The Reserve Bank of India this week announced that the 99% of the demonetised currency was back with the banks thereby dealing a blow to Prime Minister Narendra Modi’s much-touted claims that the key objective of note ban was to curb the black money and counterfeit currency floating in the market.
An embarrassed finance minister, Arun Jaitley, moved in with lightening speed to defend the indefensible. Jaitley questioned the wisdom of economists, who declared the note ban had miserably failed in its objectives.
Jaitley questioned the knowledge on black money and its relation with the demonetised currency adding that the demonetisation’s objective was also to create a digital economy and India was moving in the right direction.
He said, “People with inadequate understanding of how to tackle black money linked note ban with money returned..The objective of demonetisation was that India is predominantly high cash economy therefore that scenario requires to be significantly altered.”
However data revealed by the RBI punctures the government’s claims even on digital economy front. Post 8 November when Modi made the shock announcement of note ban, the volume of digital transactions rose from 671 million in November 2016 to 957 million in December 2016.
But the same number, as reported by NDTV, dropped to 862 million in July 2017, which is considerably lower than what it was before the note ban announcement. In September 2016, the volume of digital transactions stood at 1,452 million.
As for the value of these digital transactions, they rose to Rs. 1,044,055 billion in December 2016 but dropped to only Rs. 107,481 billion in July 2017.
Ananth Narayanan, chief executive officer of Myntra, told NDTV that an average of 40 per cent of their customers paid made payments digitally before demonetisation.
He said, “Post-demonetisation that number went close to 54-55 per cent but it has now come back to 45-46 per cent.”