After opposition parties and left-wing critics, right wing news magazine ‘Swarajyamag’ has joined the anti-demonetisation bandwagon. The publication has today published an article titled “Modi’s DeMo Gambit Failed: Costs Exceed Gains And Farm Anger Is The Final Piece Of Evidence” by its editorial director and senior journalist R Jagannathan that points major flaws in the move.
“After being largely positive on the medium-to-long-term benefits of notebandi, including a fall in gross domestic product (GDP) growth rates for one or two quarters, the negative side of the ledger on demonetisation (DeMo) is larger than the positive. The recent farmer agitations for loan waivers indicates that the DeMo has failed,” claimed the Swarajyamag article.
The article suggests that seven months after PM Modi announced that he was withdrawing the legal tender status of Rs 500 and Rs 1,000 notes from 8 November, the costs are outweighing the benefits.
“Rising demand for farm loan waivers has a direct link to demonetisation. Maybe loan waivers would have happened anyway in the run-up to 2019, but it is clear that demonetisation has emptied many mandis of cash, and the demand for ready harvested crops has collapsed in many parts of the country,” the Swarajyamag quoted The Indian Express in its article.
Following the article, social media users took to Twitter and expressed their anger over the government’s move. Here’s how they reacted:
— Andy Mukherjee (@andymukherjee70) June 14, 2017
Will be surprised if this basic fact was not known to PM on 8th Nov that Cost of Demonization will exceed the benefits !
— Vimal Lakhotia (@vimallakhotia) June 14, 2017
If @PMOIndia had consulted economists ¬ CA expert on demonetisation,would have known different scenarios of SR,MR,LR impact on growth.
— Rupa Subramanya (@rupasubramanya) January 17, 2017
Here’s why the right-wing magazine thinks that the DeMo move has failed:
- After the demonetisation window for old notes closed on 31 December, the government doesn’t know how much money has come back. The total value of Rs 500 and Rs 1,000 notes outstanding on 8 November was Rs 15.44 lakh crore. If the deposits have hit this number or even exceeded it, it would mean not only a major embarrassment for the government.
- There is not much evidence that tax collections have spiked due to demonetisation or even that the tax base in expanding. Hence, it cannot be claimed that black money is not being hoarded.
- The fall in interest rates following large inflows into the banking system indicates that the victory hasn’t been huge, unless credit demand picks up – of which there is a little sign, claimed the Swarajyamag article.
- According to the Centre for Monitoring Indian Economy, the move has also hit the pace of announcements of new investment proposals during the quarter ended December 2016. New investment proposals worth Rs 125,000 crore were observed during the quarter ended December 2016 as against Rs 236,000 crore per quarter on average in the preceding nine quarters of the Modi government.