RBI has let the cat out of the bag.The August 29 report says that demonetization was for nothing.None of the stated objectives have been realized ..Indeed the costs of demonetization in term of foregone growth, loss of life and loss of jobs, closure of small firms, the distress to farmers migrant labour and so on outweigh the so caled notional benefits promised on November 8 2016 which will go as the blackest day in History to any sensible student of economics.
At a time when the author of this write up compiling the old notes on this subject which has had a deleterious effect on the entire economy, the news from RBI is telling the obvious..the unprecedented currency reform aimed at flushing out terror /counterfeit money,and unearthing black money held in currency and ushering in less cash economy and so on has been a huge failure but leaving behind many scars and wounds in the economy ..
Pending the publication of the child's guide to Mr Modi's Demonetization in a few months time it would be in order to place some crude truths about the fall out of this much hyped measure
1)The banned 500 and 1000 rupee notes amounted to Rs15.42 lakh crores.This constituted 86 % of total money supply ..Every single rupee of this amount returned to RBI..wait the missing amount was only a meager 13000 crores.
2)There was a great expectation that at least 3 lakh crores wund not visit RBI and therefore to that extent the liability of the central bank would be reduced and huge amount would be passed on to the federal government as dividend...
3)But the interesting paradox and a greater irony is that in 2016-17, the fiscal year ended june ,the dividend actually paid out was less than half of What RBI paid out in the previous year .In absolute term that was Rs 35221 crores less..
4)To replace the old notes the RBI had to incur an expenditure of nearly nearly 13000 crores .Before demonetization it had spent some 4000 crores..A huge amount spent with all the real costs to the economy, people firms and so on for what...to get 13000 cores dividend the missing money mentioned earlier.
5)what happened to the objective of flushing out the counterfeit currency notes?Indeed the fake notes have gone up sharply and during the demonetization period 322000 such instances have come to light..
Let me stop here as the battery has to be charged...The economy also needs to be administered with care and concern and egoistic unilateral self aggrandizement of power will be an economic suicide and already the rupee has given the red signal .It seems the saffron colour is hardly bothered as it is confident that people memory is short and there is no united opposition
At a time when the author of this write up compiling the old notes on this subject which has had a deleterious effect on the entire economy, the news from RBI is telling the obvious..the unprecedented currency reform aimed at flushing out terror /counterfeit money,and unearthing black money held in currency and ushering in less cash economy and so on has been a huge failure but leaving behind many scars and wounds in the economy ..
Pending the publication of the child's guide to Mr Modi's Demonetization in a few months time it would be in order to place some crude truths about the fall out of this much hyped measure
1)The banned 500 and 1000 rupee notes amounted to Rs15.42 lakh crores.This constituted 86 % of total money supply ..Every single rupee of this amount returned to RBI..wait the missing amount was only a meager 13000 crores.
2)There was a great expectation that at least 3 lakh crores wund not visit RBI and therefore to that extent the liability of the central bank would be reduced and huge amount would be passed on to the federal government as dividend...
3)But the interesting paradox and a greater irony is that in 2016-17, the fiscal year ended june ,the dividend actually paid out was less than half of What RBI paid out in the previous year .In absolute term that was Rs 35221 crores less..
4)To replace the old notes the RBI had to incur an expenditure of nearly nearly 13000 crores .Before demonetization it had spent some 4000 crores..A huge amount spent with all the real costs to the economy, people firms and so on for what...to get 13000 cores dividend the missing money mentioned earlier.
5)what happened to the objective of flushing out the counterfeit currency notes?Indeed the fake notes have gone up sharply and during the demonetization period 322000 such instances have come to light..
Let me stop here as the battery has to be charged...The economy also needs to be administered with care and concern and egoistic unilateral self aggrandizement of power will be an economic suicide and already the rupee has given the red signal .It seems the saffron colour is hardly bothered as it is confident that people memory is short and there is no united opposition
1 comment:
I can understand your anguish about the way our economy is moving and the outcome of the demonitisation in crashing the life of the under privileged and the down trodden. Let's really work on solid grounds to make our economy strong and you as an academician have to give awareness to the common man throgh your write ups and forums. Looking forward to meet you in person and let's work on a possible extent to make the larger crowd get aware on the metrics of economy .
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