Four years after he announced a surprise decision to ban the Rs 1000 and Rs 500 notes on 8 November 2016, Prime Minister Narendra Modi on Sunday defended the move, saying it had reduced corruption and increased transparency.
“Demonetisation has helped reduce black money, increase tax compliance and formalisation and given a boost to transparency,” PM Modi tweeted. He said that these outcomes have been greatly beneficial towards national progress.
Along with his tweet, PM Modi also shared a graphic on how demonetisation has ensured better tax compliance, improved tax and GDP ratio, made India a lesser cash based economy and gave a boost to national security.
On 8 November 2016, PM Modi appeared on national television at 8 pm and announced the decision to ban all currency notes of higher denomination of Rs 500 and Rs 1,000 from midnight. Demonetisation of high-value currency notes — Rs 500 and Rs 1,000 notes — that constituted 86.4 per cent of the money in circulation in November 2016 was a step taken to bring back money that was out of the banking system.
In a famous speech, he asked people to bear the pain for 50 days and if the situation did not improve, he said, he was ready for “any punishment”. It took months for people to get the cash they needed and India’s annual economic growth slid from 8.25 per cent in 2016 to 5.02 per cent in 2019, according to the World Bank.
Initially billed as an ultimate move to eliminate black money, many economists believe that demonetisation failed to achieve its objective. Meant to wipe out black money, the Reserve Bank of India said 99.30 per cent of all notes banned managed to come back into its system, they remind.
The government, however, has always defended the move. The ruling BJP on Sunday said demonetisation was an “attack” on corruption and black money that were rampant during the “lost decade” of the Congress-led UPA government.