Sir,
The first 50 days of demonetisation seem to have impacted the poor, the daily wage earners and the common man more than the rich and big time black money hoarders. The massive gold import in November and its quick consumption in centres such as Delhi, Ahmedabad, Hyderabad, Chennai and Bangalore – known as big dens of black money hoarders – clearly suggest the innovative route taken by the rich to substantially convert their unaccounted cash into gold rather in questionable bank deposits.
The Enforcement Directorate under the finance ministry itself revealed that 60,000 kgs of gold was imported in November and ED sleuths suspected that a lot of black money may have been illegally converted into gold through bullion traders. While the bullion trade boomed in November and December, other domestic businesses and exports contracted after demonetisation.
There is no doubt that the government, the Reserve Bank and the local banking system have been seriously trying to ease the cash situation, especially in rural areas and smaller towns, despite their constant struggle to push digital commerce, but the economy is unlikely to recover from the currency crunch shock too soon.
Yours etc…
Nantoo Banerjee
New Delhi
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