Black Money: Ineffective Efforts to Control Banknote Forgery in India

History Indian History

Posted by NewAdmin on 2025-02-07 09:13:51 |

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Demonetisation's Impact on India's Poor
India’s demonetisation policy, first implemented in 1946 and revisited in 1978, was reintroduced in 2016 by Prime Minister Narendra Modi with a radical move to invalidate 500 and 1,000 rupee notes, comprising 86% of the currency in circulation. Officially aimed at curbing black money and corruption, the policy caught the nation off guard and led to severe consequences, particularly for the poor and rural populations. While urban centers experienced disruptions, the rural areas—where a large portion of India's unbanked population resides—faced chaos due to a lack of access to banking infrastructure and cash liquidity. Over 80 deaths were reported within weeks, many linked to the immediate hardships caused by the policy’s implementation.

Historical Failures of Demonetisation
This wasn’t the first time India had tried such a policy. In 1946, the government demonetised high-denomination notes, leading to widespread panic, death, and chaos. Despite its intent to curb currency forgery, it failed to achieve its objectives and disproportionately affected the middle and lower classes. Similarly, a second attempt in 1978 under Prime Minister Moraji Desai resulted in chaos again, with little impact on black money. Experts like Chintaman Deshmukh and I.G. Patel criticized the policy for its inability to effectively target black-marketing or illicit wealth, as most black money was not stored in cash form.

The 2016 Demonetisation Crisis
In 2016, Modi’s demonetisation was positioned as a move toward a cashless economy and a crackdown on corruption. However, the disruption caused by rendering the majority of currency valueless led to mass suffering, particularly in rural India, where bank account ownership is low and illiteracy rates are high. While Modi claimed the move was designed to push the country into the digital age, it became clear that the policy was poorly implemented, leading to economic hardship and social unrest, particularly for those without access to digital banking facilities.

The Cost of Technological Progress
Despite Modi's assertions that the demonetisation was meant to drive India toward technological advancement, the policy proved to have devastating consequences for the poor and vulnerable. While the government touted the move as a bold step towards modernity, the disruption in daily life and the significant loss of life reveal the dangers of radical economic policies that fail to consider the realities of the most disadvantaged citizens. The historical context and failure of previous attempts at demonetisation underscore the need for more effective and inclusive measures to address the issues of black money and corruption without jeopardizing the well-being of the entire nation.

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