BANKS HAS REDUCED OVER THE YEARS AND BANKS ARE DOLING OUT LESS AND LESS RS 2000 NOTES.THAT MEANS THE RS 2000 NOTES ARE BEING WAREHOUSED BY THE MARKET – FOR MONEY LAUNDERING AND BLACK MARKETING.THAT DEFEATS THE PURPOSE OF DEMO AND MAKES THE CASE FOR DEMO – PART 2 FOR THE RS 2000 NOTES
7.THE ABOVE PROVES THAT THE ENTIRE DEMO DRIVE WAS BOGUS AND NOT BECAUSE ALL THE CASH CAME BACK INTO THE SYSTEM.IT IS BECAUSE ALL THE AIMS FAILED (AS ABOVE)
8.AS PER THE RBI REPORT,RS 11000 CRORES OF CASH DID NOT COME INTO THE BANKING SYSTEM. HOWEVER , THAT IS ALSO A MISLEADING STATISTIC AS
• THE RBI HAS SPENT RS 10000 CRORES IN THE LAST 3 YEARS TO PRINT THE NEW NOTES
• COULD RS 11000 CRORES WHICH IS 0.6% OF THE CASH THAT CAME INTO THE BANKS,REPRESENT THE SOILED,DAMAGED NOTES OR FORGOTTEN CASH OR CASH OUTSIDE INDIAN WHICH COULD NOT RETURN TO INDIA DUE TO THE FEAR OF QUESTIONING AND PROSECUTION – BUT IS LEGIT MONEY ? THAT WOULD BE A CASE OF THE INDIAN STATE CHEATING ITS CITIZENS
o THIS RS 11OOO CRORES IS NOT COUNTERFEIT AS IT IS ASSUMED THAT THESE ARE SERIALLY NUMBERED NOTES
• HAS RBI ACCOUNTED FOR EACH LEGIT CODE NUMBERED CURRENCY NOTE WHILE CALCULATING THE RS 11 CRORES AMOUNT OR IS IT BASED ON A DEDUCTIVE FIGURE ? DEDUCTIVE FIGURES ARE BASED ON ASSUMPTIONS OF COUNTERFEITS AND DAMAGED NOTES.
9.THE RBI REPORT DOES NOT STATE THE VALIUE OF THE COUNTERFEIT CURRENCY EXCHANGED FOR GOOD NOTES IN THE DEMO DRIVE.THAT IS A PURE LOSS OF THE DEMO DRIVE AND WAS A FOOL PROOF MODE OF CONVERTING CURRENCY AT POST OFFICES,COOPERATIVES AND BANKS IN TIER 2 AND 3 CITIES
10.IT MUST BE NOTED THAT IF COUNTERFEIT CURRENCY IS SENT INTO INDIA BY A STATE ACTOR,THEN IT IS ONLY REASONABLE TO ASSUME THAT THE SAME HAS ALREADY BEGUN AND IS MORE PROFITABLE THAN BEFORE.
• THE RBI HAS NOT RELEASED THE STATISTICS FOR THE NEW NOTES BEING COUNTERFEITED.
• EVEN IF THE CASES ARE LESS IT WOULD BE SUBJECT TO PARA 10.5 ABOVE.
• ALSO,A COUNTERFEIT IS COUNTED BY THE RBI ONLY IF IT IS DETECTED.GOOD COUNTERFEITS ARE NOT DETECTED.
• AS A MATTER OF RECORD,PAKISTAN’S MINT PRINTS CURRENCIES FOR SEVERAL NATIONS INCLUDING GCC NATIONS,WITH FAR MORE STRINGENT QUALITY NORMS AND SEVERE SAFETY AND RISK FEATURES THAN THE INDIAN RUPEE.
11.IT IS A MATTER OF RECORD THAT THE SMEs HAVE BEEN DESTROYED BY DEMO AND GST AND THEIR OUTPUT HAS BEEN TAKEN OVER BY LARGE CORPORATES – AND THAT IS WHY THE GST AND POWER DEMAND IS HIGHER THAN BEFORE.BUT 100s OF MILLIONS OF LABOUR ARE UNEMPLOYED AND SMEs ARE DESTROYED FOREVER.
12.IN LIGHT OF ALL OF THE ABOVE,WHAT IS THE BENEFIT OF THE DEMO DRIVE ? WAS THERE A SINGLE BENEFIT TO THE NATION ? THAT IS WHY THE INFORMATION SOUGHT BY THE APPELLANT IS IN PUBLIC AND NATIONAL INTEREST
13.BESIDES THE ABOVE ,THE DEMO FRAUD AND THE DEMO C OUNTERFEIT FRAUD ( WHEREIN THE COUNTERFEITS ARE EXCHANGED FOR REAL CURRENCY) – IS NOT STATED IN THE RBI REPORT
• THERE IS NO REPORT IN THE MEDIA, OF ANY RECOVERY MADE FROM THE CONVERTERS BY THE DRI/ED
14.HAS THE RBI DATA ON DEMO BEEN AUDITED BY A 3 RD PARTY ? HAS THE RS 15 LAC CRORES OF NOTES BEEN CHECKED FOR EACH CODE NUMBER AND WATERMARK AND COUNTERFEIT ?
• IF NOT,THEN THE NOTES MAY INCLUDE COUNTERFEITS.
o IF YES,THEN THE ESTIMATED COUNTERFEIT AS SAY 3% OF THE AGGREGATE CASH IN INDIA – WOULD BE A BENEFIT – WHICH THE RBI HAS NOT HIGHLIGHTED IN THE REPORT.DOES THAT MEAN THAT THE COUNTERFEITS ARE IN THE NOTES SUBMITTED AND EACH NOTE HAS NOT BEEN VERIFIED.
• EVEN IF THE COUNTERFEITS WERE CHECKED AND FOUND OUT AFTER THE EXCHANGE AND AFTER MANY MONTHS, THE DATA OF THE SAME AND THE ACTION ON THE DEPOSITORS (SINCE CCTVs CAPTURE THE DEPOSITOR),IS IN PUBLIC INTEREST