The abrupt withdrawal of 86 per cent of the notes that were in circulation was followed by insufficient new bills, which has plunged the country, particularly rural India, into an exacting cash shortage. The government has taken a series of steps to minimise pain points for farmers by offering special loans and permitting the use of the outlawed notes to buy seeds. But rural banks complain they don’t have enough cash to disperse and farmers are worried about falling behind schedule on their winter crops.
PM Modi has in emotional speeches asked for “just 50 days” till the end of the year to unearth black money and penalise those who’ve evaded tax.
So far, 82 per cent of the outlawed notes have been deposited – about Rs. 12.6 lakh crore of a total of Rs. 15.3 lakh crore ($225 billion) has been turned into banks. This has experts pointing out that it’s likely that virtually all the abolished currency will be declared, which means that there will be very little black money left undisclosed. What, then, is the point of this vast and expensive exercise analysts have asked.
“Lack of a meaningful cancellation could be a double blow for Modi as the measure was being used as a political and economic gauge of the success of his Nov. 8 move. One of Modi’s biggest campaign pledges was to expose black money in Asia’s No. 3 economy, and economists were viewing the cash as a potential windfall for the government,” said this report in Bloomberg.
(Sourced from agencies, feature image courtesy:moneycontrol.com)
