Demonetisation was largely a farce as it made no significant impact on any of it's original objectives such as curbing black money. Many government employees even run their own businesses registered in some family member's name and are easily cleaning black money into white all the time.
RBI has infact stated categorically that burdening the tax payer by demonetisation is not going to yield the intended results according to TOI.
The government had said demonetisation would help curb black money and steep rise in Rs 500 and Rs 1,000 notes; check the circulation of fake currency; and promote e-payments and financial inclusion. But according to minutes of the RBI board meet at 5.30pm on November 8, 2016, three hours before the PM announced demonetisation, “directors made the following significant observations”
“Most of the black money is held not in cash but in the form of real sector assets such as gold or real estate and this move would not have a material impact on the assets.”
Infact RBI's directors had warned of a short term hit to the country's GDP with this move but the government proceeded with it anyway.
Demonetisation also gave a boost to cryptocurrency use, trading and possession in the country.
Also, one thing worth considering is if real-estate and gold are where majority black money is held or use for it, then shouldn't the government consider banning speculation and trading of these asset classes? Why consider banning cryptocurrencies as it has in the past.
There's no substantial evidence to claim cryptocurrencies are worse off than real estate or gold as the latter is proven to work for black money hoarders.
Some RBI directors had countered the government’s argument on the growth in high denomination notes being much faster than the pace of economic expansion, arguing that “adjusted for inflation, the difference may not be so stark”.
Also as per an RTI PM Modi went ahead before RBI's formal approval.
TOI also reports that in another reply, the RBI has revealed it had no data on the old Rs 500 and Rs 1,000 notes used to pay for utility bills such as fuel at petrol pumps.
It's high the time government gets realistic about the failure of demonetisation and ensures such moves are not made without proper consideration. There is no dearth of corruption and red tape in India. Demonetisation hasn't helped in reducing any of the current issues as we've seen in the past few years since this happened.
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