How the Demo by Namo destroyed our country!

How the Demo by Namo destroyed our country!

By Dr.C.Srinivasa raju

To root out counterfeit currency, fight tax evasion, curb inflation, eliminate black money and terror-funding, and to promote a cashless economy, On November 8, 2016, the Indian government declared that the 500 and 1000 rupee notes those accounted for 86 percent of the country’s cash supply by value.

Demonetization is not new to the Indian economy. “10000” notes in 1946 and then in 1978 were demonetized without any ill effects Since not many people had access to such notes at the time.

But the latest round of demonetisation  has undoubtedly affected the common public and bankers.

Impact Of Demonetisation On The Indian Economy

On Gross Domestic Product (GDP): The Indian economy is a cash-driven economy and demonetisation has largely affected its growth. The GDP growth rate of 8.01% in 2015-2016 fell to 7.11% in 2016-2017 after demonetisation. This was largely due to less availability of cash in cash-intensive industries like manufacturing and construction. It has also adversely impacted the primary function of banks to issue loans and has put pressure on them as current account holders demand0 large sums of cash.

On Daily Wage Workers: A major portion of the Indian workforce is a part of the informal economy. They use cash to meet all their expenses and demonetisation has resulted in a lot of them losing their jobs due to unavailability of cash. According to CMIE’s Consumer Pyramids Household Surveys (CPHS), approximately 1.5 million jobs were lost during the final quarter of the financial year 2016-17. The estimated employment during this period was 405 million as compared to 406.5 million during the previous four months.

On Small Scale Industries:Businesses like the textile industry, salons, restaurants, and seasonal businesses are low capital enterprises and work on the basis of liquidity preference.

Demonetisation gravely impacted their revenue collection and threatened their existence to an extent.

The State Of The Indian Economy After Demonetisation -1.5 Million Jobs Lost,

GDP At A Low:

Quantitative Analysis Of The Impact Of Demonetisation On The Indian Economy

                    Table 1 indicates that GDP lost its growth streak of 4 years in the financial year 2016-17.

As per the estimates of the Central Statistics Office, all the sectors of the economy faced different crunch situations in Q1 of the financial year 2017-18.

Table-2 shows a decline in growth from 7.6% in 2016-17 to 5.6% in 2017-18 (see table 2).

Sectors in the economy such as Construction, Agriculture, Forestry & Fishing which employ a large number of daily wage workers and have liquidity preference witnessed a decline in growth.

Manufacturing, which is the most important indicator of economic growth and employment has grown at a very slow rate post demonetisation. It grew by only 1.2% in Q1 of 2017-18 as compared to a massive growth of 10.7% in Q1 of 2016-17.

Conclusion

Demonetisation  is a weapon that supposed to do good but has been boomeranged to destroy our smooth flowing economy.

Demonetization itself is good idea but ill preparedness, banking corruption and deficit in perception of consequences especially in introducing “2000”note,   spoiled the entire economy.

Liquidity crunch, unemployment, loss of growth momentum, and a temporary halt to major economic activities. All this is evident from the data provided by the RBI.

We have been painfully waited for the long term effects of Demonetisation which may augur well for our country. But alas,those moments never happened.

Apart from this demo fiasco, every Indian should know about the cruel fiasco of   “crude oil imports  and day by day rising of prices of  refined oil .

And there is another blunder. That is GST! In theory its good. But at field level the govt would have study it by implementing in few states in phased manner and restrict the slabs to two .