Narendra Modi’s Demonetization drive was a bold step taken towards curbing the flow of unaccounted income and tackling terrorism. The question to ask is whether the decision positively impacted the functioning of the economy to stop corruption. While this move aimed to combat corruption and the circulation of black money, it caused distress and disorder among indigenous businesses and the working class. The failed experiment has cost the livelihood of many individuals and establishments.
Demonetization Loopholes addressed
There are several loopholes that exist within the system as Demonetization had a limited impact to curb instances of corruption. In a modern economy, people utilize real estate, foreign currencies and overseas bank accounts to safeguard unaccounted wealth. Only a negligible percentage of the population invest their unaccounted income in liquid cash. This defeats the whole purpose of the Demonetization movement. It was promised that the Demonetization would only cause a short-term pain which would ultimately help fight corruption. When in fact, in reality, this measure merely caused a slight lag in individuals indulging in corrupt practices. People obviously adopted newer ways by reverting to the gold and the real estate sector to resume corruption in the economy.
Demonetization Unbearable consequences
The unorganized sector in India mostly functions on hard cash, which accounts for 80% of employment and 48% of the total output of the country. While the Modi government was positive about replacing hard cash with a digital economy, several marginal farmers have suffered the unbearable consequences. The banning of 500 and 1000 Rupee notes and replacing them with the legal tender of 2000 was not a very smart move. This clearly did not aid the sections of the society who ultimately dealt with smaller amounts of hard cash on a daily basis. Demonetization had a negligible impact on the economy in the long run compared to the unbearable consequences that hindered the growth of the economy.
The failed planning and execution of the Demonetization drive therefore, continues to have a long lasting impact on the lives of businesses and individuals.