‘Note ban, a step in the right direction, but a lost opportunity’

The Prime Minister has always had a penchant for the theatre. His public addresses have been over the top: successes exaggerated, and failures underplayed. Despite that when he came out with demonetisation I felt it was a workable idea.
‘Note ban, a step in the right direction, but a lost opportunity’
V Pattabhi Ram, CA, Partner at Yoganandh and Ram


Forgotten was the fact that some of the top economists felt it was the equivalent of using Band-Aid to cure cancer. 
Ignored was the fact that this was a low-lying fruit when the real thing lay in real estate and assets stacked abroad. In short, given the Prime Minister’s famed execution skills many were ready to bite the bullet for a more prominent cause. Manmohan’s claim that there would be a 2% drop in India’s GDP was dismissed “Fine, if that happens it’s the cost of cleaning up our system. 
A year on, beyond the rhetoric, what’s the reality? 
Months after the deadline date, the RBI indicated that they were placing fresh orders for buying counting machines. It meant that banks had accepted currency without verifying them. Fake notes could have come in. When the final count was given out, a remarkable 99% of the high-value rupee notes had been deposited into some bank or the other. 
Apparently, Rs 15.28 cr of the 15.43 lakh cr have come back into the banking system. And one had been lead to believe the shortfall would be a minimum of Rs 3 lakh cr. India’s tax criminals proved to be one up on the government. In fact, some argue, that they have now managed convert black into white. 
Has demonetisation done more harm than good? 
Of course, the fact that the money got parked in bank accounts and did not have a natural outlet means that we can track down much of it. But that’s a long-drawn process. The bottom line: we didn’t arrest illicit, the dividend from RBI fell sharply, and growth slowed down by 2% as indicated by Dr Singh. But because of the divided nature of our polity, the debate has never been healthy and has stooped to name-calling. From a different perspective, it has increased the tax base, made people be more careful about taxes and lead to a spurt in digital transactions. At a personal level, Prime Minister Modi has been able to demonstrate his commitment to fighting black money, leading to electoral victories. 
For someone like me who so whole-heartedly welcomed demonetisation as a step in the right direction, there is a singular disappointment at the failure. But if this one act will make people more conscious of paying tax then it has done something worthwhile.
What is important is not whether demonetisation is good or bad, but it’s whether it worked or not. Unless you back this up by asking property to be linked to Aadhaar card, and unless you unleash the belt at those who have stacked money abroad, one will only dismiss this exercise as a missed opportunity. If Modi wants a meaningful legacy, he must up the ante.

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