Prime Minister Modi said that demonetization had helped improve tax collection.
New Delhi:
Four years after announcing a surprise decision to replace nearly 86 percent of all India’s cash that sends shockwaves into the economy that has yet to fully recover, Prime Minister Narendra Modi on Sunday defended the move. , saying it had reduced corruption and increased transparency.
On November 8, 2016, four hours in advance, Prime Minister Modi announced the decision to ban Rs 500 and Rs 1000 notes from midnight.
People lined up for weeks at ATMs and banks to withdraw new bills that were rationed, throwing businesses into chaos.
In a famous speech, he asked people to endure pain for 50 days and if the situation did not improve, he said, he was ready for “any punishment.”
It took people months to get the cash they needed, and India’s annual economic growth slid from 8.25% in 2016 to 5.02% in 2019, according to the World Bank.
On the fourth anniversary of Sunday’s decision, Prime Minister Modi tweeted:
Demonetization has helped reduce black money, increased tax compliance and formalization, and boosted transparency.
These results have been very beneficial for national progress. #DeMoliendoCorrupciónpic.twitter.com/A8alwQj45R
– Narendra Modi (@narendramodi) November 8, 2020
Initially seen as a miracle solution to eliminate everything from ill-gotten wealth to terrorism, demonetization has been viewed by economists as a huge mistake.
In an attempt to stamp out black money, the Reserve Bank of India said that 99.30 percent of all banned banknotes managed to get back into its system.
Yet the government has stubbornly defended the move even in the face of searing criticism from the opposition.
The ruling BJP said on Sunday that the demonetization was an “attack” on corruption and black money that were rampant during the “lost decade” of the congressional-led UPA government.
It resulted in the cleanup of the economy, the formalization of the informal sector and the aggregation of income, said BJP spokesman Rajeev Chandrasekhar.
Congressional leader Rahul Gandhi offered a different take, saying the move was aimed at helping some of Prime Minister Modi’s “crony capitalist friends” and “destroyed” the Indian economy.
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