“The tri-color fluttering all over the country is black , red and scarlet –black money, red tape and scarlet corruption”
On 8th November, we got a communique from our prime minister proving that his war against kala dhan wasn’t just words. His announcement that high value currency would be no good after 12 p.m. set a flutter through the country and was seen as a leonine move. While the common man hailed such an iconoclastic and audacious attempt to curb the surfeit black money in the market, hoarders jumped into damage control mode. The sahukaars, babus, the property dealers, lobbyists were hit hard but politicians and corrupt officers are the worst hit.
There are two shades to the Indian economy, the white and black. The former is intertwined with economies of various nations and thus is affected by reverberations when economies of other countries are down with depression. The latter on the other hand keeps moving and mellows down the effect on the former by GREASING it. But the downside to this parallel economy is much steeper than we think it is. In order to scrutinize the effectiveness of these measures let us find out this inception of this trend of “Black money”. In India, the mentality of small businessmen is that the money which he has earned is “hard earned Money” and the government has never done anything good,hence paying tax on income is worthless exercise. The same businessman would be willing to pay a cut or commission inspector –license raj as stated by C.Rajagopalachari back in 1950’s. This is how black money circulates at micro level. As this small business man becomes an industrialist his tentacles in the black economy reach new places and thus his nexus grows stronger. With effect from 9th November, each small business house would deposit its income and go unaffected since it is a minuscule portion compared to the large stash of the industrialist. But now, when the turn comes to bribe an official, he would not have any money hoarded in his locker to pay that inspector and even the inspector would think twice, what if the white money is traced back to him? It is true that these measures will not bring down the whole black building. However, it will affect the very foundation of it, as those who have it in large sums will deter from doing it again. There are trades which solely function in black, not just the illegitimate ones but also the kosher ones, such as property, education, retail.
The question of circulating a Rs.2000 note helping curb black money is a ridiculous one. Point being if a person deposits 10k as Rs.1000 notes one day and withdraws the same from the atm in new currency, he can deposit a similar account in Rs.1000 notes again and keeps repeating it over and again ,when questioned he can call it a same transaction as the same sum was being deposited and withdrawn. However, with introduction of Rs.2000 note, he will gets a different denomination. He cannot deposit Rs.1000 note and call it the same transaction a) it becomes known he is depositing old currency as the denomination while depositing is written as Rs.1000. b) this is the reason why Rs.500 notes have been introduced at a belated stage.
Demonetization is being criticized for being too inconvenient for the common man, as the ultimate target is someone sitting in his bungalow sipping coffee while his servants exchange money for him. Well he might be sipping coffee but that is only to rid himself off the headache and hypertension he has caught since 9/11. Yes, there are long ques at ATM’s and banks, lack of liquidity has affected prices of various necessary commodities. Rumors have become rampant and the needy man is being harassed. Nani Palkhivala said about a common man in India “We Endure Injustice and unfairness with feudalistic servility and fatalistic resignation”. This has been true since the time we were ruled by the British, not much changed after independence. Why not suffer and endure a little more to see a change,after all that we have suffered for so long.
But the criticism doesn’t just end there, people have been verbose about the leaks and loopholes of the policy. On the contrary it is vital to point out that the intent behind the audacious move isn’t just targeting black money, it has helped in countering fake currency and curb funding of terrorist activities. There is veracity in the claim that there are many leaks, however the balance of convenience still falls in favor of demonetization. There is an undercurrent running that big households have escaped its affects cannot hold good. After all how many jugaads can one find to make crores of rupees white without getting noticed while the red line remains 2.5 lakhs. The other claim is that cash is being injected into the Jan Dhan Scheme accounts. But if one tests the argument it falls through if one tests it as an individual, how many of you would be willing to give cash to a total stranger who will be depositing your money in his own name and can withdraw it at his volition.
It must be realized that the sheer audacity of this move is breathtaking, it cannot be dismissed as propaganda to win upcoming elections as that would mean to miss its significance. When was a policy measure that required total mobilization of society at such a humongous and gigantic scale? Literally, each citizen has been affected by it and is bound to participate. The ability to transform a simple measure into a national project is incredible.
Submitted by: Sushant Kareer