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How government’s goalpost around demonetization changed over the time

Almost two years since demonetization, corruption and black money have gone missing from the Modi government’s lexicon.


“The disease of corruption and black money is deep-rooted in our society. These misdeeds of corruption and black money are the biggest obstacles in the path of eradicating poverty in our country. To free the country from the festering termite of demonetization and black money, we need to take some bold steps. From midnight onwards, which means from November 8, 2016, the 500 and 1000 denomination notes will no longer be legal tender.”

On November 7 at around 7 PM the entire country was glued to their television sets as Prime Minister appeared on the podium for a televised address to the entire nation to announce the demonetization decision of the NDA government. These were the words spoken by Prime Minister Narendra Modi with a great zeal which can never be forgotten. Even after two years since the 500 and 1000 rupee notes ceased to be legal tender, these words still haunt the Indian public.

Laying down a sugar-coated background for the ordeals that the countrymen would be facing due to what-was-termed-as an economic “Masterstroke”, the Prime Minister told the country that his government is waging a war against “Corruption and Black Money” which are the deep-rooted diseases of our society. The Indian society was promised in 2014, that the new government will bring back all the black money stashed in Swiss banks and was even promised a crackdown on corruption. The Indian public too went through the 100 or rather more days of torment, stood in the long ATM queues to get the notes exchanged, all in the name of curbing corruption and black money.


Fast forward to this day, almost two years since demonetization, corruption and black money have gone missing from the Modi government’s lexicon. Two years on, all that public is still waiting for an answer to the omnipresent question that looms over the head of Indian Economy at large- how exactly did demonetization attack the corruption and black money problem of the country? However, all that the public got is changing goalposts and hollow narratives.

As the recent annual RBI report exposed the frailties of the entire demonetization drive, Finance Minister Arun Jaitley quickly took charge of the defence saying the note ban exercise has “served its purpose”.  Justifying government’s move of flushing out almost 85% of the currency in circulation overnight, he said, “Demonetization led to more formalization of the economy, more money in the system, higher tax revenue, higher expenditure, higher growth after the first two quarters.” He further (to our surprise) writes, “The larger purpose of demonetization was to move India from a Tax Non-compliant society to a compliant society.” Read that again.


From corruption and black money to tax-compliant society, the convenient shift from one goal of demonetization to another was passed off as a legitimate explanation of the entire exercise in which more than 100 people lost their lives and livelihoods of many in the unorganised sector were destroyed. However, this is not the first time the government is coming forth with constantly changing the narrative.

Crackdown on terror-funding:


Two weeks after PM Modi announced the biggest battle against “Corruption and Black Money” on November 7, 2016; Attorney General Mukul Rohatgi defending the move in the Supreme Court said that the government expects that almost close to ₹4-5Lakh crores may not return to the system which denotes that it is Black Money.  He said this money amounting to “Rs 4-5 lakh crores is used in northeast and J&K to fuel trouble in India.” One may say that this could be a part clever wordplay adopted by the lawyers to get an edge over others. At this juncture, only 35 per cent of the banned money had returned. Soon enough, another goal was presented to justify demonetization.

Bringing down real estate prices:

P. Chidambaram

Three months into the demonetization and the then Chief Economic Advisor came up with another rationale behind demonetization. Arvind Subramanian, the then CEA, in a press conference said that the motive was to bring down the real estate prices.

Releasing the Economic Survey for 2016-17 in January last year, he said, “In real estate you do see a blip in prices, sales and launches and of course some of it may be adverse to the economy but in the long, some of that could be good because aim of the demonetisation is to bring down real estate prices.”

Cashless to less cash society:


The focus completely shifted towards the cashless economy and push for digital India by the end of three months. In his address to the nation through Mann ki Baat, Prime Minister on February 5 said, “Our dream is that there should be a cashless society. This is correct that 100 per cent cashless society is never possible. But we can make a start with less-cash society, then cashless society will not be a far-off destination.”

Changing behaviour pattern:

When everyone thought there cannot be anymore shift in the intent presented by the government, came the turnaround statement by Finance Minister Arun Jaitley. Last year, on September 23, the Union Finance minister appeared as a chief guest at the 70th annual general meeting of Indian Banks Association. In his brief address, he talked about Modi government’s two (supposedly) biggest reforms: Demonetization and GST. However, as expected, the black money reference was missing from his speech on Demonetization. On the contrary, he said, “There was a conscious effort being made in order to alter both the behaviour and spending pattern of the society.”

The government’s demonetization narrative changed faster than the weather seasons. According to the recent RBI report, as many as 99.3% of the demonetised currency returned to the system. Last year’s RBI annual report revealed that 98.96% of the demonetised currency was deposited back. This clearly shows the original objective of demonetisation i.e. eradication of black money has in no way been attained.

As our business editor, Mr Akhilesh Bhargava observed, “The fact is that the system mainly connived to defeat the ill-planned demonetisation move and that includes banks which laundered the cash, cooperative societies/banks, politicians/babus who helped the select few and all those petty workers, farmers, labourers etc. who lent their names and deposited cash on behalf of the illegal cash hoarders. It ensured that all was white and none was black and defeated a hasty, ill-planned and poorly executed demonetisation.”

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