The possible "long term" benefits of demonetisation of large currency notes will be at the cost of the suffering of India's poor, said President of India Pranab Mukherjee in a new year message.
"Demonetisation, while immobilizing black money and fighting corruption, may lead to temporary slowdown of the economy," said President Mukherjee in a video address to Governors and Lieutenant Governors on Thursday. "We all will have to be extra careful to alleviate the suffering of the poor which might become unavoidable for the expected progress in the long term."
Mukherjee, who had earlier welcomed Prime Minister Narendra Modi's decision to demonetise ₹1,000 and ₹500 currency notes, appeared much more cautious on the issue in the new year. "While I appreciate the thrust on transition from entitlement approach to an entrepreneurial one for poverty alleviation, I am not too sure that the poor can wait that long," he said. "They need to get succour here and now, so that they can also participate actively in the national march towards a future devoid of hunger, unemployment and exploitation."
He also referred to the recent announcement by PM Modi on new year's eve for government packages for the poor. "The recent package announced by the Prime Minister will provide some relief," he said.
According to reports, 97 percent of the demonetised notes have been returned to banks, pointing to a much smaller percentage of it in black money than the government's estimate. While the Reserve Bank of India has claimed this estimate could be incorrect, interestingly, finance minister Arun Jaitley three-word response to this revelation has been, "I don't know".
Over 100 people have died standing in serpentine queues at banks and ATMs ever since the government, in a surprise move, announced that ₹1,000 and ₹500 currency notes would become "illegal tender" four hours after the announcement on 8 November 2016. The move, aimed to remove black money and corruption, hit the poor of India the hardest, who did not have access to bank accounts and digital money for making daily transactions.
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