NEW DELHI: Though neither the Narendra Modi government nor the BJP celebrates demonetisation, of late it has proved to be a major boon not just for the dispensation but also for the common man.
In a televised address, Prime Minister Narendra Modi had announced the demonetisation initiative at 8 pm on November 8, 2016 to fulfil four objectives of checking terror-funding by Pakistan, printing of counterfeit currency, black money and corruption.
With the demonetisation move, Rs 500 and Rs 1,000 currency notes ceased to exist as legal tenders from the midnight of November 8, 2016.
However, the opposition criticised the Modi government over “notebandi” (note ban), alleging that none of the four objectives of the move has been fulfilled.
Former prime minister Manmohan Singh had called the demonetisation drive as a “monumental mismanagement failure”. He had warned that GDP growth could fall by 2 per cent and it would hurt agriculture, small industry and everyone in the unorganised sector.
The former prime minister had said the demonetisation drive would have disastrous impact on the economy and termed the initiative as “a case of organised loot and legalised plunder”.
Delhi chief minister Arvind Kejriwal, his West Bengal counterpart Mamata Banerjee and Congress leader Rahul Gandhi, who then was the party’s vice-president, launched scathing attacks on the Narendra Modi government. BSP supremo Mayawati too vehemently opposed it.
Asking the BJP-led NDA government at the Centre to roll back demonetisation, Kejriwal and Mamata threatened a “revolt”. Kejriwal had gone on to say: “Change PM, not notes.”
Rahul called demonetisation a “scam”. He alleged that PM Modi had “informed his close friends” about note ban before the announcement.
Even two years later, the Congress sought to corner the Modi government by questioning its motive behind celebrating surgical strikes while leaving out two other landmark events such as its demonetisation decision and implementation of Goods and Services Tax (GST) on July 1, 2017.
The Modi government announced the celebration of ‘Parakram Parv’ to mark the second anniversary of the surgical strikes that were carried out by the Indian Army against terror launch pads in Pakistan across the Line of Control (LoC) on September 29, 2016.
However, despite the frontal attacks, the Modi government stood its ground. Instead of succumbing to the onslaught and rolling back demonetisation, it kept promoting cashless economy by way of digital payment to usher in more transparency and in order to check corruption and black money.
The opposition’s charges may or may not hold true but the demonetisation drive certainly helped not just the government but also the people at large.
These are the ways in which the note ban has come in handy for the India:
During lockdown
When demonetisation was implemented five years ago, even the Modi government did not have any idea that it would prove to be a blessing in disguise. After Covid-19 hit the country in February-March 2020, PM Modi announced nationwide lockdown in the country from March 25.
The nationwide lockdown was imposed in phases till May 31, 2020. Except for essential activities, the country ground to a standstill for more than two months.
Cashless economy, which was promoted by the government in the wake of demonetisation for checking black money and corruption, proved to be a godsend opportunity for the survival of people during the lockdown period.
People ordered essential items during home isolation and made payments – in advance or on delivery of goods and services – through online banking, debit or credit cards, or through Unified Payments Interface (UPI) consisting of various apps.
Had these means not existed during lockdown, people would have been forced to step out of house and risked contracting the deadly coronavirus disease.While the purpose of lockdown would have been defeated, the number of Covid-19 patients would have been much higher.
Post-lockdown period
The government started unlocking activities and services from June 2020. In six unlocking phases, the country witnessed restoration of a semblance of normal activities by November 2020. Since then, several offices opened and most of the economic activities resumed, though some of them were scaled down.
However, the country has switched over to the highest point of a cashless economy so far. Digital mode of payment provided a sigh of relief for the people who are already terrified with the havoc which the second wave played with the lives and health of their near and dear ones. There is perhaps no family who did not lose at least one relative or friend during the second wave alone.
The tragedy would have been worse had cashless transactions not become popular and acceptable to a large size of the Indian population. Now even vegetable sellers on handcarts to all kinds of vendors deal in digital transactions.
The cashless economy has proved to be a timely gift. Had it not been for digital payments, there would have been more of close contacts between the people. It would have led to spurt in cases of coronavirus disease.
Impact on economy
Though the economic activities slowed down since lockdown in March 2020, the gross Goods and Services Tax (GST) revenue collected since October 2020 have been the highest since the introduction of the new tax regime on July 1, 2017.
Experts feel the spurt in the collection of GST revenue was due to the combined effect of the rapid economic recovery post-pandemic, nationwide drive against GST evaders and fake bills along with several systemic changes including cashless transactions.
The gross GST revenue collected in the month of October 2020 was Rs 1,05,155 crore. It was only for the second time that the GST revenue collection had crossed the Rs 1 lakh crore mark. The previous highest of Rs 1,13,866 crore was registered in April 2019.
The gross GST revenue collected in November 2020 was Rs 1,04,963 crore. It was highest in December 2020, since the introduction of GST and it was also for the first time that it crossed Rs 1.15 lakh crore.
The GST collections touched a record high at Rs 1.41 trillion in April 2021, breaching the Rs 1 lakh crore mark for the seventh straight month in a row during 2020-21.
It was Rs 1,02,709 crore in May, 2021. In July 2021, GST collection stood at Rs 1,16, 393 crore after it dipped below Rs 1 lakh crore figure in June due to the restrictions imposed by states.
The gross GST revenue collected in the month of August 2021 rose to Rs 1,12,020 crore and Rs 1,17,010 crore in September.
The gross GST collection for October 2021 registered the second highest since its implementation. It was Rs 1,30,127 crore.
The “surgical strike on black money” seems to have come to the people’s aid during the ongoing Covid-19 pandemic phase.

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