Demonetisation helped create monopolies by devastating MSMEs, informal sector, says Rahul Gandhi

Lok Sabha Leader of the Opposition and Congress leader Rahul Gandhi
| Photo Credit: ANI

India uses more cash now than eight years ago but demonetisation has led to monopolies by devastating the micro, small and medium enterprises (MSMEs) and the informal sector, Leader of Opposition in the Lok Sabha Rahul Gandhi said on Friday, November 8, 2024.

Also Read: Demonetisation ‘destroyed’ economy, helped few crony capitalists, alleges Rahul

Mr. Gandhi remarks were made in a post on X on the eighth anniversary of demonetisation. On November 8, 2016, Prime Minister Narendra Modi had addressed the nation to declare that ₹500 and ₹1,000 notes would cease to be legal tender.

The government cited promotion of digital economy and reduction of cash transactions as prominent reasons behind the move that also sought to check corruption and black money.

Also Read: The debacle of demonetisation

“India continues to use more cash today than 8 years ago when demonetisation was implemented. DeMo paved the way for monopolies by devastating MSMEs and the informal sector,” Mr. Gandhi alleged in the post.

He added that “incompetent and ill-intended policies” that create an environment of fear for businesses will stifle India’s economic potential.

Also Read: Currency in circulation rises by 83% since demonetisation in 2016

“What is needed is a new deal that fosters fairness and freedom to unlock the energy of play-fair businesses across the country,” the Congress leader asserted.

Mr. Gandhi also shared a chart, using data from the Reserve Bank of India (RBI), that showed how “cash with the public” fell from 11% of GDP in 2013-14 to 8% in 2016-17 and how it had risen to 14% of GDP in 2020-21. According to the chart, cash with the public was 12% of GDP in 2022-23.

In a separate X post, Congress communication chief Jairam Ramesh said, “Today is the 8th anniversary of the senseless demonetisation – the first shock the non-biological PM gave to the economy, and the beginning of the economy’s loss of momentum”.

“MSMEs were destroyed and millions of livelihoods were adversely affected. It was a Tughlakian move of disastrous proportions. Black money was not impacted at all and today more cash circulates in the economy than ever before,” he added.