Vol. XLII No. 46 November 18, 2018

Demonetisation is a Failure, Govt Should Admit

THE Bank Employees Federation of India (BEFI), Tamil Nadu, has demanded that the government should openly accept that demonetisation is a failure and should compensate the families for loss of lives due to demonetisation.

The bank employees demanded that the government should compensate the banks and RBI for the expenses additionally incurred and create job opportunities to compensate the loss. It should also come out with a white paper on the ill effects of demonetisation and measures to rectify them.

The BEFI has given a call for country-wide demonstrations, protesting against the damage caused due to demonetisation. As a part of that call, demonstrations were held in front of banks on November 13.

Prime Minister Narendra Modi, on November 13, 2016 said, “I have asked the country for just 50 days. If after December 30, there are shortcomings in my work or there are mistakes or a bad intention found in my work, I will be prepared for the punishment that the country decides for me.” He added, "I am doing this for the poor, honest people, for those who are working hard to survive. So that they can get their own home, their children get good education and so that their parents get care.”

The BEFI said that two years ago, when demonetisation was implemented assuring that the exercise would eradicate black money, corruption, fake currency and money to terrorists, the government spokespersons defended the move saying that about Rs 5 lakh crore of black money would be curbed.
However, in reality, the Reserve Bank of India admitted that 99.3 per cent of the demonetised currency i.e., Rs 15.33 lakh crore had come back. The remaining Rs 11,000 crores that did not come back was mainly due to the money stuck in Nepal, Bhutan and money lying in the form of demonetised currency in courts and with the ordinary people who had no opportunity to bring them to the banks within the stipulated time, the BEFI noted.

The bank employees union said that the questions of, where the black money is and what happened to the prediction of the government that about Rs 5 lakh crores would be held back, remain unanswered. Black money was not curbed. Rather there is no tangible action against the 1.48 lakh account holders who deposited more than Rs 80 lakh demonetised currency each to the extent of Rs 4.89 lakh crores into the banks.
Even today there are fake currencies of the newly introduced Rs 2000 notes that are inducted into circulation. Corruption is rampant and there are corruption charges against even high-level CBI officers. The government has not submitted any evidence that the supply of money to the terrorists has been curbed due to demonetisation, added the BEFI.

On the other hand, it is the common public that had to pay a heavy price for demonetisation.  More than 100 people and 12 bank employees died and lakhs of jobs have been lost in the bid.   Crores of people were made to stand in the queues for hours for the first 50 days of demonetisation. People had to suffer due to shortage of currency for more than five months. Small, medium and micro enterprises have been hit severely and the economic growth was affected and the GDP was reduced by about 2.5 per cent.
The revenue of RBI was reduced by about Rs 31,000 crore. The cost of printing new notes exceeded Rs 8,000 crores and the banks had to incur about Rs 5,000 crore for extra work and recalibration of ATMs, a still ongoing process.
The banks had to face loss of business, recovery of loans etc. People were pushed towards digitisation which only helped inland and foreign corporates. The bank employees and officers who burnt the midnight oil in this exercise were not honourably treated. Their legitimate overtime wages were still not paid in some banks.

Two years since the demonetisation, it is evident that the exercise was not only a failure but also led only to the erosion of the income of the poor and the middle class to the benefit of the corporates. Till today, education, health or housing remains beyond the reach of the poor. The promise of the prime minister is kept unfulfilled. Ultimately, the exercise of demonetisation has turned out to be a cruel attack on the people, the bankers said.