#Demonetization: not a distinct decision but comes with perspective planning
Source :NewsBharati   Date :07-Nov-2017

Demonetisation in perspective planning:

It is equally important to make a note of the following measures taken prior to the announcement of demonetization. In a way, demonetization was a carefully thought and a comprehensively planned strike.The following will highlight the initiatives in several schemes comprehensively taken by the Union Ministry of Finance in this regard. (quote)

1. “Pradhan Mantri Jan Dhan Yojana

The scheme was launched on 28th July, 2014, with the objective being a national mission to bring comprehensive financial inclusion of all the households to ensure access of all households to financial services. The following achievements were marked:

a) 60% bank accounts opened in rural areas (As on 26.4.2017)

b) 44 crore Jan Dhan accounts opened (As on 26.4.2017)

c) The total balance in Jan Dhan accounts = Rs. 64,567crores (As on 26.4.2017)

d) Over 22 Crore Rupay Cards issued: (As on 26.4.2017)

e) A share of zero-balance Jan Dhan accounts dropped to 24% in December 2016 from 73% in December 2014.

f) Over 1.25 lakh bank-mitras appointed by banks

2. Pradhan Mantri Sukanya Samriddhi Yojana

The scheme was launched on 22nd January, 2015, with the objective of being a small deposit savings scheme to promote the welfare of girl child and ensure them a secure future. It achieved over one crore accounts that have been opened and an amount of over Rs.11766 crore has been deposited as on 31st January, 2017.

3. Pradhan Mantri Mudra Yojana

The scheme was launched on 8th April, 2015 with the objective to provide financial support for growth (development and refinancing) of microenterprises sector. Following were the achievements marked:

(i) Easy, loans without guarantee under three categories – Shishu, Kishore, and Tarun by the banks.

(ii) Financial Year : 2017-2018 
No. of PMMY Loans Sanctioned – 18340053
Amount Sanctioned: 88067.81 Crore


Amount Disbursed: 84413.28 Crore Loans more than Rs. 1.80 lakh crore disbursed to over 4 crore borrowers in 2016-17 FY as per data available till 13.04.2017

(iii) More than 70% of the loans have been availed of by women entrepreneurs

(iv) Budget allocation for 2017-18 doubled to Rs.2.44 lakh crores against Rs. 1.22 lakh crores in 2016-17

(v) Mobile App launched.

4. Pradhan Mantri Suraksha Bima Yojana

The scheme was launched on 9th May, 2015, with the objective to provide a very affordable insurance scheme for the poor and underprivileged people in the age group of 18 to 70 years with a bank account at a premium of Rs.12 per annum; with risk coverage of Rs.2 lakhs for accidental death and full disability and Rs.1 lakh for partial disability. The following were the key achievements:

a) Around 10 crore people (as 12th April,2017) enrolled under Pradhan Mantri Suraksha Bima Yojana (PMSBY)

b) Accident insurance worth Rs. 2 lakh at just Rs. 12 per annum

5. Pradhan Mantri Jeevan Jyoti Bima Yojana

The scheme was launched on 9th May, 2015, with the objective to create a social security system for the poor and underprivileged in the age group of 18-50 years by providing a renewable life insurance cover of Rs.2 lakhs with just a premium of Rs.330. The following were the notable achievements:

(i) 3.10 Crore persons (as on 12th April, 2017) enrolled under PMJJBY.

(ii) Life insurance worth Rs. 2 lakhs at just Rs. 330 per annum

6. Atal Pension Yojana

The scheme was launched on 9th May, 2015, with the objective to provide financial security in old age through guaranteed minimum monthly pension for those working in the informal sector or daily wagers in the age group of 18 to 40 years. The following was achieved:

a) Government contribution- 50 percent of beneficiaries’ premium (up to Rs. 1000) for 5 years in new accounts opened before December 31, 2015.

b) As on 21st March, 2017, a total of 46.80 lakh subscribers have been enrolled under APY with a total pension wealth of Rs. 1713.214 crores.

7. Gold Monetization Scheme

The scheme was launched on 5th November, 2015 with the objective to reduce the country’s reliance on the imports of gold to meet the domestic demand and to reduce the demand for physical gold. Till 14th November, 2016, under the Gold Monetization Scheme a total of 5730 Kilograms of gold has been mobilized and from the six tranches of Sovereign Gold Bonds issued, a total of 14071 kgs of gold units amounting to Rs. 4127 Crore have been subscribed

8. Sovereign Gold Bonds.

The scheme was launched on 5th November 2015 with the objective to provide a new financial instrument of investment to the public at large and reduce the demand for physical gold, and since 3986 kg of Gold bonds worth Rs.1044 crore were subscribed.

