8th of November was the nights that will have a great impact on the world, I am writing on the world because two very unexpected and unbelievable things happened on that day. Where on one side in the evening hours it was Donald Trump, who won the presidential elections of the United States at the other incident came the demonetization by the PM Narendra Modi. These two incidents impacted the people in a very polarized way occurred as for some it was a nightmare for few and a dream for others. Starting with it all we should first of all discuss what is demonetization. Demonetization in Hindi is “NOTEBANDI” and in terms of definition it is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.
From the Midnight of 8th November the notes of Rs. 500 and Rs. 1000 termed to be illegal.
And I felt the decisions impact on the first morning when I was returning from somewhere to my home, the scene of Rajasthan Toll Plaza, there was a long queue of vehicles ranging to at least 8-9 kms. Usually it takes 5 minutes to cross that toll plaza and to pay the required amount but that day it took me approx 1 hour and 22 minutes to do all the formalities, as this announcement resulted to a lot of unnecessary chaos and panic.
The following day another notice came from the Government that the notes which are termed to be illegal can be used on petrol pumps and several other necessities along with this for few days routes all over India became toll free. I accepted it as a little relief from the government,
The announcement followed that individuals are free to deposit amounts in the banks up to December 30th. There after came the announcement of setting withdrawal limits up to 2000 Rs. Per day from ATMs, and Rs. 24,000 per week from Banks.
Now where it raises my brows is that all these are from Central Govt. Directions, where is RBI all this while? And why the chairman was silent over all this.
To give a reflection on this It is pertinent to note that few months back RBI Governor Mr. Raghuram Rajan was replaced by Mr. Urjit Patel and this appointment to most of the Nation was unjustified. Adding to it very few knew that Mr. Patel was the President of finance department in Reliance Industries Limited (RIL)and he is the major man behind every economic plan of Reliance. Due to the fact of Knowing personally to Mr. Patel, that he is expert in keeping and maintaining relations Mukesh Ambani being owner of Reliance personally endorsed his qualification in Media while asked by a Journalist when it was trending in news about whom to make new RBI Governor.
This clearly shows that now Mukesh Ambani will have reachable hands to the affairs of RBI. The son is now on his father’s path. It was many times in controversy that, in times of Late Shri Dhirubhai Amabani, he had the access to monetary policy and Union budget before it was made public or introduced.
This is how business works and corporate be the part of system of the country, and makes Government and corporate world moves parallel to each other.
After that a sudden reminder tingled me of the 2014 election times when Mr. Modi gave the promise to bring back the black money. Nation was about to change according to few. To my view this demonetization is not anything else than just a reformative step taken into consideration the upcoming UP elections.
When we come to measuring and analyzing the consequences of steps being taken we can see that there are long queues in the banks, tolls, hospitals, shops, railways everywhere. In the end, the common man is who suffering. Around 90 people crumbed to death in this incident. Now the major question to be asked is Who should be made responsible for this? Mr. Modi or BJP? Or RSS? (these three are from the same benchmarks). The mastermind economist who suggested this demonetization scheme in an interview said that the scheme itself could have been properly implemented and only even if half of his suggestions were taken into account. Secondly, Former RBI Governor Mr. Raghuram Rajan stated that he was also approached with this structural formulation but he denied as it will shake the economy of the nation.
Lets come down to issue of digitalization that we are focusing on, it is not possible that way in my view the entire nation would have to prepare a structural formula for this. In a nation where 60% of the people are uneducated plus are from Rural Background and also they are daily wage workers how can you expect this particular section to get digitalized in a month or two.
The government’s goal was to eradicate counterfeit currency, fight tax evasion, eliminate black money gotten from money laundering and terrorist financing activities, and promote a cashless economy. By making the larger denomination notes worthless, individuals and entities with huge sums of black money gotten from parallel cash systems were forced to convert the money at a bank which is by law required to acquire tax information from the entity. If the entity could not provide proof of making any tax payments on the cash, a tax penalty of 200% of the tax owed tax was planned to be imposed.
In my view the plan has failed to curb the corruption as daily crores of rupees in new notes are found; now the question is where are they coming from? and how is it being done? Where on one side the government says no one had the knowledge of this announcement on the other side the amount is increasing day by day, today only a Nigerian person was detained at airport with Rs. 53 lac in new notes of Rs. 2,000. Adding on to this the team member of digital India movement was also arrested in making of counterfeiting of these notes. So these Kinds of incidents make the demonetization questionable in itself because the corruption has not stopped but it has increased for example for a second just think if one wants to get a bribe of 1 lac rupees, he just need to take 50 notes as compared to earlier notes, which he can hide very well because the volume is low.
Amongst all this, the interesting part is that everyday RBI is changing the notifications almost every day; I doubt what is really going to happen to this Nation’s economy this way? As contradicting the previous notification now the Limit of depositing old notes was scraped before 30th December which in a way is a joke made to the individuals of this nation where firstly you implement some schemes and then you keep on changing them as per your whims and fancies, here I would just like to say that you are running a people elected government in a democratic and secular Nation and not a vegetable market.
Adding to all this Many economists including Dr. Manmohan Singh said that the scheme is not proper, the proper structural reforms and implementation were neglected.
There is a need to understand that the country is supported and promoted by a democratic and secular thinking, not by governments peculiar and one minded thinking ability.
Lastly coming on to the Withdrawal limit, if we look at the provisions any government cannot impose limits on the individuals to withdraw money from their own accounts the Section 26(2) of the Reserve Bank of India Act, 1934. This provision gives the Union government the limited power to demonetize certain currencies through a notification. This provision does not, however, give the government the power to freeze bank accounts through limits on cash withdrawals, disrupt normal banking operations and impose mandatory disclosure requirements (such as identity cards) while depositing cash into bank accounts or exchanging the now worthless legal tender.
The irony of this democratic country is that we elect the government and then they do whatever they want to. Firstly it was like Black money is in Swiss banks, then it is like it is in India only and now we holds the black money, what a instance it is to call incredible India.
I believe with the passing of time, the situation gets under control and the nation should lead and move further on the path of progress and development.