The Indian economy has never been a subject to captivating roller coasters. India has been this shy economy that has its lop sides and evolved gradually with genuine flaws and pros. Modi’s bold move to flush black money toxins out of India’s economic system has gone for a toss in its way of implementation. Six months later, lines outside ATMs are not shorter nor are banks less crowded. Trapping big fishes was the aim of the government but has generally backlashed with the public growing impatient in the time taken by the government to normalize the scenario.
The overnight note ban, which has never been attempted by any major economy, would brand as the Modi government’s make or breakpoint. The plan seemed fitting- bans higher denomination currencies which will nuke all black money holders, new currency releases and everything goes back to normal. But the loophole came in circulating the new currency and that of the 2000 denomination. In short, the country ended up with minor denominations of 100 and below and 2000 on the other end. Either this stake was not foreseen, which again is a less comprehendible move, or purposely ignored.
The move has helped to gain back black money anyhow, and if all of it comes back Indian economy will be a spectacle. Real estate rates will go down, the price hikes will reduce and the value of the Indian rupee will increase. The impeccability of the plan apparently can overlook all negativities or public discomforts and would be labeled as minor ransoms for a better future. Since India is a land of diversities and disparities this cheese of a plan wouldn’t spread evenly through the crowd.
Where ceremonies are bigger than people in it, allotting minimum money withdrawals for marriages and other events was criticized with a much of emotions. The same was the case of standing queues every day or at least every two days in ATM lines, thus bringing the overall spending power of the nation down. Small scale vendors and traders who are yet to familiarize themselves with card payment systems had to face recoil in business. Meanwhile, the general crowd shifted to supermarkets and branded shops where card payment can be done. The government has branded itself as poor man’s Eden has knowingly or unknowingly favored multinationals and big guns n the retail sector.
The ultimate aim of the note ban was to create a cashless economy. First of all, a cashless economy is a parallel system to currency and not an alternative. Also, to create a cashless economy the new currencies should have been of lower denominations and not a higher denomination of 2000. The note was also designed and printed and circulated in frenzy, taking a huge toll on its final look, quality, and popularity. The currency on a designer basis needs to be flawlessly aligned which was disregarded. A national currency is not an overnight design project to make RBI and bank employees pull an all-nighter.
India, a month ago note ban, was almost in a threat of war with Pakistan backed by Uri attacks. While Pakistan was sending signals of using nuclear weapons, India was also gathering support from foreign nations. In a scenario of war, the Indian economy will be the first element to take the hit. After the demonetization catastrophe, the Indian economy will still require at least 6 months to cure. Demonetization has put India on a vulnerable front, where the economy is already facing a backlash, and war will put it to a sweet death.
Prime minister’s faith in “Swadesh” and “Make in India” systems that will boost both political image and economic scenario will be a band-aid to fix bullet hole created by demonetization. Execution is the stage where the plan will flip out and present its reality, a point again missed by the government. Also, no sound expert advice behind this move makes the public question its credibility.
Not every opinion has found currency ban a hitchhike; many of them have welcomed it as a courageous move. The strength and will government needed in this is worthwhile appreciated. But it has shaken the very foundation of the economy India’s specialists have worked so hard to build upon. Unlike the western economy which witnessed a huge landslide due to vague economic policies, India was well planned to witness it all. Modi government, has a history of effective economic renewal in Gujarat have seen putting less pertinent efforts in implementing demonetization. If the current stratum of cashlessness prevails, this would do more harm than good to the image of the Government. But at the same time, as guaranteed, the economy comes out clean, even and viable to all economic classes, India could be another superpower in 10 years. Indian government’s political image is at the tipping point where it could multiply high or crumble down into instability.