Reserve Bank of India governor, Urjit Patel, says counting of banned old Rs500 and Rs1,000 currency notes is still going on for six days a week, that the RBI has cut down on holidays, and its staff is working “round the clock” except on Sundays. It’s been 7 and a half months since the infamous Demonetisation ended and we still don’t know what’s what. Of course, the economy has slowed down and there have been many other disastrous repercussions in specific sectors of business.
Meanwhile, like we all said, King Cash would return, and the spike in digital transactions was only temporary. Check the Bloomberg graph in the first comment and it’s easy to understand why King Cash will always be a big force in India.
So, the first big myth was that Demonetisation would stop the black money. Mr Patel is still counting the money but by and large, even Modi Sarkar dropped the Black Money disinformation and launched the second piece of deception, that Demonetisation was done to improve digitization and to stop cash transactions. Very soon that was also proved to be distortion and fabrication.
TOI tells us: “In the seven months between November 2016 and May 2017, digital transactions grew 1.15 times in volume and 1.11 times in value. As compared with this, transactions in the immediately preceding period grew 1.14 times in volume and 1.12 times (faster) in value. Even for the 12-month earlier period (November 2015 to May 2016), digital transactions gained 1.08 times in volume and a relatively faster 1.19 times in value.”
Kalpesh Mehta, partner and India financial services leader, Deloitte Haskins & Sells tells us, “Prior to demonetization, digital transactions grew by choice and then due to cash shortage post-demonetisation — by force, people were forced to use digital modes. Once cash got back, people who preferred to pay by cash went back to it.”
RBI deputy governor S S Mundra had warned that “migration to digital transactions” was one of the important determinants for judging the success or failure of Demonetisation. Well, it has been judged over and over again, on several diverse parameters, including the return of King Cash.
THE VERDICT: TOTAL DISASTER.