Exactly a year after Indian Prime Minister Narendra Modi announced a surprise demonetization of Rs500 and Rs1000 banknotes, the tangible benefits are unclear. The costs are more clear cut, especially in human terms. More than 100 people died while standing in bank queues and more than 50 others committed suicide as the Modi government moved to crack down on the black-market economy and corruption.

The economy suffered slower growth. In 2016, Q3 registered year-on-year growth of 7.3%. Q4 2016 was half-way through when demonetization was announced and ended up with growth at 7%. Q1 of 2017 saw growth fall to 6% while it slid to 5.7% in Q2 —  the sixth successive quarter that growth trended lower. Corporate investments have stalled since the measure and bank credit growth dropped to a multi-year low of 5% as of March-end, 2017. It has barely recovered, running at about 8.4% as of October 13.

There have been credible accounts of job losses across many sectors. Employment has fallen in the textiles and hosiery business, in real estate and construction, and in agriculture-related businesses like jute and tea. Estimates by the Centre for Monitoring Indian Economy (CMIE) indicate that up to 1.5 million jobs may have been lost from January to April this year.

Falling prices led to dumping of farm produce

Agricultural prices saw such strong deflation that frustrated farmers dumped produce. The farm sector remains in distress. Central Statistics Office (CSO) data for April-June shows that annual growth in gross value added from agriculture was only 2.3% in real terms (adjusted for inflation or deflation). Nominal growth was only 0.3% in April-June — a clear indication that prices had fallen.

November to December is the key period for planting kharif (winter) crops but farmers were short of cash at a critical point before planting. Attempts to relieve agrarian distress have led to the huge farm loan waivers totalling Rs300 billion in Maharashtra and Rs369 billion in Uttar Pradesh.

It’s unclear if any of the many stated objectives of demonetization have been met. The RBI estimates that 99.3% of the Rs15.44 trillion worth of demonetized currency notes have returned to the banking system with only Rs160 billion (0.7%) outstanding. The outcome makes a mockery of official predictions that in excess of Rs4 trillion in banknotes would not return to the system.

Another objective was to boost digital transactions, which did increase during demonetization. In November 2016, data from National Payments Corporation of India (NPCI) shows the total value of electronic transactions was Rs94 trillion. By March 2017, transactions were up to Rs149 trillion. But by July, they dropped to Rs107 trillion and then down to Rs100 trillion in October 2017. Transaction volumes dropped from 957.5 million in December 2016 to 863.9 million by October 2017.

Marginal increase in direct taxes collected

More people have registered as taxpayers but not significantly more than the average amount each year. The new PAN card holders won’t necessarily pay tax. Ministry of finance data indicates that from April to September, net direct tax collections represented 39.4% of total budgetary estimates for direct taxes. For April-September 2016, 38.65% of the budgetary estimates of direct taxes for FY2016-17 was collected. Not a huge improvement.

However, many so-called shell companies have been struck off the books and many others are under investigations for suspicious transactions. Perhaps, this will result in higher punitive tax collections in future. But those collections would have to be astronomical to compensate for the lost growth.

Former prime minister and respected economist Manmohan Singh estimates that 2% of GDP growth will be lost through demonetization. The CSO estimate of a 7.1% GDP growth rate in 2016-17 was about 0.5% lower than the February 2016 budgetary estimates after mid-year revisions to the Wholesale Price Index and the Index of Industrial Production boosted the numbers.

International Monetary Fund projections of 2017-18 GDP growth have been lowered by 0.5% to 6.7%. The RBI estimates GDP growth is likely to come in at the lower end of its estimated band of 6.5-7.5%. The Asian Development Bank projects 2017-18 growth at about 7%, lower than earlier estimates of 7.4%.

Was all the misery and disruption worth it? BJP supporters will say yes, given a big victory in the Uttar Pradesh Assembly elections last March. That is seen as political validation. However, a popular mandate doesn’t necessarily make economic sense. That’s harder to find.