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Showing posts from December, 2016

Demonetisation is a disaster, so what options does Modi now have?

The black money hunt rhetoric is fast losing steam. Why not focus on stalling future creation of black wealth? On December 13, RBI deputy governor, R Gandhi had an interesting statistic to share with the media. As on December 10, Rs 12.4 lakh crore of old notes that were scrapped under demonetisation have been deposited in banks by the public, he said. This should have been reason to cheer for both banks and the government after the demonetisation of Rs 500 and Rs 1,000 currencies announced on November 8. But it is not to be. Here’s why. When the PM announced the scrapping of these currencies, that formed 86 per cent of the currency in circulation, the calculation was that Rs 4-5 lakh crore would never return to the banking system, which it expected would roughly be the quantum of black money in the economy. Narendra Modi’s war against black money would have seemed comprehensive and complete, with income tax evaders biting the dust, and illegal currency hoarders pleading for me