The Hindu Editorial 17th Jan 2017
Review of this Interview
On the 8th November 2016 PM Narender Modi announced demonetization of 1000 and 500 denomination which comprises 86 percent of total currency.
Government has taken this step to fight against black money, terrorist funding and counterfeit currency and at the same time wants to make nation cashless and digital.
What are the short term gains or losses of demonetization?
In this interview Amartya Sen tried to mention that initially people of country didn’t strike against government decision because they were frequently told that government is doing this to curtail black money which may indirectly be a fight against corruption too. So, people chose to stay calm and praise Modi government which was proved short term gain for government.
It is right to say that it was not a good decision taken by government?
Cash is promissory note which play important role in a country like India where most of the business is currency intensive. Demonetization has been hampered many small and medium business which can’t run smoothly as the government has decided to ban the circulation of 86 percent of notes.
Government had targeted black money but in reality a very small proportion of black money that is less then 10 percent is in cash. Most black money is in the form of precious metals and other assets in foreign accounts.
Government is trying to make India a digital country but the truth cannot be denied that a big chunk of our population is residing in rural areas who don’t have easy access to internet and adequate training to run these technical instruments. In urban area people who are engaged in labour work found difficulty to be digital in their dealing.
Secondary impact of demonetization
Primary impact was long queues outside bank and shortage of cash. Secondary impact seems more harsh and difficult to be dealt with.
Small business are not doing well because of less liquidity in the market which is going to bring slow down in our economic growth. RBI has estimated growth rate around 7.1% for 2016-17 and ‘London’s Financial Times’ has called ‘a dramatic drop in business in 34 days since 8 November’.
There are going to be huge job losses too that has already been started.
So through this interview we can conclude that demonetization is not a welcomed decision for our country because people are not trained in a fashion to adopt and cone up with this sudden and drastic change, India is fastest growing country of the world, at this point of time our economy with currency or short of currency cannot sustain this growth rate. To make country digital we need to have special programme to train people and make system easy and accessible to all.