9. Indian Gold Coin Scheme.

The scheme was launched on 5th November 2015 with the objective to give a boost to the indigenous gold coin scheme launched under Make in India.

10. Stand- Up India

The scheme was launched on 5th April 2016, with the objective to support entrepreneurship among women and SC & ST communities by facilitating bank loans between 10 lakh and 1 Crore to them. To benefit at least 2.5 lakh entrepreneurs. The following have been the key achievements:

(i) Loans of more than 15,000 entrepreneurs approved out of which more than 80% are women.

(ii) Rs.500 crore has been allotted in 2016-17

(iii) As on 29.03.2017, Rs. 5237.29 crore sanctioned of which Rs. 2704.19 crores disbursed in 25435 accounts (20305 – women, 1086-ST and 4044 – SC).

(iv) Capital subsidy under new scheme ATUFS (Amended Technology Upgradation Fund Scheme) in Textile Sector will create over 30 lakh jobs, especially for women.

11. Goods and Services Tax: (GST).

The following were the salient features of the new tax structure in the country.

a) One Nation, One Tax- One Nation-One Market

b) Passed by Parliament, Rolled out on July 1, 2017.

c) 4 Tax Rates- 5%, 12%, 18%, 28%

d) Reduction in overall taxes on goods, estimated to be 25-30%

e) Lead to ease of doing business and increase in tax revenue collections.

Following are the benefits of the GST:

(i) Decrease in inflation due to the reduction in cascading effect of taxes and the overall reduction in prices.

(ii) Ease of doing business due to a common national market and benefits to small taxpayers

(iii) Decrease in “black” transactions due to the self-regulating online tax system and non-intrusive and transparent tax system.

(iv) More informed consumer due to simplified tax regime and reduction in the multiplicity of taxes.

(v) Poorer States to gain due to GST being a destination based tax, consumer states to benefit the most and abolition of CST.

(vi) Make in India boost due to exports to be zero-rated and protection of domestic industry – IGST.

12. GDP Growth Rate

India has been the brightest star in global economy since the National Democratic Alliance (NDA) Government came to power, and fear-mongering over demonetization was exposed by Q3 2016-17 growth of 7.1%


Growth rate (%)











A quick glance at the impressions of the experts from the international arena indicates the following rating on the GDP.

GDP projection by select international agencies (2016-17 vs. 2017-18).

1. International Monetary Fund (IMF): 6.6 % (FY’16), 2% (2017-18), 7.7% (2018-19) (As per WEO April 2017).

2. Organisation for Economic Co-operation and Development (OECD): 7% (FY’16) and 7.3% (FY’17).

3. World Bank: 7% (FY’16) & 7.6% (FY’17).

4. United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) Report: 7.3% (FY’16) and 7.5 %( FY’17).

5. Asian Development Bank (ADB): 7% (FY’16) and 7.8 %( FY’17).

6. Moody’s: 7.1 % (FY’16 & FY’17).

7. Fitch: 7.1 % (FY'16) and 7.7 %( 2017 -18).

8. Central Statistics Office (CSO): 7.1%.

13. Pradhan Mantri Garib Kalyan Yojana

The scheme was launched on 17th December, 2016 with the objective to provide an opportunity to pay taxes with heavy penalty to come clean so that the Government gets additional revenue which will be deposited as Pradhan Mantri Garib Kalyan Deposit for undertaking activities for the welfare of the poor and the remaining part of the declared income legitimately comes into the formal economy. It achieved higher revenues to Government from Income Declaration Scheme 2016 (Unearthed Rs.65, 250 crore) and Pradhan Mantri Garib Kalyan Yojana to raise resources to spend on the poor.

14. Direct Benefit Transfer (DBT)

This scheme covered those account holders whose accounts were opened under the Jan Dhan Yojana and other similar schemes for the DBT which enabled the government authorities to transfer directly the concerned amounts into the accounts of beneficiaries which eliminated all the middlemen. The record is as follows:

(i) Rs.1.71 Lakh Crores have been disbursed under DBT directly into the bank accounts of the beneficiaries.

(ii) Savings due to DBT by the elimination of ghost beneficiaries and middlemen worth Rs.49,560 Crore over the last three years.

(iii) 33 crore people receive various subsidies directly into their bank accounts through DBT.

