Topic Of The Day”Money, Money, Money: On Demonetisation”
The Reserve Bank of India’s annual report for 2017-18 reveals that 99.3% of currency notes that were demonetisedat midnight on November 8, 2016 have returned to the banking system. This is only marginally higher than its provisional estimate last year that over 99% — or ₹15.28 lakh crore worth of the old ₹500 and ₹1,000 notes — out of the ₹15.44 lakh crore that were in circulation at the time had been deposited by June 30, 2017. This makes a couple of things crystal clear. First, the hope that a large chunk of unaccounted money would not return to the system — arguably, the principal reason for the exercise — was almost wholly belied. As a result, the plan to transfer the arising surplus from the RBI to the Centre, which was not formally declared but strongly rumoured, was a non-starter. Second, given the sheer logistical difficulty in penalising all those who converted unaccounted money into legal tender, demonetisation worked as an unintended amnesty scheme. Despite the significant cost to the economy, demonetisation, to the disappointment of the Prime Minister’s critics, had no political fallout. Narendra Modi succeeded in portraying the move as one that would knock out the corrupt rich — a harsh but necessary shock therapy. This was perhaps why the massive disruption caused by the overnight removal of 86% of the currency in value terms did not cause agitations.
Nevertheless, the RBI report, which points to a spurt in counterfeiting of the new ₹500 and ₹2,000 notes, raises the old question all over again. Was it worth the slowdown in growth, the damage to informal sector supply chains, and job losses in sectors such as construction that were the bulwark of employment creation for the unskilled? True, there have been some benefits. For instance, the number of income tax returns filed has surged a little over the trend growth rate. But surely this could have been achieved by other policy measures. Cashless modes of payment have become more common, but financial savings in the form of currency have also risen, suggesting that people still value cash. Not all policy choices work out and accepting mistakes or planning flaws helps strengthen governance processes. For example, learning from the UPA’s mistakes, a cleaner auction process for natural resources has been worked out. The government must not disown its biggest reform attempt or try to sidestep parliamentary scrutiny of the outcomes of demonetisation. Instead, it could focus on fixing the problems that people still face — transactions with ₹2,000 notes in the absence of ₹1,000 notes are difficult as it is a departure from the currency denomination principle (every note should be twice or two and a half times its preceding denomination). Even as these issues are sorted out, the larger lesson must be heeded: sudden shocks to the economy don’t always yield intended policy objectives
MEANINGS AND WORD
1) demonetised
Meaning : deprive (a coin or precious metal) of its status as money.
Synonyms : termination , ending
Antonyms : substantiation
Example : “coins minted with the name and portrait of Emperor Caligula were demonetized after his death”
2) chunk
Meaning : a thick, solid piece of something.
Synonyms : clump
Antonyms : give
Example : “huge chunks of masonry littered the street”
3) penalising
Meaning : subject to a penalty or punishment.
Synonyms : pillory
Antonyms : praise
Example : “high-spending councils will be penalized”
4) unintended
Meaning : not planned or meant.
Synonyms : unmotivated
Antonyms : motivated
Example : “the unintended consequences of people’s actions”
5) portraying
Meaning : depict (someone or something) in a work of art or literature.
Synonyms : represent
Antonyms : prosecute
Example : “the ineffectual Oxbridge dons portrayed by Evelyn Waugh”
6) disruption
Meaning : disturbance or problems which interrupt an event, activity, or process.
Synonyms : barracking
Antonyms : activity
Example : “the scheme was planned to minimize disruption”
7) agitations
Meaning : a state of anxiety or nervous excitement.
Synonyms : pother
Antonyms : precede
Example : “she was wringing her hands in agitation”
8) counterfeiting
Meaning : imitate fraudulently.
Synonyms : forge
Antonyms :veritable
Example : “my signature is extremely hard to counterfeit”
9) bulwark
Meaning : .
an extension of a ship’s sides above the level of the deck.
Synonyms : defend
Antonyms : attack
Example : “the ships met, their crews lining the bulwarks”
10) auction
Meaning : a public sale in which goods or property are sold to the highest bidder.
Synonyms : vendue , sale
Antonyms : purchase
Example : “the books are expected to fetch a six-figure sum at tomorrow’s auction”
11) scrutiny
Meaning : critical observation or examination.
Synonyms : checkup , scan
Antonyms : deviate
Example : “every aspect of local government was placed under scrutiny”
12) Heed
Meaning : pay attention to; take notice of.
Synonyms : attentiveness, attention
Antonyms : inattention
Example : “he should have heeded the warnings”
