Modi's Demonetization Called "Colossal Failure That Ruined Economy" As India GDP Growth Slumps To 2-Year Lows

India's embattled Prime Minister Narendra Modi faced a double whammy of abuse this week as his nation's economic growth collapsed to its weakest since Q1 2014 and India's Central Bank released a report on Modi's extraordinary "demonitization" plan last year showing that 99 per cent of the high denomination banknotes cancelled last year were deposited or exchanged for new currency, crushing Modi's lie that his contentious 'war on cash' would wipe out huge amounts of so-called 'black money'.

When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals — popularly believed to hoard large amounts of illicit cash — would be stuck with “worthless pieces of paper”. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy - as the wealthy abandoned or destroyed it, rather than admit to their hoardings - reducing central bank liabilities and creating a government windfall.

Since he unleashed his cunning plan, India's GDP growth has slowed dramatically.

After India's Composite PMI collapsed, India's Q2 GDP growth slowed to 5.7% - its weakest since Q2 2014...

 

And now, as The FT reports, the Reserve Bank of India’s annual report on Wednesday suggested that most holders of the old currency managed to dispose of it, estimating that banned notes worth Rs15.28tn ($239bn) were returned to the bank. That amounts to 99 per cent of the Rs15.44tn of the old high-value notes that were in circulation when Mr Modi made his announcement, according to the finance ministry.

The government’s critics were quick to seize on the RBI’s announcement as evidence of the policy’s failure.

“99 per cent notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” former finance minister P Chidambaram tweeted.

 

Rahul Gandhi, de facto leader of the opposition Congress party, tweeted: “A colossal failure which cost innocent lives and ruined the economy. Will the PM own up?”

The bank’s figures are a political embarrassment to Mr Modi, who had appealed to the nation to endure the disruption and hardship to punish the rich and corrupt, and deprive them of their ill-gotten gains.

Many lower income Indians hard hit hard by cash shortages supported the demonetisation policy because they believed the rich were suffering more.

It appears they were suckered!

Comments

Manthong Common_Law Sat, 09/02/2017 - 22:33 Permalink

 
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Surprise Surprise Surprise Nothing instills confidence in government and leaders like when they change the rules of the game and pull the rug out from under you in a blindside move. Modi should be boiled in oil along with his bankers.

In reply to by Common_Law

philipat 07564111 Sun, 09/03/2017 - 00:43 Permalink

Unfortunately, it won't make any difference. "Modern Western Liberal Democracies" such as Australia will still double down on their "Wars on Cash" and ignore the Indian experience because their objectives are other than as stated. The real goal is to allow confiscation of your money via the application of negative interests rates with no escape routes. Other than PM's, which, of course, explains the war on them also...Get in line plebs, just STFU and BOHICA......

In reply to by 07564111

Arrow4Truth auricle Sun, 09/03/2017 - 14:48 Permalink

Indians (not the woo-woo kind) are not his countrymen. He sold his soul, so he is of the malevolent kind. One could not arbitrarily disrupt the monetary system of the entire nation if he was in possession of any emotion e.g., empathy, or conscience. It's fucking eee-vil. But it appears that there is no line in the sand.

In reply to by auricle

philipat yarpos Sun, 09/03/2017 - 03:23 Permalink

That's a very obtuse re-statement of what I didn't say? Fiat currencies are low on my list of investment priorities for sure but in the very short-term if you have funds in a Bank and need to get them out in a hurry, cash works just fine. The alternative is no way out and negative interest rates. Which do you prefer?

In reply to by yarpos

Arrow4Truth BeanusCountus Sun, 09/03/2017 - 14:34 Permalink

Horseshit. Elections are for nothing more than providing a false sense of security for the slave consenters for 2 - 4 years. "Oh, this one will surely be an improvement!" Nope. The fucking system is too corrupt for any new blood to make a difference... and you're stuck with the same old shit for another term. Problem is, this shit will continue as long as people continue to believe that by taking ownership of the title "voter", that they are "doing the right thing"... making their contribution, yet bitch about how corrupt the "system" is, and never consider that by their actions they support it. Goddamn. Prime example of how stupid people have become. Wake... the fuck... up. (sigh) Forgive the rant... ommmmmmmm. 

In reply to by BeanusCountus

Dubaibanker Manthong Sun, 09/03/2017 - 08:05 Permalink

Myself and Jayant Mehta had predicted this, that demonetization will be an epic failure. We are barely 10 months and things are in TERRIBLE shape!One of my comments is here from Dec 10, 2016: http://www.zerohedge.com/news/2016-12-09/65-atms-nonoperational-goldman… remain one of the largest passive sufferering people in the world. Citizens of other countries have rioted  or changed Govts for much less.It is because of fear of the educated and the powerful over the mass of illiterates, lower castes etc.Indian politiicians love to continue the divide and rule policies of the Mughals and British runing India for over 800 years.Over 50% of all elected Members of Parliament are criminals.GST is another unfolding disaster implemented since July 2017.Worse is yet to come but hiding facts is an art you can learn from the Indians!

In reply to by Manthong

Mr.BlingBling Sat, 09/02/2017 - 22:12 Permalink

Failure? Not at all. The people calling the shots think that this test program worked quite well. Phase II will be coming soon to a theatre (of financial war) near you soon!

saldulilem Sat, 09/02/2017 - 22:21 Permalink

Political embarrassment? Time will tell, but there was a theory that the scheme was designed to starve opposition parties of cash, resulting in his party scoring state election victories.

Latitude25 (not verified) Sat, 09/02/2017 - 22:38 Permalink

Indian public reaction = buy more gold than ever.  I laughed my ass off when Modi demonetized.

sdot54 Sat, 09/02/2017 - 22:46 Permalink

First they agreed to be hotwired with IUD's for the Aadhhar. Apparently Modi convinced them Americans loved their S.S. numbers. Then they bought the idea of getting rid of cash for the good of India. They have to help fight those criminals (A CRAY dark economy in India does exist) Next up on the docket they are introducing a shit load of taxes in the coming years. I've heard some 40 desperate shakedowns...fuck off. Local Indians will be hard pressed 2 speak out or protest, because Modi can press a button and zero their accounts. What's that phrase? "Hi, we're from the government and we're here to help."

East Indian Sat, 09/02/2017 - 23:44 Permalink

Ken Rogoff. IMF. Indians are the guinea pigs. The results are disastrous. Even for the cabal. So, this idiotic experiment will not be repeated in other countries. Instead they will resort to the salami tactics and slowly eliminate the physical cash. Poor Modi. He came to power on an anti- America mindset (he was once denied visa by the American Embassy). But the Gujaratis in America (Patels are Gujaratis, from his home state Gujarat) fooled him and he has totally gone with the debt-as-money gang; his commitment to BRIC is questionable. He should kick those fellows out. But what do I know?

flapdoodle Sun, 09/03/2017 - 00:05 Permalink

Modi is a (((Deep State))) puppet and clearly a psychopath - he ignores, or actually enjoys, the pain he has inflicted on millions of Indians as he sees their lifes effort disappear in a bonfire of US$16 bills... what a creep, and what a jackass.

...not to mention his willingness to start a war with China to help out the US/Israeli Deep State Department.

napper flapdoodle Sun, 09/03/2017 - 20:57 Permalink

The recent border drama might have been a calculated move by Modi to divert Indians' ire at his failed economic policies. China helped Modi with some strong words and military exercises. India's strategic interests lie in being a constructive member of the SCO and BRICS. There will be well-funded attempts by the US (or the London interests) to draw India away, and even use it as sort of cannon fodder in a war against China on behalf of the West.  

In reply to by flapdoodle