Six years back, on 8 November 2016, Prime Minister Narendra Modi announced the decision to ban all Rs 500 and Rs 1000 notes, with just four hours’ notice.
The Prime Minister claimed that the Note Ban would result in unearthing black money, end corruption and choke funding for terrorism. He also claimed that the it would reduce inequality between rich and poor.He asked people to bear “temporary” pain for the sake of “long term gain”.
Every one of these claims has been proved to be false.
The Note Ban created a prolonged period of acute cash crunch. It forced people to deposit all their savings in banks and adopt digital payments instead of cash payments.
The number of cashless digital transactions has jumped nearly five times in the past five years. With over 7400 crore digital transactions in 2021-22, worth more than Rs 1000 lakh crore, India is now the world’s largest market for digital payments.
Mass usage of digital payments have created the opportunity for huge profits to be made by Indian and foreign monopoly capitalist companies offering financial technology services. These include Google, Paytm, PhonePay and payment banks of Airtel and Jio.
The impact of the Note Ban on working people was devastating. Several sectors of the economy that largely depend on cash transactions, such as agriculture, wholesale and retail trade, construction and tourism were severely affected.
Many deaths were reported because of people being unable to pay for emergency medical services. Their suffering was called “temporary pain”.
Nearly four crore people were rendered jobless when more than three lakh small and medium industrial enterprises were closed down. Many of these companies could not restart their operations. Their pain was permanent, not temporary.
The “long term gain” has been for capitalist billionaires, for whose benefit the Note Ban was actually done.
The Prime Minister himself revealed the real aim of the Note Ban on 27 November, 2016, when he said, “The great task that the country wants to accomplish today is the realisation of our dream of a ‘Cashless Society’”.
Reducing the use of cash is not the same as reducing corruption. Corruption takes place in many forms which do not involve cash. The use of Electoral Bonds by capitalist companies to influence the outcome of elections is one such example. Making state-owned banks write-off huge loans owed by capitalist companies is the biggest corruption scandal in recent times. Sale of public property to private companies at throwaway prices under the banner of privatisation, disinvestment and monetisation is also a major form of corruption.
One of the promises of the government was that so much black money would be seized that Rs 15 lakh would be deposited in each poor person’s bank account. This promise has not been fulfilled even after six years. The claim of bringing back black money stashed abroad has also been shown to be totally false.
The government informed the Supreme Court that it expected to recover 4-5 lakh crore rupees of black money through the Note Ban. Even this statement proved to be false. The Annual Report of the Reserve Bank of India, released on 30th August, 2017, revealed that as much as 98.96 per cent of old currency notes had come back to the banks by that date. Only notes worth Rs 16,000 crore had not been returned.
The Prime Minister’s claim that the Note Ban would result in eliminating counterfeit notes and thereby reduce terrorist activities has also been exposed to be completely false. Those who finance terrorism use many modern channels of financing, including the recent crypto-currency; they do not depend only on counterfeit notes.
Six years after the Note Ban was implemented, it is very clear that it has not reduced the gap between the rich and the poor. That gap has in fact increased enormously.
Life experience has exposed all the false claims made by the government to justify the Note Ban. It has exposed the real aim, which was to promote digital payments for the benefit the biggest Indian and foreign monopoly capitalists.