Thursday, 31 August 2017

RBI Annual Report 2016-17 confirms demonetisation disaster

Andhra Jyothy dt Aug 31, 2016 - Headlines
  • On November 8,  2016, the Modi government kicked off a massive demonetisation exercise in a move that was aimed at curbing black money, fake currency and corruption. Since then it has been a widely debated topic, with analysts and economists wondering whether the benefits trumped the costs.
  • The Reserve Bank, which has so far shied away from disclosing the actual number of junked currency deposited after November 8 last year, said in its Annual Report for 2016-17, that Rs.15.28 lakh crore out of the Rs.15.44 lakh crore of the junked currency had come back into the banking system, leaving only Rs.16,050 crore out.  This means that 98.96% of Rs 1,000 and Rs 500 notes that were banned as a result of demonetisation were returned to the central bank by the end of June 2017.
  • In the immediate weeks after demonetisation, one school of thought believed that if a sizeable amount of demonetisation notes didn’t return to the RBI (presumably because the owners of the notes feared getting caught for tax evasion, this could translate into a “windfall gain” for the Modi government. The government itself believed that roughly Rs 2 -3 lakh crore would not return, according to statements the-then attorney general made before the Supreme Court in November 2016.
  • Former Finance Minister P Chidambaram said, "RBI gained Rs 16,000 crore, but lost Rs.21,000 crore in printing new notes! The economists deserve Nobel Prize." He also tweeted "Rs.16,000 crore out of demonetised notes of Rs.15,44,000 crores did not come back to RBI. That is 1 per cent. Shame on RBI which 'recommended' demonetisation."
  • A collateral damage as a result of rise in printing and other cost was dividend RBI pays to the government. RBI said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent. The RBI paid Rs.30,659 crore dividend to the government for the year ended June 30, 2017 against the expected Rs.74,901 crore. In the previous year RBI paid dividend of Rs.65,876 crore dividend to the government.

  • Demonetization has destroyed Agriculture, Informal economy, Small Industries, and unquantifiable effects on each and everyone. No one is benefited. CMIE estimated costs incurred by Nation during demonetisation period of 50 days is over Rs.128,000 crores that achieved nothing. Yet our PM Modi lives in a fools paradise publicizing what ever small good is happening around as an achievement of DeMon while maintaining stoic silence on bad effects that surface.
  • Series of  farm loan waivers by states to mitigate farmer woes is actually pulling down our otherwise vibrant economy. Another effect is the NPAs have virtually destroyed public sector banks. Today they are doing nothing but counter banking.
Demonetisation process adopted by Modi giving undue importance to secrecy rather than meticulous planning for its seamless implementation, betrayed constitution, violated laws of the land, undermined RBI & other institutions, cabinet made irrelevant and parliament denied its right to discuss and vote it. With in few days of DeMon, it was clear that it is headed for its monumental failure and Modi had opportunity to 'restore status-quo ante' and deliberately ignoring it indicates his arrogance and contempt for people of India and their sufferings. He was so much blinded that he has not even considered mitigation aspects except making an emotional speech asking people 50 days but problems persisted for over 8 months. Charismatic he is, he was able to campaign and win UP elections that DeMon is hurting and making rich sleepless and is the tool in his hands fighting corruption which is a total lie. His apathy towards not appointing Lok Pal & Lok Ayuktas for the past 4 years is the true indicator of his corruption fighting attitude. It is a matter of shame that, the one man Modi who unleashed mindless & unwarranted economic disaster 'demonetization' on otherwise vibrant Indian economy resulting in the nation losing lakhs of crores of rupees, impacting poor & peasants is walking amidst us proudly unpunished and pretending as a great achiever. 

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