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Money, money, money: on Demonetization


The Centre may not own up to the fiasco of demonetisation, but it could sort out wrinkles
The Reserve Bank of India’s annual report for 2017-18 reveals(प्रकट करना/प्रत्यक्ष करना) that 99.3% of currency notes that were demonetised at midnight on November 8, 2016 have returned to the banking system. This is only marginally(मामूली/सीमांत रूप से) higher than its provisional(अस्थायी) estimate(अनुमान) last year that over 99% — or ₹15.28 lakh crore worth of the old ₹500 and ₹1,000 notes — out of the ₹15.44 lakh crore that were in circulation(खपत/प्रसार) at the time had been deposited by June 30, 2017. This makes a couple of things crystal clear(बिलकुल स्पष्ट). First, the hope that a large chunk(हिस्सा) of unaccounted(बेहिसाब) money would not return to the system — arguably(यकीनन), the principal reason for the exercise — was almost wholly belied. As a result, the plan to transfer the arising(उत्पन्न/उठना) surplus(बचत/अधिशेष) from the RBI to the Centre, which was not formally declared but strongly rumored(अफवाहें), was a non-starter. Second, given the sheer logistical difficulty in penalising all those who converted unaccounted money into legal tender, demonetization(विमुद्रीकरण) worked as an unintended amnesty scheme. Despite the significant cost to the economy, demonetization, to the disappointment(निराशा/मायूसी) of the Prime Minister’s critics, had no political fallout. Narendra Modi succeeded in portraying(चित्रित/अभिनय करना) the move as one that would knock out the corrupt rich — a harsh but necessary shock therapy. This was perhaps why the massive(भारी/बड़ा) disruption(व्यवधान/विघटन) caused by the overnight removal of 86% of the currency in value terms did not cause(कारण/वजह) agitations(आंदोलन/उत्तेजना).

Nevertheless, the RBI report, which points to a spurt( बढ़ोतरी/उछाल) in counterfeiting(नकली/जालसाजी) of the new ₹500 and ₹2,000 notes, raises the old question all over again. Was it worth the slowdown in growth, the damage to informal sector supply chains, and job losses in sectors such as construction that were the bulwark of employment creation(निर्माण) for the unskilled?(अकुशल/अशिक्षित) True, there have been some benefits. For instance(उदाहरण), the number of income tax returns filed has surged(बढ़ी/उमड़ना) a little over the trend growth rate. But surely this could have been achieved (हासिल/उपलब्ध किया हुआ)by other policy measures. Cashless modes of payment have become more common, but financial savings in the form of currency have also risen, suggesting(सुझाव/संकेत करना) that people still value cash. Not all policy choices work out and accepting mistakes or planning flaws helps strengthen governance processes. For example, learning from the UPA’s mistakes, a cleaner auction(मोल तोल/नीलामी) process for natural resources has been worked out. The government must not disown its biggest reform attempt(प्रयासआज़माना) or try to sidestep parliamentary scrutiny of the outcomes of demonetisation. Instead, it could focus on fixing the problems that people still face — transactions with ₹2,000 notes in the absence of ₹1,000 notes are difficult as it is a departure from the currency denomination principle (every note should be twice or two and a half times its preceding(पूर्ववर्ती) denomination). Even as these issues are sorted out, the larger lesson must be heeded: sudden(आकस्मिक/अचानक) shocks to the economy don’t always yield intended policy objectives.


Important Vocabulary

1.Marginally(मामूली/सीमांत रूप से)
Synonyms: kind of, lightly, marginally, somewhat, hardly
Antonyms: a lot, considerably, greatly

2.Auction (मोल तोल/नीलामी) 
Synonyms: sell-off, bargain, jam

3. Surged(बढ़ी/उमड़ना)
Synonyms: climb, flow, grow, rise, stream
Antonyms: decline, decrease, descend, lessen

Synonyms: establishment, formation, formulation, production, conception
Antonyms: being, conclusion, end, finish, death

5. Circulation(खपत/प्रसार)
Synonyms: currency, dissemination, apportionment, spread, transmission
Antonyms: blockage

6. Portraying(चित्रित/अभिनय करना) 
Synonyms: characterize, depict, describe, illustrate, interpret
Antonyms: confuse, mix up, obscure, be original

7. Spurt( बढ़ोतरी/उछाल)
Synonyms: commotion, eruption, explosion, outburst, spate
Antonyms: peace, continuity

8. Rumored(अफवाहें)
Synonyms: reputed, broadcast, bruited, circulating




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