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One year on, Indians still feel the pain of cash ban

One year on, Indians still feel the pain of cash ban
From Al Jazeera - November 8, 2017

On Wednesday morning, Indians woke up to a celebratory advertisement by the government of Prime Minister Narendra Modi. Advertisements in leading national newspapers and highway billboards claimed "Demonetisation: A historic and multi-dimensional success."

The opposition, however, dubbed the government decision to ban high denomination notes a year ago on this day as a "monumental disaster" and a "tragedy".

Modi's shock decision was packaged as a game changer, a masterstroke, something which no country with an economy of this size had ever attempted. The drama around the announcement was as intriguing; on the evening of November 8, 2016, the media got a heads up that Prime Minister Modi was going to make an address to the nation, but no one had a clue what was coming.

Trying to justify its act, the government and the ruling party kept shifting the goal post - first, it was 'black money', then fake currency, then digital India and 'terrorism' funding.

What was delivered surprised and shocked the country86 percent of its currency was rendered illegal by executive order. What followed was complete chaos.

People were forced to stand in serpentine queues in front of ill-equipped banks; many of them questioned the wisdom behind the move.

One year down the line, growth figures are out for the first quarter, and as expected and predicted by critics the gross domestic product (GDP) rate is down to 5.7 percentthe worst in three years.

Opposition parties are saying this dip is essentially due to demonetisation. "Black Day" - that is how they are marking the day.

A year since the controversial decision, Modi, with lots of political capital on his side, remains defiant and insists he is on a mission to get rid of "black money" [illegal money or not declared to the tax authorities) from India.

His claims, however, are contested by the central bank's report that states that nearly 99 percent of the banned notes returned to the banking system.

History of demonetisation

For India, demonetisation is not new. The British colonial rulers had attempted a similar move, banning 500, 1,000 and 10,000 rupee notes a year before India was granted independence.

The ordinance of January 12, 1946, had provisions for up to three years of imprisonment along with a fine for violators. Newspaper clippings from the period reveal similar panic.

The British administration had hoped demonetisation would penalise Indian businesses that were concealing fortunes amassed during World War II.

Effects of Demonetisation

Shifting the goal post

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