(iv) 121 Schemes in 23 Ministries/Departments Covered under DBT at present compared to only 34 in March 2015

(v) Target is to bring 533 Central payment schemes under DBT by March 31, 2018

(vi) Elimination of middlemen and brokers through direct benefit transfer has been rolled out in 121 districts, 27 selected Central Sector (CS) and Centrally Sponsored Schemes (CSS) in a phased manner. 121 schemes of 23 Ministries/Departments have been on-boarded with DBT.

a. 1.79 Lakh Crores have been disbursed under DBT directly into the bank accounts of the beneficiaries.

b. Elimination of fictitious claimants and middlemen has resulted in savings of Rs. 49,560 Crore.

15. Swachch Bharat Kosh:

The Prime Minister was specifically more emphatic on this scheme since it reflected the social and cultural awareness in the society. The scheme was launched in order to improve the cleanliness levels in rural and urban areas, priority to girl toilets in schools. It aimed at the construction of new toilets and repair and renovation of dysfunctional toilets in villages, towns, government schools and Anganwadi. The fund provided under this scheme was also used for constructing water lines to the toilets, training and skill development to maintain hygiene in the toilets and other activities to improve sanitation. A budgetary provision of Rs.365 crore was utilized for school toilets and renovation of defunct toilets

16. Swachch Bharat Cess:

Swachh Bharat Cess is not another tax but a step towards involving each and every citizen in making a contribution to Swachh Bharat. In this direction, the Government has decided to impose, with effect from 15th November 2015, a Swachh Bharat Cess at the rate of 0.5% on all services, which are presently liable to service tax. This will translate into a tax of 50 paise only on every one hundred rupees worth of taxable services. The proceeds from this cess are being exclusively used for Swachh Bharat initiatives.[9]

17. Budgetary reforms:

These were introduced in the economic sphere striking a break from the colonial psyche on the part of the rulers. Three major reforms in a budgetary system in the year 2017-18 were brought about.

(i) Presentation of Budget advanced to 1st February to enable the Ministries to operationalize all activities from the commencement of the financial year.

(ii) Merger of Railways Budget with General Budget to bring Railways to the center stage of Government’s Fiscal Policy and

(iii) Removal of plan and non-plan classification of expenditure to facilitate a holistic view of allocations for sectors and ministries”[10]

18. Affordable Housing-

The housing scheme 'Pradhan Mantri Gramin Awas Yojna' with the aim of providing 'Housing For All' by 2022, 1.17 lakh more affordable houses for urban poor was sanctioned under PMAY(Urban). An investment involving Rs.5,773 crore with the Central assistance was approved. Rs.1,816 crore. A total investment in affordable housing was approved close to Rs.1 lakh crore mark. A total of 32.14 lakh houses have been completed in 2016-17 under PMGAY in the rural areas.

19. Deen Dayal Upadhyaya Gram Jyoti Yojana

In line with the philosophy of Pt. Deen Dayal Upadhyaya of ANTYODAYA (serving the last Man), on 20th November 2014, Government of India had approved Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), an integrated scheme covering all aspects of rural power distribution viz., feeder segregation, system strengthening, metering. Prime Minister of India, Shri Narendra Modi, in his Independence Day address to the nation on 15th August 2015 pledged to electrify all Un-electrified villages within 1000 days. The government of India has accordingly taken up village electrification on a mission mode targeting completion by May 2018. It is to be noted that up to 15th May, 2017,13,469 villages were electrified.[11]

20. Pradhan Mantri Ujjwala Yojana

Pradhan Mantri Ujjwala Yojana is a scheme to provide free LPG connections to women from Below Poverty Line (BPL) households. Over two crore LPG cylinders were distributed to BPL women under the PM’s Ujjawala Yojana. The government has approved Rs. 8000 crore under the Pradhan Mantri Ujjwala Yojana (PMUY) for the release of 5 crores deposit free new LPG connections to women of BPL families over next three years.

The googly :

Demonetisation as well as the above mentioned public welfare schemes also aimed at marching towards a cash-less as well as a less cash economy. Progressive economy expects the citizenry to adopt and be accustomed to transact business more and more with other than cash currency mode. Demonetisation cannot be considered in isolation, it is not merely an economic consideration or a tax proposal, and it is essentially a step towards building and transforming the psyche of both, the society and the individual. It is marching towards a modern political society. It has a far-reaching impact of bringing about a change in the monetary habits of the individual, a change from within too. It is a boon in disguise at the same time utmost precaution becomes imperative to undertake efforts to protect the privacy of the individual.

