Second anniversary of Demonetisation : Step was good but implementation was poor

Ruling and opposition parties are putting counter claims about success or failure of demonetisation on its second anniversary when old currency-notes of denominations of rupees 500 and 1000 were demonetised on 08.11.2016. Demonetisation was indeed a very good and bold step. Rather it was senseless to issue rupee-500 notes in the year 1987 followed by issue of rupees-1000 denomination notes. It is significant that every sensible country has highest denomination of 100 in its currency.

But poor implementation made such a bold step a sort of failure when currency-circulation now is higher than that before demonetisation. 50-percent disclosure scheme if would have been announced by the prime Minister in his speech of 08.11.2016, would have overflown public-exchequer. By the time scheme was announced, most people having unaccounted currency had exchanged old currency with new currency at cost ranging from 30-40 percent. There would not have been currency-crunch if old currency would have been allowed at outlets of essential services like Mother-Dairy booths, Kendriya-Bhandaar and petrol-pumps. Negligible cases of misuse could make demonetization a smooth affair. Allowing too many Identity Proofs for note-exchange resulted in persons queueing up repeatedly by taking money to exchange notes.

 Even now corrective measures can and should be taken by targeting larger transactions of say rupees 20000 and above for compulsorily through banking transaction rather than targeting petty ones through BhimApp and PayTM etc. Monthly withdrawal from banks by an individual should be 96000 to be gradually reduced to rupees 48000 per month.