I am neither an economist nor a financial whiz kid, but a layperson in the confusing world of finances, economics and commerce. At around 8:15 pm On November 8th, 2016, I was introduced to a new term ‘demonetization’, adding to the health of my vocabulary.
Prime Minister Narendra Modi through an unscheduled live televised address to the nation at 8:15 pm on Nov 8th 2016 declared circulation of all Rs.500 and Rs.1000 banknotes of the current Mahatma Gandhi series as invalid and announced the issuance of new Rs. 500 and Rs. 2000 banknotes of the Mahatma Gandhi series in exchange for the old banknotes. This is ‘demonetization’.
This was done (1) to stop counterfeiting alleged to be used for funding terrorism within the country. Pakistan’s ISI has been raking in an annual profit of around 500 crore by circulating counterfeit notes in India. This profit was used for our ‘friendly’ neighbor’s favorite pastime ‘foment trouble inside India’. The total number of fake notes that came into India in 2010 from abroad was pegged at Rs.1,600 crore. The phenomenon of fake notes is not new to India. According to the annual report of India’s Central Bank, 435,607 counterfeit notes were identified in fiscal 2010-11-up 9.4% from fiscal2008-09. The number of counterfeit notes detected by the RBI in 2008-09 was 401,476. Four in every 1,000 currency notes in India are fake, amounting to 3,200 crore in 2010, citing a confidential government report. Pakistan government officials are directly involved in distributing counterfeit notes through agencies like the ISI, the D-Company, and lately the IS through corridors offered by nations like Nepal, Bangladesh and Dubai. And (2) to crackdown on black money in the country, the amount of which is uncertain. Some reports claim a total of US$ 1.06 trillion is being held illegally in Switzerland. A parallel economy by itself, Indian black money constitutes 50% of our GDP which was US$ 2.1 trillion in 2015. This is to speak only of the black money outside the country. That within the country is unknown. Taking on the humongous black money was one of the most prominent promises of Modi on which he rode to power. He chose to honor it on November 8th, 2016, taking everybody by surprise. All hell broke loose though measures to cushion hardships the common man was sure to face due this the bombshell were also put in place.
Demonetization is no stranger to the country.
Similar measures were adopted to in the past in January of 1946. Currency notes of 1000 and 10,000 rupees were withdrawn and new notes of 1000, 5,000 and 10,000 were introduced in 1954. The Janata Party coalition government again demonetized notes of 1000, 5,000 and 10,000 on January 16, 1978 to curb counterfeiting and black money. The need for a procedure to be resorted to repeatedly tells of its failure to achieve its purported end. The tasks on the Prime minister’s hand are therefore, by no means menial. They had to be realized. The success of an exercise like demonetization is dependant largely on the secrecy with which it is planned and executed. The Prime minister’s decision to demonetize therefore came as a bombshell to many. People complained they should have been warned, which does not hold water. Measures were in fact put in place to limit the inconvenience caused to the ‘Aam aadmi’. But in a vast country with a population of 1,332,548,868, these measures fell far too short. Confusion reigned. ATMS dried up in no time. Banks were clueless. People formed long queues outside banks to exchange their old notes for the new, which had not yet reached the banks, and also to deposit undisclosed money. People died standing in queue for long hours. This, even in Kerala where citizens brave sun, rain and wind and Tsunami, risking death to queue outside beverage outlets to purchase their daily quota of the ‘spirit’! People having run out of money burgled shops in Madhya Pradesh. A 40-year old daily wage worker lost her entire life savings of Rs.15,000 while standing in the queue outside a bank to deposit old notes in Chikkaballapur in Karnataka. heartbroken, she committed suicide. Huge drop in the sales of lotteries in Kerala forced the state government to cancel eight daily lotteries and postpone the draw of ten others, causing an estimated loss of Rs.202 crores. The government seemed to have bit off more than it could possibly chew. Shops threatened to down their shutters as trade plummeted for want of change. Chaos reigned. People turned restive. The social media worked overtime to churn out trolls. The Prime Minister, made a teary appeal for cooperation from the citizens for a worthy cause. The citizens individually were willing to suffer it out for the noble end that the country truly deserved. With the elections in the crucial state of Uttar Pradesh fast approaching, the timing chosen to demonetize seemed suspicious. The move, many suspected was to render campaigning by BJP’s challengers in the polls ineffectual for want of money, thus ensuring a win for the BJP. If that is true, it is unfortunate and sinful. The tears of the Prime Minister suddenly resembled crocodile tears against that accusation. Was the entire nation being taken for a rough ride? Only time can clarify this. And History will not forgive the PM. But, what is the point of demonetizing repeatedly in this country? Pakistan’s counterfeit industry would, in no time master in counterfeiting the new currency, and the dirty games would continue. These counterfeit notes reach the hands of various socio-religious organizations and individuals, which are left untouched in the name of ‘protection of minorities’ and ‘secularism’. These organizations, through trained and indoctrinated religious bigots infiltrate into society like cancer at the local level in villages, towns and cities across India to actualize the nefarious designs of the enemy. This has to be tackled by an alert and determined law enforcing agencies uncompromisingly, backed by a government looking beyond vote-bank politics. Only then would demonetization succeed. Terrorism must be nipped by cracking down on local supporters mercilessly. It is through their hands that counterfeit notes become operational. Activities viz: buying large chunks of land, especially benami property in which mega-structures are constructed, purchasing high-end automobiles, and ornaments in large quantities overnight, purchasing undergraduate and postgraduate seats in courses for issues in professional colleges and universities which sprout across the nation like mushroom after summer rain, indulging in nauseating splurging and display of wealth in the so-called ‘weddings’ must all be viewed with suspicion. Only ill-gotten wealth can finance such activities. These activities, so rampant in certain areas, which everybody knows about, but refuses to act upon for obvious reasons have to be viewed suspiciously. People tending to spend big out of the blue must be placed under the scanner. Even places of ‘worship’ should not be spared. Black money parked in foreign havens must be brought into the country through diplomatic channels taking advantage of bilateral relation between India and those countries. Countries in which fugitives like Lalit Modi and Vijay Mallya and other fraudsters have fled to seeking safe haven must be arm- twisted for their extradition and presented before the law of the land for the sake of the poor in this nation they so conveniently looted. Only then would demonetizing realize its intended end. Politicians hoarding black money through scams, which has become a habit in India must be pulled up and made accountable. Unless these basic things are looked into, there is absolutely no point in changing the designs and color of currency notes every now and then, putting the already harassed citizens through untold misery, even unto death!