Prime Minister Narendra Modi on Sunday said the demonetisation move, when Rs 1,000 and Rs 500 notes were scrapped in a sudden announcement four years ago, helped reduced black money and increased tax compliance and was “greatly beneficial” towards the progress of the country
“Demonetisation has helped reduce black money, increase tax compliance and formalization and given a boost to transparency. These outcomes have been greatly beneficial towards national progress. #DeMolishingCorruption,” PM Modi tweeted.
Demonetisation has helped reduce black money, increase tax compliance and formalization and given a boost to transparency.
— Narendra Modi (@narendramodi) November 8, 2020
On November 8, 2016, PM Modi, in an unexpected move, announced the scrapping of the existing Rs 500 and Rs 1,000 notes with immediate effect. The sudden withdrawal of notes led to liquidity shortage, with long queues outside banks. It had also roiled the economy, with demand falling, businesses facing a crisis, and GDP growth declining close to 1.5 per cent. Many small units were hit hard, with many reporting huge losses even after nine months.
About 115 people reportedly died standing in queues to withdraw money from their bank accounts. The RBI gradually introduced Rs 500 and Rs 2,000 notes in place of the notes withdrawn, but the pace of remonetisation was very slow.
Opposition criticism intensified after the RBI, in its annual report for 2017-18 on August 29, 2018, said that nearly all the money that was withdrawn returned to the banking system. The RBI said it had received Rs 15.31 lakh crore of Rs 500 and Rs 1,000 notes, or 99.3 per cent of the Rs 15.417 lakh crore worth of notes which were in circulation as on November 8, 2016.
Earlier in the day, Union Minister Nirmala Sitharaman said demonetisation led to better tax compliance and a major push towards digital economy. In a series of tweets, Sitharaman said: “To fulfill its promise of freeing India from corruption, the Modi govt implemented Demonetisation 4 years ago on this day, today. The move that was an unprecedented attack on Black Money also led to better tax compliance and a major push to digital economy”.
“Rs 900 crores of undisclosed income was seized in the first four months after demonetisation. And in the last three years, assets worth Rs 3,950 crores were seized. While surveys conducted post-demonetisation led to unearthing of undisclosed income worth several crore, Operation Clean Money helped formalise the economy,” the Finance Minister said.
Meanwhile, the Congress started a social media campaign #SpeakUpAgainstDeMoDisaster in which party MP Rahul Gandhi alleged that the main aim of demonetisation was to waive the loans of big defaulters. The party also claimed that the move resulted in GDP growth rate decreasing by 2.2 per cent and employment decreasing by 3 per cent.
“Four years ago Prime Minister Narendra Modi began an assault on the Indian economy. He hurt farmers, labourers and small shopkeepers. Manmohan Singh ji said the economy will lose two per cent and that is what we saw,” Gandhi said.
The former Congress chief said PM Modi’s claim that it was a fight against black money “was a lie”. “The attack was on you, Modi wanted to take your money and give it to his 2-3 crony capitalist friends. You stood in lines, not his crony capitalist friends. You put your money in banks and PM Modi gave that money to his friends and gave them a loan waiver of Rs 3,50,000 crore,” Gandhi alleged.
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