Updated: November 8, 2020 4:52:23 pm
Prime Minister Narendra Modi. (Source: video screenshot)
Prime Minister Narendra Modi said on Sunday that the demonetization measure, when the Rs 1,000 and Rs 500 notes were scrapped in a sudden announcement four years ago, helped reduce black money and increased tax compliance and was “very beneficial” for the progress of the country.
“Demonetization has helped reduce black money, increased tax compliance and formalization, and boosted transparency. These results have been very beneficial for national progress. #DeMolishingCorruption, ”PM 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. #DeMoliendoCorrupción pic.twitter.com/A8alwQj45R
– Narendra Modi (@narendramodi) November 8, 2020
On November 8, 2016, PM Modi, in an unexpected move, announced the scrapping of the existing Rs 500 and Rs 1,000 banknotes with immediate effect. The sudden withdrawal of banknotes caused a shortage of liquidity, with long lines outside the banks. It had also shaken the economy, with demand falling, companies facing a crisis and GDP growth slowing by about 1.5 percent. Many small units were hit hard, with many reporting large losses even after nine months.
Some 115 people were reportedly killed in queues to withdraw money from their bank accounts. The RBI gradually introduced Rs 500 and Rs 2,000 notes in place of the withdrawn notes, but the pace of remonetization was very slow.
Criticism from the opposition intensified after the RBI, in its annual report for 2017-18 on August 29, 2018, said that almost all of the money that was withdrawn returned to the banking system. The RBI said it had received Rs 15.31 lakh crore of Rs 500 and Rs 1,000 notes, or 99.3% of the Rs 15,417 lakh crore notes that were in circulation on November 8, 2016.
Earlier in the day, Union Minister Nirmala Sitharaman said demonetization led to better tax compliance and a big push towards the digital economy. In a series of tweets, Sitharaman said: “To fulfill its promise to rid India of corruption, the Modi government implemented demonetization 4 years ago on this day, today. The move that was an unprecedented attack on Black Money also led to better tax compliance and a huge boost to the digital economy. “
“Rs 900 million of undisclosed income was seized in the first four months after demonetization. And in the last three years, assets worth Rs 3,950 crore were seized. While post-demonetization surveys led to the discovery of undisclosed income worth several crore, Operation Clean Money helped formalize the economy, ”said the Minister of Finance.
Meanwhile, Congress launched a #SpeakUpAgainstDeMoDisaster social media campaign in which party deputy Rahul Gandhi claimed that the main goal of demonetization was to forego loans from large defaulters. The party also claimed that the measure resulted in a decline in the GDP growth rate of 2.2 percent and employment by 3 percent.
“Four years ago, Prime Minister Narendra Modi launched an assault on the Indian economy. It injured farmers, workers and small merchants. Manmohan Singh ji said that the economy will lose two percent and that is what we saw, ”Gandhi said.
The former head of Congress said Prime Minister Modi’s claim that it was a fight against black money “was a lie.” “The attack was against you, Modi wanted to take your money and give it to his 2-3 crony capitalist friends. You were in ranks, not his crony capitalist friends. You put your money in the banks and Prime Minister Modi gave that money to his friends and gave them a 3.50 billion rupee loan exemption, ”Gandhi alleged.
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