There was this article recently which said demonetisation was a complete 100% failure — https://www.ndtv.com/opinion/well-blame-demonetisation-on-nehru-i-guess-1909001
And there is a retaliatory message in WhatsApp doing the rounds the past two days which goes like this:
The Government of India decided to cancel the Legal Tender Status of Rs.1000 and Rs.500 denomination currency notes on 8th November 2016 with several objectives: (i) flushing out Black Money, (ii) eliminate Fake Indian Currency Notes (FICN), (iii) to strike at the root of financing of terrorism and left wing extremism, (iv) to convert non-formal economy into a Formal Economy to expand Tax Base and employment and (v) to give a big boost to Digitalization of payments to make India a less cash economy.
Effect & Benefits of ‘Demonetisation’.
📎 56 lac New Taxpayers Added post Demonetisation.
📎 Tax Base increased by 1.26 crore taxpayers.
📎 The number of Returns filed registered an increase of 24.7% over previous year of 9.9%
📎 Net currency circulation reduced by Rs. ~3 trillion i.e 21%
📎 Interest rates reduced by 100 bps.
📎 Card (Debit & Credit) transaction increased by 65%
📎 Deposits in Banking system increased by 3 lac crore.
📎 16,000 crore didn’t came back to Bank.
📎 4.73 lac suspicious transaction detected.
📎 All Transaction above 3 lac under Scrutiny.
📎 Jewellery demand plunged by 80%.
📎 Digital payments have increased by 56%.
📎 Assets under management (AUM) of Mutual funds (MFs) rose by 54%.
📎 More than 1 crore workers added to EPF & ESIC.
📎 Under IDS’15 a total of 3,770 crore declared.
📎 Under IDS’16 a total of 65,250 crore declared.
📎 52.4 crore unique Aadhaar numbers have been linked to 73.62 crore accounts in India.
📎 21000 people declared 4,900 crore under PMGKY.
📎 34 Big Chartered Accountants under Investigation.
📎 460 banks officials punished for alleged irregularities: CVC
📎 5,800 companies with ‘withdrawal syndrome’ under government scanner.
📎 Notices to 1.16 lakh for cash deposit of over Rs 25 lakh.
📎 5000 Tax notices who deposited more than 1 Crore.
📎 18 Lac Accounts scrutinised & Notices been send under ‘OCM’.
📎 5.56 lakh more ppl identified whose deposits do not match their income profile.
📎 35,000 shell companies were struck off.
📎 About 200 high risk clusters of persons were identified for appropriate action.
📎 2.1 lac shell companies De-registered
📎 GoI to de-register 1.2 lac more shell companies.
📎 3.09 lac Board of Directors disqualified.
📎 Undisclosed income of 42,448 crore admitted u/s 132(4).
📎 33,028 crore detected as Undisclosed Income.
📎 Cash deposits of 2.89 lakh crore under I-T investigation.
📎 The impressive revenue collection under GST is also partially attributable to demonetization drive.Who’s saying ‘Demonetisation’ was Failed … Bring Him here …
Fact remains 1,65,396 crore worth of ‘Black Money’ had been captured / admitted / came back post IDS & due to Demonetisation. Recovery by ED & Recoveries under ‘Benami’ & ‘Imposition’ Tax are additional. Total of 2,12,360 crore worth of ‘Black Money’ have been ceased in last 4 Years.
And of-course ‘Currency’ came back to Banks doen’t mean it is not Black Money. Ceased amount is also been deposited..
#Demonetisation #BlackMoney
Many of the points are taken from this Finance Ministry’s press release of August 30, 2017 — http://pib.nic.in/newsite/PrintRelease.aspx?relid=170378.
Let’s explore the message in detail.
First, it’s anonymous (where as the NDTV article has an author), and as is expected of such messages has grammar errors, and mixes up a few things.
Second, the comical points.
34 Big Chartered Accountants under Investigation.
You conduct a country-wide demonetisation exercise to bring to book 34 CAs? And proud to state this as one of the successes of the demonetisation operation? The news of investigation is from February 2017 — https://www.financialexpress.com/economy/demonetisation-narendra-modi-govt-hands-34-chartered-accountants-names-to-icai-for-money-laundering-investigation/551650/. We are in Sep 2018. At least what happened to the 34 CAs?
A few more, which the message claims as ‘successes’ -
460 banks officials punished for alleged irregularities: CVC
52.4 crore unique Aadhaar numbers have been linked to 73.62 crore accounts in India.
Interest rates reduced by 100 bps.
Interest rates move up and down. When rates are low, it is good for businesses and home buyers to borrow. But not so good for retirees who survive on monthly interest payments. Even with the interest rates going down after demonetisation, businesses didn’t borrow money as expected. The interest rates are going back up again now.
Net currency circulation reduced by Rs. ~3 trillion i.e 21%
Card (Debit & Credit) transaction increased by 65%
The government sucked out 86% of the total money in circulation. And then replenished the money supply with new bank notes slowly over months. Naturally the currency in circulation reduced. Digital transactions were meant to take over. 20 months after demonetisation, the money in circulation is more than it was in Nov 2016. We Indians it seems are back to dealing in cash. The number of digital transactions which saw an uptick immediately after demonetisation, has come down.
5,800 companies with ‘withdrawal syndrome’ under government scanner.
Notices to 1.16 lakh for cash deposit of over Rs 25 lakh.
5000 Tax notices who deposited more than 1 Crore.
18 Lac Accounts scrutinised & Notices been send under ‘OCM’.
5.56 lakh more ppl identified whose deposits do not match their income profile.
35,000 shell companies were struck off.
About 200 high risk clusters of persons were identified for appropriate action.
2.1 lac shell companies De-registered
GoI to de-register 1.2 lac more shell companies.
3.09 lac Board of Directors disqualified.
Are these ‘successes’? These may be at best be termed as the aftermath or consequences, as such an operation will definitely have. Identifying shell companies using the demonetisation is similar to identifying the 34 faulting CAs. Those can be done even today without the demonetisation operation.
https://timesofindia.indiatimes.com/business/india-business/i-t-prosecution-cases-treble-in-2017-conviction-up-four-times/articleshow/62481108.cms — With all those pretty numbers, a grand total of 48 people have been convicted.
56 lac New Taxpayers Added post Demonetisation.
Tax Base increased by 1.26 crore taxpayers.
The number of Returns filed registered an increase of 24.7% over previous year of 9.9%
Those seem to be the definite things which happened. Even these could have been achieved through other means instead of the 4-hour-shock and the subsequent chaos created over the next few months, affecting crores of people in lower economic strata of the society. Like say slow demonetisation.
