India News

Demonetisation hovers like a dark cloud

Published

9 years ago

January 31, 2017

[vc_row][vc_column][vc_column_text]Economic Survey points to the short-term costs which are visible and tangible

By Parsa Venkateshwar Rao Jr

In President Pranab Mukherjee’s address to the Joint Session of Parliament as the Budget Session kicked off on Tuesday, there was a passing reference to demonetisation, in Para 55, of the more-than-an-hour long and 80-paragraph speech. It seemed as though the government (the President’s address is written by the government) did not want to linger too long on the unpleasant fact of demonetisation.

But an hour after President Mukherjee’s speech and after Finance Minister Arun Jaitley laid the Economic Survey 2016-17 on the table of Lok Sabha, Chief Economic Advisor in the Ministry of Finance, Arvind Subramanian, took the floor at the National Media Centre, to explain to the media the salient points of the survey, which is the official assessment of the state of the economy of the year gone by.

The survey had to take the bulls by the horn as it were, and in this case the bull and its horns happen to be Prime Minister Narendra Modi’s November 8, 2016 announcement declaring that Rs 1,000 and Rs 500 notes will cease to be legal tender. Problems followed, and though the ordinary people bore with the acute inconvenience it had created which emboldened the Prime Minister to believe that the people will back his unpopular decision, the Economic Survey could not look away from the issue staring in the face of the economy.

While describing demonetisation in laudatory terms as “a radical governance-cum-social engineering measure”, and seeking to assess the short-term costs and long-term benefits of the move, the survey could not avoid noting that “the costs have nonetheless been real and significant” ; it also said, “The magnitudes of short-term costs remain uncertain, as do the timing and extent of long-term benefits.”

The survey also emphasises what needs to be done to cushion the hard-landing of demonetisation: “…remonetising the economy expeditiously by supplying as much cash as necessary, especially in lower denomination notes; and complementing demonetisation with more incentive-compatible actions such as bringing land and real estate into the GST, reducing taxes and stamp-duties, and ensuring that demonetisation does not lead to over-zealous tax administration.”

But then he places demonetisation as one of the many measures, including the passing of the GST Bill, the setting up of the Monetary Policy Committee (MPC) in the Reserve Bank of India to calibrate interest rates and to manage inflation, giving Aadhaar a legal basis by making the Unique Identification Authority of India (UIAI) a statutory body. The survey does not give demonetisation the status of a game-changer in itself.

In Chapter 3 of the survey, enticingly entitled “Demonetisation: To Deify or Demonise?” it offers a closer look at the decision. It says that “India’s demonetisation is unprecedented in international economic history” because “all other sudden demonetisations have occurred in the context of hyperinflation, wars, political upheavals, or other extreme circumstances. But the Indian economy had been growing at the fastest clip in the world on the back of stable macroeconomics and an impressive set of reforms. In such normal circumstances, demonetisations – such as the one announced recently in Europe – tend to be phased in gradually.”

And the survey tries to explain, if not explain away, demonetisation, in another way: “In the wake of the Global Financial Crisis (GFC), advanced economies have used monetary policy t stimulate growth, stretching its use to domains heretofore considered heretical such as negative interest rate policies and “helicopter drops” of money. In fact, India has given a whole new expression to unconventional monetary policy, with the difference that whereas advanced economies have focused on expanding money supply, India’s demonetisation has reduced it. This policy could be described as “reverse helicopter drop”, or perhaps more accurately a “helicopter hoover”.

It can be seen that the survey tries hard to understand and explain the inexplicable demonetisation move, and it has come to the hard conclusion that this would bring down the growth rate by one-fourth or one-half percentage points.[/vc_column_text][/vc_column][/vc_row]

Related Topics:APN Budget 2017 Demonetisation Economic Survey

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Delhi Palam fire leaves 6 dead, massive rescue operation underway

Six people died after a fire broke out in a residential building in Delhi’s Palam. Firefighters continue rescue efforts with 30 tenders at the spot.

