Comments on: Demonetisation: disruptive economics, self-destructive governance https://www.policyforum.net/demonetisation-disruptive-economics-self-destructive-governance/ The APPS Policy Forum a public policy website devoted to Asia and the Pacific. Tue, 03 Jan 2017 05:43:10 +0000 hourly 1 https://wordpress.org/?v=6.1.7 By: John Lansangan https://www.policyforum.net/demonetisation-disruptive-economics-self-destructive-governance/#comment-7939 Tue, 29 Nov 2016 07:52:49 +0000 http://www.policyforum.net/?p=14537#comment-7939 I’m not an economist, but this is my take on this issue. The poor will be the ones most affected by this move–those who have no access to banking facilities and those subsisting on earnings under the informal economy (which should NOT be confused with the black economy). Likewise, the overall GDP will suffer if this pushes through as the velocity of money slows down and economy shrinks as transactions being made throughout the Indian economy decline. Though it may result to deflation due to lower money supply, this will nonetheless be only short-term since unemployment rate also rises as firms have no incentive to produce more. With more people losing their jobs and losing their purchasing power, inflation rises in the long run as production for inelastic goods (e.g. basic food) slows down while demand remains the same. :)

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By: Anonymous https://www.policyforum.net/demonetisation-disruptive-economics-self-destructive-governance/#comment-7937 Tue, 29 Nov 2016 06:48:14 +0000 http://www.policyforum.net/?p=14537#comment-7937 The premise of the argument that this move by the Modi government was to curtail terrorist activities is very much so only partially to the point. In fact, while this may be the political narrative imparted to rally support by the citizenry, the ramifications are more so for middle or low hanging corruption and barely scrapes the surface when looking at broader national or transnational corruption. 

However, the main point here is that India finally has a government willing to do something – anything – against black money and corruption. For so long India’s highest office has been held by the greatest beneficiaries of the exact black money Modi is ridding India of. If nothing else, this move has imparted a severe surge into the people that corruption will not be tolerated, and the sentiment across the electorate remains that this is “short term pain for long term gain”.

If the people believe in the fundamental principle of ridding the country of corruption, then this small act of simply changing a couple of notes may have the potential to create a movement unseen in India. India’s youth are tired of their forefathers letting corruption be the norm; they are looking to change the nation and to use its greatest wealth – its people – to make India one of the most significant powers in the world. They can only do this, however, when the people have confidence in themselves and the world has confidence in working with India.

By way of a political stunt, it’s execution is second to none. In which country can you look to and say that something this paramount can seamlessly occur, without leaks or warning. Modi has made his stance, and it’s a significant one; whether it’s simply ceremonial or will result in the intended effect, only time will tell. In any case, India was yearning for a leader who would come down hard on corruption and they have definitely found that in Modi. 

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