Rahul Gandhi had been vehemently against demonetisation ever since the announcement back in November 2016. He was quoted as saying in December 2016,”I want to tell about the biggest scam committed by Narendra Modi single-handedly and present the voice of people, especially poor, who have suffered due to this move. “Initially the government spoke about black-money, then moved to counterfeit currency and then again to a cashless society campaign. The prime minister took this so-called bold decision. The bold decision can also be a foolish decision. And this was a foolish decision, it has devastated the country. More than 100 people have died. Farmers, fishermen, daily wage earners have been hit hard.” He has continued with his barraging of the government over the notes band and demonetisation recently tweeting,” Dr Jaitley, the economy is in the ICU because of notes ban and GST” and followed it up with , “Aap kehtey hai aap kissi sey kam nahi/ magar aapki dava mein dum nahi.”
Rahul Gandhi has been proven correct in his assessment of the demonetisation decision. The major objective of the government when it announced demonetisation was to curb all the black money. But with RBI recently stating that 99% of the money had made its way back into the banks, it is a status quo with regards to the black money proposition. At the end of the process, RBI gained 16,000 crore having spent more than Rs 20,000 crores in the printing of the notes. The second target of demonetisation was terror funding. Though terror activity did go down during November and December, 2016 a long term effect has not been witnessed so far as terror incidences have been on a rise in the past few months.
As far as the effect of demonetisation goes, the populistic view of the economists is that the GDP was hit by at least 1% due to demonetisation. Then, the corporate performance for Q3, Q4 for YoY 2016-17 was muted especially consumer durable goods, automobiles and real estate. Demonetisation affected employment rate as well when the paucity of cash on hand meant that production in SMEs had to be stopped and workforce laid off. It had an adverse effect on banking as the build-up of cash resulted in a higher carrying cost for the banks.