Demonetisation: now a proven failure?: 

Demonetisation: now a proven failure?:

Context:

Demonetization as a way to tackle black money.

To what extent the demonetization was successful?

• It was thought that if cash was squeezed out, the black economy would be eliminated.
• Cash is only about 1% of the total black money estimated in the economy.
• Not even 0.01% of the black money has been extinguished.

Why there is a little impact of demonetization on the black economy?

• Black money is a result of black income generation.
• It is produced by various means which are not affected by the one-shot squeezing out of cash.
• Squeezed out cash quickly get regenerated.
• Criticism of the demonetization:
• Demonetization is not a way to tackle the black economy.
• The government’s intention behind the demonetization was not clear and still.

What is the challenge in tracking black money?

• The income tax department does not have the resources for dealing with lakhs of tax payers.

Who was impacted due to the demonetization?

• The demonetization was carried out without preparation.
• The unorganized sector was badly impacted.
• The Farmers, traders and those who never had any black money.
• The demonetization has impacted the overall growth rate of the country.