In an interview to the PTI, defending and explaining his grand announcement of a minimum guarantee scheme for the poor, called NYAY, which is now the mainstay of the Congress poll manifesto, Mr. Rahul Gandhi said that its object is two fold ie. first is to guarantee a minimum income to the bottom 20% of the poorest families in India and second he said is to remonetise the economy, which he said has been rashly demonetised by Narendra Modi. His proposal to remonetise the economy is by giving back money to the poor, totalling to a stunning Rs.3.60 lac crores per year, to put money into their hands. Rahul Gandhi says that the scheme is called NYAY because it stands for justice, since as per him, over the past five years, Mr. Modi has simply snatched from the poor and has given back nothing, which he proposes to give back through this scheme.
The fact is that demonetisation was a draconian harsh measure, which had a brutal impact on our economic growth. It gave a huge setback to the economy, which was further aggravated due to the hurried onset of the GST, and their adverse effects continue to linger. The worst effected were not the large enterprises, but was the MSME sector. The vibrant and dynamic informal sector of India, which is a huge job generator and is largely cash dependent was the worst hit due to this reckless measure. It resulted in the closure of lacs of small enterprises, who were suddenly rendered out of cashflow and business and loss of livelihood to these employers, as well as their employees. The government tried to remonetise a suffocating economy at a fast pace, by pumping in new money to replace the cancelled currency, but it could not restore jobs or rekindle growth in the enterprises that had closed down. Together with GST, demonetisation hit the volumes of business and also snuffed the cash out of their system, which left many enterprises either dead, or crippled for life. The economic momentum that the economy had gathered during the pre demonetisation period was lost and we are yet to regain it.
The unfortunate part is that while this brutal measure inflicted an irreparable body blow to our informal economy and to the MSME sector, it also failed to really achieve the objectives for which the PM had announced it on 8th Nov. 2016 ie. assault on black money, terrorism and counterfeit currency. The Rs.5 lac crores that the government had confidently said, would not come back into the system, resulting in cancellation of such black money, simply did. It was the other collateral measures against black money generation that have proved to be far more effective in the government’s war on black money, than demonetisation and as per the RBI the counterfeit currency in circulation at about Rs.400 crores, out of a total currency in circulation of Rs.15.50 lac crores at the time of demonetisation, was really not an issue that would justify the draconian measure of demonetisation. The MSME sector and the informal sector suffered immensely and irreparably, such that the measures announced for the sector, by the PM in Nov.2018, including the 59 minute loan scheme and the restructuring of MSME bank loans was a bit too late and too little also.
There is an all time record cash of almost Rs.21 lac crore in circulation today, as against Rs.15.50 crores that was, when the demonetisation took place. Such excess remonetisation ie. the pumping of cash into the economy has failed to revive the fortunes of those who suffered due to the reckless demonetisation. There is no reason to believe that any further pumping of cash into the system, will undo the havoc wreaked by demonetisation.
Its done and over and as we said, the damage has been irreparable and irreversible. Rahul Gandhi’s promise to remonetise is thus an irrelevant and meaningless empty poll promise. The economy has already been over remonetised but has failed to provide relief to those who suffered due to demonetisation. What we need from the Congress is a precise and suitable strategy and commitment to further reform and speed up the growth of the Indian economy, particularly that of the suffering MSME sector and the distressed rural sector and not poll promises like these that only mislead.
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