Prime Minister Narendra Modi's speech on demonetisation made it clear that their target was to "wipe out black money" and route the currency back into the system. "To break the grip of corruption and black money, we have decided that the five hundred rupee and thousand rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016," Modi said. "The five hundred and thousand rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper," he added.
Now, two years after demonetisation, neither could black money be removed nor could the economy improve. According to a survey by Local Circles, a whopping 60% of Indians said that black money in the country has not died; in fact, its circulation is going to only increase before the 2019 General Elections.
In fact, the economy took a sharp knock from the cash crunch, with growth sliding to as low as 5.6 percent in the quarter through June 2017. Rupee devalued further, banks took a hit due to lack of currency, fuel prices skyrocketed and availability of cash is still scarce even today. Not only did this move of the Central government hit small business, it also dealt a severe blow to the informal sector, daily wage earners and farmers in rural India. Another growth setback came last year when the government introduced the Goods and Service Tax, which was marred by glitches and disrupted business activity. But, the Union government still believes that "Demonetisation is a key step in a chain of important decisions taken by the Government to formalise the economy," as Arun Jaitley said today.
It is clear that along with the honest who stood in line and deposited their cash in banks, the dishonest got the better of the government. They discovered innumerable ways to deposit their illegal holdings of cash in the banks, which is not such a success for recovering black money as the Modi government claims.
For instance: There has been no change in the splurge of money in elections since the Uttar Pradesh elections of 2017. We should expect a huge spurt ahead of the 2019 elections in illegal expenses, which are always made more by the ruling party since it usually has access to more funds. Its system of electoral bonds (introduced in 2017 after demonetization) in which the donor is anonymous - and can therefore call in favours after an election - is designed for corruption. Though the BJP government claimed that it won the UP elections because people accepted demonetisation, they couldn't claim the same in Karnataka. And, neither can the BJP go to 2019 elections calling demonetisation as an achievement or success.
In fact, Prime Minister Modi made outlandish remarks saying: "Give me 50 days. Burn me alive if I'm wrong." It is beyond 730 days and the Prime Minister is still dishing out the same old marketing pitches to the people of his country. The mood has changed and the Modi wave is slowly disappearing. What the BJP government claimed as a success has actually been one of the biggest disasters for India and its citizens. The whole episode reflects that the citizens of India have immense patience and are mute spectators to such decisions that a brute State takes by using its power to render citizens powerless.