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Demonetisation : Biggest blunder or biggest scam in Indian history?

EconomyDemonetisation : Biggest blunder or biggest scam in Indian history?

Demonetisation is considered as the biggest economic loss or the biggest corruption in the history of India destabilizing millions.

By Epat Bratizbaqk

Demonetisation – A blunder or biggest corruption in the Indian Economy?

Biggest economic loss or corruption in the history of India

Demonetisation of 500 and 1000 Rupee notes in Nov 2016 costed RBI a massive 500,000 crores. Some estimate the loss at 700,000 crores. It is considered the biggest economic loss or the biggest corruption in the history of India.

In fact, on studies, you will nowhere find a government in the world whose economic policy led to the loss of a colossal amount of revenue to the government exchequer.

Output loss due to demonetisation impacting the rural economy

Output loss due to demonetization is in and above Rs 1 lakh crore.  This primarily gave a severe jolt to the rural economy. The Gross National Disposable Income (GNDI), the household financial liability (debt) averaged 3.06% before demonetization and it suddenly rose to 4% of GNDI in 2017-18.

Consumption power and selling power were reduced

Shockingly, liabilities went up from Rs 3, 70,964 crores in 2016-17 to Rs 6, 79,349 crores in 2017-18.  Urban consumption was reduced by 34 percent and rural consumption lowered to only 4 percent which is the worst in 20 years.

Massive loss of jobs

Azim Premji University report accesses that between November 2016 and October 2019 there was a loss of 50 lakh jobs. At that time, there was a pandemic. Now, the unemployment rate is the worst in 45 years and millions of highly educated people sit at home jobless.

Strangely enough, all the people know that demonetization was a failure and no government in the world has ever done such an economic blunder, however, it is a failure that most choose to ignore perhaps because the pandemic pulled in at that juncture.

Core economic sectors doing worse in decades due to the demonization

During the soaring rage of the COVID-19 pandemic, a total of 12.3 crores of people lost jobs, and industries were put at a standstill.  Industries are slowing down.  Core economic sectors of India including Agri, Auto, Real Estate, Textile, and Tourism are worst performing in decades.

Banks Collapsed

The banking sector is called the backbone of the economy but it was catastrophic that the banks were weakened during demonization.  Thus, demonization is considered at the biggest bank fraud done during the governance of the BJP from the Center, and shockingly, the third largest bank, Yes Bank collapsed due to this.

The Reserve Bank of India (RBI) in its annual report said that a total of Rs 15.41 lakh crore demonetized currency notes of Rs 500 and Rs 1,000 denominations have been recovered. Only Rs 10,720 crore was to be reached to the banks or the RBI.

This means only 0.7 percent of demonetized currency notes were junked in the exercise. The government had initially expected that approximately Rs 3 lac crore of demonetized currency notes would not come back to the banking system. But it was reversed and the Indian economy thrashed.  There was no big black money comeback and in fact, no one got the election promise of 15 lakhs given by the prime minister himself.

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