When
the world was busy with the American presidential election results on 8th Nov
2016, Indian media suddenly interrupted their programmes to show PM Modi; who
using his executive authority declared a ban on the Rs500 and Rs1000 bank notes
from that midnight. As if it was a nostalgic stimulus from its first PM Nehru's
'When the world sleeps India wakes up at the midnight hour', it almost kept
Indians awake with uncertainty. With the black money holders not having a
chance to cash in that night, society facing endless serpentine lines the next
day, money not reaching the villages after that, cash not being available for
marriage, buying of seeds and giving away daily wages even after that and
making a feast out of all that opposition ganging up against the government
India was shaken to the core. It seemed, the only ones, who made money were the
economists and the media, who organised endless debates.
Yes
this demonetisation brought about a lot of problems to the people of India and
other countries, where Indian currency is grudgingly accepted i.e. Nepal.
THE
PROBLEMS:
1.
The suffering of its people:
People
in different countries suffer when their nations go to war, face natural
disasters or chose a revolution. Indians had none of them. Furthermore, even if
demonetisation alone is seen as a cause of the suffering, people did not suffer
in previous ones. So what happened this time?
Though
designed to make the black marketer suffer and pay, this demonetisation seems
to have made the ordinary people suffer instead; that too for a prolonged
period of time. In fact, almost as a fodder for a socialist revolution, this
suffering has been mostly borne by the poorer sections of the society. Having
left the barter system long ago and not quite caught up with the banking ways,
and therefore, exchange being done entirely on cash the farmers, the labourers
and the traders faced the heaviest brunt. While the rich used their poor
workers to get their cash in the long serpentine lines, the poor even had to
forfeit their daily wages to get theirs in them.
Let
alone the hard earned cash problem, making housewives 'expose' their hidden
cash, it defiled family secrecy too. Even if we forget the government's lack of
thought about the cash needed for marriage, buying grain in time and giving
wages; and even have some sympathy for the repeated ministerial damage control meetings, one
cannot forget the deaths of people while cueing. Tharoon called it a disaster.
One, however, wonders how the then USSR managed long queues. Tharoor called it
a disaster.
2.
Corruption alleviation:
With
cash constituting just 10% of the black money according to the economists (rest
being in
gold,
houses and in foreign bank accounts) demonetisation obviously could not do much
to dent the black money problem. In addition, with necessity being the mother
of invention to the bad guys too, and them being more cautious in addition, it
did not quite dent their corrupt ways either. Now, to the horror of all, the
new advanced notes even merged with the old ones in the hands of the corrupt.
3.
Terrorism:
While
attack on its army base took away the shine of 'helped in ending terrorism',
the 'it was already decreasing' took away the glow of 'it stopped stone
throwing' in Kashmir.
4.
Legal issue:
Even
if we were to disregard the anger of 'Why on earth did they have to make
different sized notes', with paper notes specifically screaming 'Bank will give
this amount to you', some even termed the 'denial' illegal.
4.
National prestige:
The
Western Press hasn't been kind either. They have ganged up against mod's
demonetisation exactly the way they ganged up against him during the
pre-election period. If those were to be taken as International opinion
on India, then the demonetisation certainly dented India's international image.
The
benefits:
This
demonetisation wasn't a first timer; it wasn't Modi's idea originally; it
wasn't done for his financial gain and it wasn't done by him alone. It was done
by a team sworn in secrecy for 6 months, who were asked to live in his house.
However, with the economists just looking at the loss of GDP, sociologist and
the media criticising the people's suffering, politicians forgetting their
genetic differences and ganging up against Modi, and the general masses just
wondering how to get cash for they occasions yes this demonetisation has been decried
by many through their own angles. However, if a deeper holistic look is given
to the issue, a significant benefit to India can be discerned.
1.
Even though a doctor was caught photocopying cash and cheating people, and the
larger note size only delayed cash distribution, the new notes are said to be
technically advanced.
2. The Data Gained:
In
today's world, the Internet is full of companies that are eager to take our
data through the filled forms. The data so gained is so important that
companies become big by selling that very data from us. Data is extremely
important. It is said that The Catholic Church could rule over Europe for so
long because of the secret data received through confessions.
Not
having the proper data, till now, the government and its own bank could only
guess the amount of cash in the circulation. Now, the bank knows the exact
amount. Not only that, the central bank has the data of the distributing bank,
the numbers, the handlers and what not. In fact, it has the entire history of
the cash circulation. Almost like in the stock market, now the bank's computers
can not only help digitally detect unusual transactions, they can detect the
source of the illegal cash too.
Thus,
the government will not only look like having a good grip on its cash, and
subsequently its economy, it will be practically scientific in its approach
too. The significance of this in planning projects and enhancing competency is
huge for a nation, whose production is severely hampered by its culture of
corruption.
3.
