HYDERABAD: Ironical, but the government never conducted a study or an audit to identify the gains from demonetisation (demo), the harum-scarum move which jolted all of the country’s 1.3 billion people two years ago. It was criticized by several economists, both within the country and abroad, for causing an upheaval in the economy and for dragging growth by 1-2 per cent. In fact, in the first quarter of FY17, growth fell with a giant thud to 5.7 per cent.
The government, though, persisted with saying that the unprecedented currency reform did deliver. Just recently, there have been drumbeats about how demo, together with GST, helped increase the tax base (direct and indirect) and tax compliance, particularly among personal tax collections.
However, it’s now revealed that there has been no effort by the government to authenticate the benefits earned out of the slapdash currency reform. Finance Minister Arun Jaitley, in a written reply to Rajya Sabha, informed as much on Monday.
According to RBI, notes in circulation grew at an average 14.51 per cent annually since October, 2014. Sans demo, at 14 per cent growth rate, notes in circulation would have been Rs 23,418.24 billion as on November, 2018, but stood at Rs 19,850.09 billion as on November, 23. In terms of GDP, notes in circulation fell from 11.63 per cent in FY17 to 10.63 per cent in FY18.