5 years after PM Modi announced the Note Ban, on November 8, 2016, the false claims that were made to justify it stand completely exposed. The real aims of that move are also amply clear.
In one stroke, 86% of the value of rupee notes in circulation (all 500 and 1000 rupee notes) was declared illegal tender on the midnight of 8th November, 2016. People were given 50 days to deposit their old notes in banks.
Stringent limits were placed on the amount of cash one could withdraw from the banks. New currency notes of Rs 2000 and others were issued only after a period of time. There was a severe cash crunch. People had to stand in long lines, often for days on end, to deposit their notes or to get some small amount of cash for urgent needs. ATMs ran out of currency notes. Bank employees worked long hours, often facing the ire of the people, to deal with the situation.
The Note Ban was justified by PM Modi as a crusade against the growing inequality of wealth, against corruption and terrorism. He claimed that its aim was to unearth the black money hoarded by corrupt persons and deploy it for the benefit of the poor, hardworking people. He claimed that the Note Ban was aimed at eliminating counterfeit rupee notes that were being used by foreign powers to finance terrorism in India.
Lakhs of daily-wage workers and contract workers were thrown out of work, because of lack of cash to pay their wages. Small and medium scale industries, wholesale and retail trade, tourism, transport, construction and many other activities which depended on cash were adversely affected. People died because of inability to pay for emergency medical services and medicines. Peasants in many parts of the country suffered as they were unable to buy their agricultural inputs in time for the rabi sowing season. In a society where a majority of people regularly depend on cash transactions for their survival, the immediate economic impact of the Note Ban was completely devastating.
However, the Note Ban was welcomed by the biggest Indian monopoly capitalist houses – the Tatas, Ambanis, Birlas and others. These monopoly capitalists saw huge opportunities to expand their empires and multiply their wealth through the destruction of small and medium industries and services and the ruination of the peasantry. By suddenly depriving people of cash, they found the fastest way to force millions of people into the digital economy and reap huge profits. Within just a few days after November 8, 2016, the biggest monopoly capitalists quickly moved in to set up digital payment banks, which have been a huge source of profit for them.
Enormous number of digital payment companies and payment banks have come into operation all over the country since 2016. People have been forced into digital transactions in banking and insurance, wholesale and retail trade, for all kinds of goods, including food, clothing, household goods, medicines, books, etc. and a host of essential services such as medical consultancy, education and many others.
The past five years have confirmed that the Note Ban has served as a means to implement the agenda of “financial sector reforms”, pushed by the biggest Indian and foreign monopoly capitalists. Forcing people to put all their savings into banks and move from cash to digital payments has served to strengthen the hands of monopoly finance capital to more effectively and extensively loot the people.
Five years after the Note Ban, its long-term impact, combined with the effect of GST can be seen in the growing unemployment and the widening gap between the rich and poor. The slowdown in economic growth was apparent even before the Covid-19 crisis struck in 2020. Thus, it is clear that while the Note Ban led to intense suffering for the workers, peasants and all working people, it enabled the biggest monopoly capitalists to rapidly grow many times richer.
The claim of fighting corruption stands exposed today as a complete lie.
Corruption, starting from the highest levels of the government and state, has only increased and become more apparent. Lakhs of crores of rupees worth of loans to several big capitalist defaulters, which public sector banks are being asked to write off or “adjust”, constitute one of the biggest corruption scandals today and a criminal loot of people’s money. This reveals the nexus between the capitalist borrowers, heads of the banks and financial institutions and the highest levels of the state.
The loot of lakhs of crores of rupees worth of public assets in the name of “monetisation”, to enable the biggest private capitalist monopoly houses to reap huge profits, the outright sale of vital public sector enterprises, such as railways, telecom, electric power, defence, etc., to private monopoly capitalists, including the sale of Air India at throwaway price to the Tata group – all these constitute the most blatant form of institutionalized corruption and loot of the people, facilitated at the highest levels of the state.
The Reserve Bank of India had announced, by August 29, 2018, that it had recovered 99.3 % of the notes under circulation as on November 2016. That completely belied the claim that the Note Ban would lead to seizure of hordes of unaccounted for and counterfeit money!
At the time of announcing the Note ban, the Attorney General of the government had said in the Supreme Court that they expected to recover nearly 4-5 lakh crore of unaccounted black money in the form of cash. But in the last 5 years, assets worth only about Rs 4,000 crores are reported to have been seized.
The PM had announced that so much black money would be seized that Rs 15 lakh would be deposited in each poor person’s bank account. No such thing happened! The claim of bringing back black money stashed abroad has also been shown to be totally false.
Terrorism continues to claim hundreds of lives. The sponsoring of terrorism serves the interests of the Indian ruling class, because it provides the rulers a justification for unleashing state terrorism and repression on the people. The Indian state is in a strategic alliance with the chief sponsor of terrorism in the world, US imperialism. Moreover, global sponsors of terrorism use many modern channels of financing; they do not depend on counterfeit notes.
Five years later, it is very clear that the Note Ban did not reduce the gap between the rich and the poor. Nor did it reduce corruption or terrorism. Each one of the claims that the government gave in 2016 to justify the Note Ban stands exposed as utterly false.
The Note Ban stands exposed as nothing other than a move to enrich the biggest Indian and foreign capitalist monopolies at the expense of the workers, peasants and masses of people of our country.
Below we provide a link to the pamphlet entitled On the Note Ban: Real Aims and False Claims, published by the Communist Ghadar Party of India in January 2017.