Problems of demonetization

What is the issue?

The gains of demonetisation are from high human cost.

What are the adverse effects of demonetization?

• War on black money, a surgical strike, had whipped up a surreal, distinctly militaristic fervour.
• Its objective of curbing black money has been failed.
• There were no explanations on offer in Parliament, even after the event, on why demonetisation was the preferred course of action.
• It was an assault on the economic rights of ordinary people, with an all-knowing state offering no explanation.

How demonetization affected people?

• It has created enormous pain it inflicted on those who are not responsible for the black economy.
• Many people from bank branch to bank branch, from ATM to ATM, from medical shop to medical shop.
• There were instances of Adivasis in the interiors of Chhattisgarh losing their lives because they could not reach hospitals on time.
• The victims of demonetisation those who lost their jobs or lives have not been compensated
• The Government displayed insensitivity towards the concerns of a society where a quarter of the population is officially illiterate and a greater number financially so.

What are the ethical flaws of demonetization?

• Digitisation poses an additional hardship on individuals locked into cash, even if one accepts that it provides a trail for the taxman.
• Underlying the push from cash to card is the subtle criminalisation of all users of cash.
• The virtues of a cashless society are questionable, one spend less when we use cash than when use cards.
• And unlike in countries such as the US or Australia, families in India which tend to be extended and supporting several dependents need to spend less and save more.

What is the status of other sectors post demonetization?

• Small self-employed businesses dependent on the cash economy, do not seem to have recovered from the impact of the disappearance of cash, and of demand for their services.
• Thegrowth of property sector is uncertain, with the Economic Survey reporting a recovery in prices after an initial problem.
• Government has given more importance to tax compliance than the erosion of competition with the small sector.
• There are slump in jobs, demand and growth, post demonetization has hit everyone.

Source: Business Line