Necessity is the mother of invention:
Akin
to 'necessity is the mother of invention', the demonetisation has invoked new
methodologies in both the bad and the good camps. While the former has found
ways to misuse even the new notes, the later has had to modify its ways into
using electronic gadgets like mobile phones for cash. While ceasing the
opportunity the country's IT guys are coming up with new aps and therefore
digitalising the nation, and the tax officials and the banks are getting more
cash back, as a measure to ease pain the government has been forced to think of
offering unusual programmes that benefit the poor. As if the missionaries were
at work in this Hindu India, the neglected and cashless bank accounts of the
poor suddenly became important had cash and therefore became 'born again
accounts'. At the end, India as a whole seems to be gaining.At the end, India
as a whole seems to be gaining.
4.
The cleaning up:
A.
General corruption:
With
the cash exchange taking place outside recorded methods, this measure alone
cannot abolish the 'exchange corruption', but the pinpointing of its source can
help identify the culprit. While this has helped the apprehending of
influential public figures, demolishing 'it's a witch hunt', it has brought
even its own party cadres in the fray. The force of the guilt of not being able
to bring home the black money as promised in the beginning, did play its part
in these measures.
B.
Political corruption:
All
parties, including the BJP, are corrupt and have the unaccounted black money.
Almost like the AAP party changing Indian electoral politics,
this measure helps in the making of political money, in general, cleaner. With
the ticket distribution for election depending on the black money, this will
have enormous benefit in the bringing of honest and capable leaders to the
elected bodies.
5.
Terrorism reduction:
Even
if the cash forms less than 10% of the black money, it constitutes a much
higher percentage of the entities that kill Indians through both Maoist and
Islamic terrorism. Yes, being run not only by the untaxed money but printed
money too, Mumbai underground guys, the North East insurgents, the Naxals and
the Pakistani terrorists have been a menace to India. This demonetisation
certainly has had an impact on them. Although attack on army camps in Kashmir
suggests otherwise, and 'Stone throwing in Kashmir was already going down' say the
naysayers, the compulsion of robbing banks is clearly indicative of the cash
crunch felt therein. Being foreign in origin and the global players having an
interest in it, Kashmir terrorism cannot be stopped so easily.
6.
International image:
Even
if the implementation of the dictat didn't bring about good reporting
internationally, the timing of the announcement was not reported as bad. But
then, let alone the timing, the Chinese official paper The Global Times thought
that the boldness of the act was unthinkable even in their one party
nation!
7.
Benefits to the BJP:
With
it being successful implementation dependent, in addition to the believable
sweet sloganeering of 'beat the corrupt guys', the act was a huge risk for the
ruling BJP. Yes all parties use black money; and cash for seats isn't uncommon.
Therefore, all parties that are so used to relying on black money will be affected
and Indian politics will see better days. But then, almost in an Orwellian way
of some being more equal than others, some parties are more corrupt than
others. Fearing none, some even flaunt cash in the form of garlands. Being
lesser of the evils, this makes BJP, unlike some other cash starved parties,
reap the benefit of the demonetisation. Calculated announcement before the UP
election, thus, can't be regarded as imperfect. Also the associated, 'Only the
corrupt parties are opposing demonetisation' disunites the opposition
attempting to unite against the BJP. In addition, the timing of it being around
the American election results, did lessen the hostile international caucus.
Thus, BJP's gain cannot be discounted.
8.
Symbolic benefit:
Almost
as a no hoper, this act did nothing to bring cash from the foreign banks - as
promised and expected. In addition, even the new currency has entered the old
black market, locally. But then, surprisingly, almost as powerfully as saying
'from now on ..' in his invite to the SAARC leaders at his oath taking ceremony, this dictat has powerfully aired Mr Modi's second
salvo - 'from now on..' - in the fight against corruption.
This
gives hope for both. Although, people suffered, even died; almost reminding
'man is what he thinks', this is energizing the formed 'Modi Modi..' craze.
Suddenly scientific data, innovative gadgets, trust on the country's leader and
hope for the future are merging together to give a new confidence to the Indian
people.
Could
they have done better?:
In
the intension, timing, recognition of corrupt Indian ways, cash production and
distribution, yes the concept and timing were faultless. Even if secrecy is
given its due, the rest didn't make a good performance. In the 6 months
available, production of cash should have been enough and stored even for the
desired controlled distribution. 'Continue to print' was a bad idea. In
distribution, a corrupt sluggish ineffective system that made only 10% reach
the end point should have been known and central data coming out of that system
should not have been taken as gospel. Instead, since it was a major issue, end
points of distribution should have been checked at least to see if they worked.
Even if secrecy hampered ways in the
pre-announcement days, post-announcement days should have seen work done
in a war footing. This means printing cash by more companies, hiring vehicles
to transfer money to remote corners and hiring an army of temporary staff at
end points of distribution - bank and cash machines. Even involving the
paramilitary, as needed. Although seeing
the pain of the people, the government was sensitive enough to do meetings, it
instead went on beating round the bush in general.
The
global impact:
Finally,
flooding the market with cheap goods, China has made life easy and even
luxurious for the ordinary folks globally. Adding cheap labour 'spice' to that
Chinese 'dish', a cost effective, productive, well behaved and progressive
India can only be good to the world. The demonitisation by Mr Modi, thus cannot
be said to be bad, even globally.
In
this scenario, the sliding down of India to below top 5 most promising markets
as aired by The Financial Express is nothing but a noting down of temporary
stock market like emotional reaction.
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