Michael Safi - Demonetisation drive that cost India 1.5m jobs fails to uncover 'black mone
More than 99% of the
currency that India declared void in a surprise announcement in 2016 was
returned to the country’s banks in subsequent weeks, according to a Reserve
Bank of India (RBI)
report. The figures suggest
prime minister Narendra Modi’s demonetisation policy, which likely wiped
at least 1% from the country’s GDP and cost at
least 1.5m jobs, failed to wipe significant hordes of unaccounted wealth
from the Indian economy — a key rationale for the move.
Modi shocked Indians
in November 2016 when he announced on live television that all 500 and
1000-rupee notes, equivalent to about £6 and £12, would be banned in four
hours’ time. People were given
several weeks to exchange their demonetised currency for new notes at banks.
But new notes could not be printed fast enough, and the policy sparked a
months-long currency crunch that left tens
of millions of Indians cashless or standing in line for hours each day
to retrieve small sums of cash.
As India’s massive
informal economy reeled, Modi
implored the country to give the policy time to work, arguing it would
flush out un-taxed wealth being hoarded by wealthy Indians, help to digitise the
economy — one of the most cash-based in the world — and starve terrorists and
criminal gangs of cash. The RBI’s annual
report on Wednesday found 99.3% of the money withdrawn from circulation had
been returned to banks, indicating either there was less “black money” than
expected, or that schemes
to launder money were more successful than thought... read more:
