Prasad wrote:All support aside, if demon was set in motion 6 months back, govt could've taken 3 months out of that to prepare and then use 3 months unleash a massive cashless initiative and then drop the demon bomb.
This is a case of selective memory. In May 2014, the government came into power within an economic milieu where, never mind cashless economy, a large number of people didn't even have bank accounts. Here's a very recent flashback:Sept 2014: Can India really provide bank accounts to 1.2 billion people?
It is ambitious because nearly 40% of Indians, or some 480 million people, have little or no access to financial services.
To put that in context, that is nearly one-and-a-half times the US population and nearly 17% of world's entire "unbanked" population.
The government aims to provide bank accounts to 75 million households by 2018.
Fast forward to today:Dec 2016: 99% Indian households are covered by a bank account
In other words, they beat the 2018 target by two years. Demonetization was NEVER about going cashless. In fact, it doesn't touch the lower denominations at all, and they saw an increase in circulation instead. They appear scarce because of hoarding, both by mango people and BMers.
Demonetization was always about destroying the liquidity of the black economy. When you can no longer transact large transactions in cash, and it takes decades to rebuild that BM cash base, it destroys most of the BM economy, turning it white, by force.
The argument given is that most of BM economy is not in cash but in RE, gold and forex. That's true. Now how is any of that going to be transacted ? If you sell black property into white, you have to show purchase data. If there's no data (benami), you're screwed. If you have a low white component in buy price, you're hit with huge capital gains tax and screwed. Big gold transactions need PAN/Aadhar. Forex no longer has hawala route.
Indira Gandhi nationalized the banks in 1971 claiming she wanted to bring about financial inclusion. And yet in 2014 40% of households had no bank account. In 2016 almost every household does. and also in 2016, the black economy that grew dramatically from the IG era, was crippled by demonetization.
For the first time, we have a government that gets things done, that multiple other administrations collectively over 4 decades could not get done. They also had the guts to implement a plan like demonetization that NO major world leader has the ba11s or the political support to do. Let them be, instead of nitpicking specifics of how to do DeMo. DeMo is done, and dusted. We are already in the post DeMo era.