Q :Sir Was demonetization administered earlier ?
Did it cause any
problem to the general public ?
D Sam :It was administered
in 1946 and 1978 and on both occasions
the demonetization of higher
denomination notes was not a problem as
it was not much in circulation and held by the affluent and its percentage in
total money supply was limited .
Kindly remember
this denomination constituted a tiny fraction - just 1,3% of total money supply(as compared to 86% of money supply in 2016); and even many educated
and middle class people would not have seen that note..Even a serious student
like me hazily remember that episode itself as it was not all an event for the majority of
the population .I was doing M Phil in Pune gokhale Institute at that time …But the case in 2016 is
distinctly different..It was an arrogant and stupid measure undertaken,
unmindful of the calamity which would visit a larger population especially when
you operate with empty hands while receiving the torrential pouring of cash
into banks like flash flood
Just imagine
the devastating effects of this measure
on informal economy, construction and farmers and so on with shortage of liquidity choking the
economy. Given the data that there are 1,34000 bank branches and more than
2 lakhs ATMs , If on an average
500 people stand in each bank imagine
how much human resources would have been lost , asked P Chidambaram..He
may not be the right person now to ask this question as serious charges are
leveled against his credentials and track record in money making madness.I do not have any respect for him .
Dr Manmohan was absolutely right in saying that it was a
monumental management failure, an organized loot and a legalized plunder. He
may not have the moral right to say as the congress government he presided over fell on the weight of
corruption charges but still the right
person to ask this question ,say backed by his
administrative experience and economic
insight to say and argue that certainly it is not the right measure or an ideal
instrument to tackle the problem.
Especially when it is undertaken in isolation
without any solid package of measures to strike at benami holding of real
estate and billions of dollar worth gold and foreign money ..the non currency
components of black wealth /corruption
is substantial and it is growing ..It is
like a hydra headed monster and there is a fertile climate in the country for its growth .The pity is that recently the Finance Minister has made a
revelation that not all the money
deposited in Swiss banks is black money.
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