Narendra Modi, the Prime Minister of India, has asked the citizens of the country to bear the problems, which have cropped up after his government’s demonetization decision, for just 50 days and then things will set right.
But if we look at the speed at which the new currency is being distributed, these 50 days do not seem enough, for sure. The Finance Ministry has released a report according to which, by the October end, notes worth Rs 17,50,000 crore were in circulation and out of which, Rs 14,50,000 crore (84%) was in the form of Rs. 500 and Rs. 1,000 currency notes which are useless now.
The Finance Ministry again released a report on Sunday according to which, from 10th Nov to 13th Nov, Rs. 50,000 crore were distributed to individuals either in the form of Rs. 100 or Rs. 2,000 currency notes by banks, post offices or through ATMs.
According to Indian Express, nearly 18 crore transactions took place in the first four days and still chaotic situations have been witnessed all over the country. In various branches of banks, post offices and ATMs, either cash in new currency is not reaching on time or getting finished before everyone in the queue gets it.
All this is happening even when the RBI is claiming that it has sufficient currency for distribution. What’s more, it is also being said that the printing presses of RBI had started printing new currency many days back to keep a good stock.
Now if we assume that Rs. 2,000 notes are used for distributing the total amount of Rs 12,500 crore, then it will take 116 days to refill the financial system. Direct Tax Administration warned against demonetization four years back; it also talked about the side-effects of this process and how useless this whole process may prove to be.
This is what a report by the chairman of Central Board of Direct Taxes read,
“One common demand from the public is that high denomination currency notes particularly Rs 1,000 and Rs 500 should be demonetized.”
The report was written in 2012 and it was titled “Measures to Tackle Black Money in India and Abroad.”
The 109-page report further read,
“In this connection, it is observed that demonetization may not be a solution for tackling black money or economy, which is largely held in the form of benami properties, bullion and jewellery.”
It also said that demonetization would result in increased costs as new currency notes would be printed, banking system would come under heavy pressure, there would be transportation issues for cash and public would face a great deal of difficulty in getting cash.
The report read,
“Demonetization undertaken twice in the past — 1946 and 1978 — miserably failed, with less than 15 per cent of high currency notes being exchanged, while more than 85 per cent of the currency notes never surfaced, as the owners suspected penal action by government agencies.”
Will things set right in 50 days or not? Do let us know your opinion in this regard in the comments section below.
