Instead of asudden discontinuation government could have increased Rs. 100 note withdrawal from ATMs & bank counters and continued accepting 500 & 1000 notes as deposits. In three months, it would have increased circulation of Rs. 100 and middle class, small vendors, mid-size businesses, housewives, students, and rural India would have feeling less miserable compared to current situation.
Influx of fake currency notes is 0.02% in Indian economy and notes are regularly exchanged once reach bank counters, this reason for such a tedious process too becomes insignificant. How will abolition of 1000 note and induction of 2000 note decrease corruption? There is no convincing reply. How will this whole exercise help fighting terrorism? Is there any factual statistic showing % age of black money used in terror activities?
I see mainly two reasons behind this decision. First, it is to increase bank deposits. Unlimited deposits and limited withdrawal increase revenues and provide ample liquidity to fuel funding as most sectors are showing negative growth. Second, induction of 2000 note will increase spending, as recent trends have reduced spending fearing uncertain economic future and high denomination coins too are to be introduced in this regard only. Both situations are against middle class and biggest beneficiaries will be large business houses. People will end up spending what they are left with.
Majority of farmers and rural India do not having access to banks and keeping their money home are most vulnerable of cheating, exploitation or burglary as small places have more eyes on people’s movements in comparison to metros or other cities.
Govt. must disclose that all the necessary procedures are followed before taking these resolutions and reveal the expenditure on the exchequer for printing new currency.
Shri Modi ‘s claim to take this historical decision to eradicate corruption, terror and counterfeit currency is again a jumla and hiding behind housewives & small vendors savings to bail out his corporate friends by providing them more loans.
The government could have waited till April, as the three months next to financial year closing are lean period in economy. By all means, it should have been avoided as it is Rabi crop time and, farmers are struggling for seeds, fertilizers and to meet petty cash expenses. Instead of spending time in their fields they are standing outside bank branches and wrestling for money and it is going to affect harvesting in April/May next year and country may face acute shortage of whole grains.
PM Modi & his advisors are turning India into a European country (and they are welcome) without knowing that majority of our statistics is based on law of averages and our census is recorded by the digital clock fixed over AIIMS ticking every second on the basis of mortality ratio subtracting by birth ratio. We can have our Cyprus in Munirka or Luxembourg in Khanpur, I mean population. Now, to get correct figures, we can’t kill the whole nation and divinely seek another pair of Adam & Eve and start counting our population.
India, second largest populated, has peculiar challenges and foremost are education & poverty – India grows if rural India grows, and that was the primary reason behind the implementation of pro-poor policies during 2004-2014 and various economic studies have evidently accepted that the most downtrodden classes seen significant increase in their economic status due to those policies whereas demonetization proves a severe disconnect of the current government with the less-privileged section of India. They certainly don’t understand India and its problems. Its ministers are making mockery of people’s misery by stating that people may die in the line of ration or claim to make digital India knowing limitations of various basic needs in rural lives. It is really a bad joke with people of India.
Instead of killing the hidden money and reprinting, wisdom would have been to employ that money to market and expand tax ambit and it was done successfully in the past, even if the tax returns are filed with nil income, number of assesses have been increased over a period and more people joined the mainstream system abandoning old practices of tax evasions. And it’s worth mentioning that, direct taxes and indirect taxes including service tax already have widened tax net and booking people at various channels.
Change of notes will not curb corruption as new notes have no sensor to detect whether these notes are spent to buy milk or to bribe a public officer, politician etc. It will continue as the sources remain open and these sources are to be shut by implementation of concerned laws, by appointing watchdogs, making system transparent, and fixing accountability.
Present exercise is to mislead people by invoking nationalism and to grab their hard-earned savings for a longer period to clean banks balance sheets as on 31st March 2017 after writing off huge NPAs of wilful defaulters on government’s whims & fancies ( Adani’s 200 crore penalty is waived off too yesterday).
And I am ready to support such decision if there is an economic turmoil in the country through natural reasons but it is an artificial emergency created to help few riches by dodging majority of countrymen and the situation is created by this inexperienced-financial-novice government, who could not surpass the oil-price-downfall-benefit to people of the nation, whose financial decisions have weakened rupee and, even then we have seen exports downfall in last 20 months whereas Bangladesh, Pakistan & China have seen significant rise in the same period and it is not to forget that exports get boost when US dollar is strong and rupee is weak.
Now, I really have apprehensions with the current government and its decision making body which includes Shri Jaitley & Shri Parrikar led by Shri Modi. Indeed, country is in serious trouble.
Remember, who wears the crown, bears the crown.