2 years of Demonetization: Then and Now

Guwahati: Demonetization in India celebrates its second anniversary today and this is high time that Indians must be capable of calculating the bad and good things demonetization has done to them in these two years. Amidst all the criticisms showering in for the decision of sudden demonetization of Indian currencies, Finance Minister Arun Jaitley has come forward to defend the move according to whom, it was an essential step to induce people to move away from anonymous and receipt-less cash payments to digital transactions.

Jaitley said in a written statement, “India was a cash dominated economy. Cash involves anonymity in transactions. It bypasses the banking system and enables its possessors to evade tax. Demonetization compelled holders of cash to deposit the same in the banks. The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through non-invasive method.”

Along with the stress laid by the Finance Minister, it would also have to be agreed in general that demonetizations certainly worked as a great push towards making one realize the significance of digital banking and transactions. Jaitley adds that the Unified Payment Interface which was launched in 2016 showed that the value of transactions grew from Rs 50 crore in October 2016 to Rs 59,800 crore in September 2018. As an instance, the Bharat Interface for Money (BHIM) app can be cited which currently has 1.25 crore users who use its UPI transactions facility. The opver all UPI transactions through BHIM was about 48% in June 2017.

Mr. Jaitley said, “The RUPAY Card is used both at the Point of Sale (PoS) and for e-commerce. Its transactions have increased from Rs 800 crore before demonitisation to Rs 5730 crore in September 2018 for PoS and from Rs 300 crore to Rs 2,700 billion in e-commerce. Today Visa and Mastercard are losing market share in India to indigenously developed payment system of UPI and RUPAY Card whose share have reached 65% of the payments done through debit and credit cards.”

Counting on another merit of demonetization, the finance minister says that demonetization has made a widespread impression on collection of personal income tax. Citing statistics of tax collection, he said that the collections were higher in Financial Year 2018-19 in comparison to the previous year by 20.2%. In case of the corporate tax as well, the collections are 19.5% higher.

Also read: Narendra Modi’s Demonetization of Notes is Nothing but a Complete Failure