Digitization is a two-edged weapon since the intelligence reports point out the rapid rise in the cybercrime. The state has to take all precautionary measures like strengthening of basic infrastructure while implementing various policies across the country. A strong infrastructure, for proper management of several businesses and otherwise activities, is the pre-condition for cybersecurity, and cybersecurity is the pre-condition for digitization. Along with digitization, the financial and digital literacy has become a pre-condition and is required to spread its compass as wide as possible to enable the system to succeed. The government has arranged several programmes for supplementing the financial literacy and the e-learning, which will enable the common people to protect themselves from the rising number of traps of the cyber-crime.

One has to take into account the indispensability of the e-governance in the routine transactions of the individual citizens, the various departments of the government and several other public authorities which make it imperative for these to be precise and cautious. In the words the Prime Minister, ‘the E-governance is easy governance, effective governance and also economic governance. E-governance paves the way for the good governance’, and therefore, it has become a backbone of the present public administration.

Moving towards a less cash society facilitated by digitization is part of the strategy of the demonetization step (Please see the Table on the previous page). Increase in digitization of the transactions would increase the accountability as well would create a trail of money, therefore making it difficult to become unaccounted. Digitization is one of the effective tools in order to control the increase in black money. The government is determined to achieve digitization at a greater pace in order bring every citizen into the banking system. While speaking in the Lok Sabha, the Finance Minister highlighted the Government’s strategy to clean the system through digital economy. According to a PIB release dated 1st February 2017, Shri Jaitley was quoted as saying, “it has a transformative impact in terms of greater formalization of the economy and mainstreaming of financial savings into the banking system. This, in turn, is expected to energize private investment in the country through lower cost of credit. India is now on the cusp of a massive digital revolution. A shift to the digital payments has huge benefits for the common man. The earlier initiative of the Government to promote financial inclusion and (Jan Dhan Accounts-Aadhaar-Mobile) the JAM trinity were important precursors to the current push for the digital transactions.”

The path ahead…towards nation building.

Demonetisation was a most discerning constructive step in the field of the Indian economy which till then had become a chaotic, disorderly retrograde situation. Several scams, bribery at high places, leaderless political manipulations, utter confusion in the market, had tarnished the image of the country abroad. The government had lost its control over the national affairs. The government entertained softly the anti-national elements in the country thereby inadvertently acquiescing their terrorist mischiefs despite its grave threats to the national security.

India now has a strong political leadership, a leadership with a certain goal before it and a strong unhesitating political will replete with caring affection for the poor and the downtrodden. Demonetisation was a glaring example of it. It was the poor in the country who had lent their overwhelming support to the demonetization process. It is a ‘dharmayudha’ for a better tomorrow. Spiritualism in India personified its manifestation in the support to Narendra Modi and his decision.

In view of the above, it is certain that demonetization and digitization need to go hand in hand with a steady economic growth with greater transparency, greater accountability, and sustainability. Of course, the cost of digitalization is required to be maintained at a low affordable level keeping in view the common poor.

It will not be out of place to refer to the statement issued by the President’s Secretariat on 8th November, 2016, through the Press Information Bureau in which the former President Pranab Mukherjee welcomed the bold step taken by the government which will help unearth unaccounted money as well as counterfeit currency.

It is gratifying to find that the decision of demonetization has received a wide support from all the sections of society and esp. the ‘Executive’ although a few desperate political dissidents who had lost their outlived faces in the electoral battle, played a lone discordant half-hearted note. The unrest reported has as usual been an exaggerated media creation.

The toiling masses and the ‘haves not’ however had already their firm resolve of uniting for nation building…. the ‘nation first’.

[1] ‘India 2017, A reference Annual’, New Media Wing, Publications Division, Ministry of Information and Broadcasting, Government of India, New Delhi, 61st edition.

[2] The text of the Prime Minister speech delivered on 8th November 2016; released by the PIB.

[3] PIB - http://pib.nic.in/newsite/PrintRelease.aspx?relid=170378

[4] This was stated by Shri Arjun Ram Meghwal, Minister of State in the Ministry of Finance in a written reply to a question in Rajya Sabha. (http://pib.nic.in/newsite/mbErel.aspx?relid=158183)

[5] “White Paper on Black Money”, Report of 16th May 2012, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi (called Pranab Mukherjee Report)

[6] “White Paper on Black Money”, Report of 16th May 2012, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi (called Pranab Mukherjee Report), page 2.

[7] This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha

[8] PIB - http://pib.nic.in/newsite/PrintRelease.aspx?relid=170405; The figures are for the year 2016-17

[9] PIB- http://pib.nic.in/newsite/PrintRelease.aspx?relid=130308

[10] PIB note on initiatives taken by the Union Ministry of Finance: http://pib.nic.in/ndagov/MinistryWise.aspx

[11] PIB- http://pib.nic.in/newsite/PrintRelease.aspx?relid=161968