Published

3 hours ago

March 18, 2026

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A tragic fire incident in southwest Delhi’s Palam area on Wednesday morning claimed the lives of six people, triggering a large-scale emergency response.

According to officials, the blaze erupted in a residential building, prompting immediate action from fire and police authorities. Around 30 fire tenders were rushed to the spot to control the flames and carry out rescue operations.

Authorities said they received a distress call at approximately 7 am reporting the fire at a house within the building. Firefighters were deployed swiftly amid concerns that several residents could be trapped inside the structure.

A fire services official stated that initial information suggested people might still be inside, leading to an intensive search and rescue effort. Emergency teams, including police personnel, reached the congested locality to assist in evacuation and crowd management.

The firefighting operation was still ongoing at the time of reporting. The exact cause of the fire has not yet been determined, and further details are awaited as authorities continue their investigation.

India News

Centre mandates 60% free seat allocation on flights, caps selection fees

Airlines must now offer 60% seats without extra charges and ensure better seating arrangements for passengers under new government rules.

Published

5 hours ago

March 18, 2026

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In a significant move aimed at protecting air travellers, the Union Ministry of Civil Aviation has directed airlines to ensure that at least 60 per cent of seats on every flight are offered without any additional selection fee. The decision follows widespread complaints from passengers about hidden charges, particularly for seat selection.

The directive has been issued through the Directorate General of Civil Aviation, which has introduced a series of passenger-friendly norms to enhance transparency and improve the overall flying experience.

Under the new guidelines, airlines have also been instructed to seat passengers travelling on the same PNR together, preferably in adjacent seats. This is expected to address long-standing concerns among families and group travellers, who often face inconvenience due to scattered seating arrangements.

The regulator has further emphasised the need to safeguard passenger rights in situations such as flight delays, cancellations, and denied boarding. Airlines have been asked to prominently display these rights across their websites, mobile applications, booking platforms, and airport counters to ensure better awareness.

In addition, carriers must establish clear and transparent policies regarding the carriage of sports equipment, musical instruments, and pets. The move comes in response to frequent complaints over inconsistent rules and high charges. Airlines have been directed to align such policies with safety and operational standards while ensuring they are communicated in a simple and passenger-friendly manner.

To improve accessibility, the regulator has also asked airlines to share passenger rights information in regional languages.

India News

Mamata Banerjee warns BJP, EC over Bengal polls, says they will be accountable

Mamata Banerjee holds BJP and Election Commission responsible for any incidents during Bengal polls, raising concerns over officer transfers.

Published

19 hours ago

March 17, 2026

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West Bengal Chief Minister Mamata Banerjee has held the Bharatiya Janata Party (BJP) and the Election Commission of India responsible for any untoward incidents in the state during the upcoming assembly elections, following the transfer of key officials.

Addressing concerns over administrative reshuffles, Banerjee said that changes involving senior bureaucrats, including the chief secretary and home secretary, could affect governance and law and order in the state during a crucial period.

The Trinamool Congress chief also announced candidates for 291 constituencies for the elections scheduled to be held in two phases on April 23 and 29.

Criticising the Election Commission, Banerjee alleged that the transfers were being carried out in a manner that benefits the BJP. She questioned the timing of the decisions and said such actions weaken the state administration at a sensitive time.

She further raised concerns about disaster management and essential services, stating that experienced officials familiar with the state’s situation have been replaced. According to her, this could impact administrative efficiency if any emergency arises before the new government is formed.

Protecting Bengal’s identity

Banerjee emphasised that the election is not merely about forming a government but about safeguarding Bengal’s identity and existence. She accused the BJP of misusing central agencies and attempting to influence the electoral process.

She urged that elections should be conducted peacefully, without external interference, and in line with democratic principles. The chief minister also expressed confidence that her party would return to power with a stronger mandate.

Appealing to voters, she called for support for the Trinamool Congress, asserting that the people of Bengal will ultimately decide the outcome and protect their democratic rights.