When announcing the decision on November 8, the government had said the then Rs 500 and Rs 1,000 notes would cease to be legal tender and this would cleanse the system of black money.
A Parliamentary panel has come down heavily on demonetisation, describing it as one that not just inconvenienced the poor but also affected the manufacturing sector. “It was an effort to combat corruption, tax evasion and counterfeiting and eradicate black money. However, the committee realises that inevitably, it is the low income and rural households who have been the hardest hit by the currency reform. Demonetisation has weighed heavily on the country’s manufacturing sector. Though the ministry took steps to mitigate the effects, it cannot be ignored that it created significant disruption throughout the economy and threatened economic output,” says the report of the committee on subordinate legislation of Rajya Sabha in which the notifications by the Ministry of Finance (Department of Economic Affairs) on demonetisation were examined.
When announcing the decision on November 8, the government had said the then Rs 500 and Rs 1,000 notes would cease to be legal tender and this would cleanse the system of black money. The goalposts subsequently were announced as making India a cashless economy and, along the way, 74 notifications were issued in the first 50 days since the announcement of demonetisation.
GDP data subsequently released showed little effect on the economy. The parliamentary committee has noted that tackling black money is in essence a function of immense political will and “legal/administrative/diplomatic heavy lifting”.
About the government description of demonetisation critics as being either corrupt or anti-national, the committee said such a counter does not take into account the real needs of the hour — of tax rationalisation and plugging loopholes in the system.
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