FIRST ANNIVERSARY OF DEMONETIZATION
On the 8th November 2016, the Prime Minister Mr.Narendra Modi addressed the Indian public through the medium of television and informed the public that from midnight of that date all the 500 and 1000 INR notes in circulation will be withdrawn and they ceased to be legal tender. The government had kept the window open for a period of 90 days and changed the rules from day to day on the quantum of notes that they could be exchanged for new notes or depositing into the accounts of account holders. Effectively a huge percentage of currency in circulation had been withdrawn leaving the people gasping for change as not much of lower denomination notes was in circulation in the past decade. The decision was taken in utmost secrecy with only a handful of officials in the ministry of finance knowing about that action. The cabinet colleagues were totally kept in dark about this move of the government. The cabinet meeting that took place prior to the address of the Prime Minister to the nation were kept in the cabinet committee room till the PM finished his address, if the reports were to be believed.
The post televised address of the PM to the nation, there was a mad rush to various channels in major cities to off load the huge cache of the 500 and 1000 INR currency notes on the business people. There were reports of gold jewellery sales going through the roof in certain cities on the night of 8th November 2016. A few outlets kept the doors open for doing brisk business till late into the night almost till the deadline time. There were also reports of a few people buying agri produce from wholesalers and mills (sago powder, pulses etc) in huge quantity for cash and locking it up in warehouses. In the next 50 days all business people who were doing business on cash and carry basis found that their fountain of wealth totally shrunk. The replacement notes of 2000 INR did not assuage the public as many were left holding the new note in their hand with none having enough change. It took some time before RBI was able to get the newly printed low denomination notes into circulation. However, the Banks were grinning broadly as there were huge deposits of money into the accounts with them as there was no limit to deposit into the account. This was a trap which many found to their discomfort when they used their various accounts for depositing the withdrawn notes. A few unscrupulous persons even used the Jan Dhan accounts of poor people to deposit the withdrawn notes. Though the government had planned the whole exercise the execution of the same left lot to be desired. The RBI was left holding the crying baby. They were ill prepared for meeting the huge demand for small denomination notes. The ATMs which are the main source of distribution of currency notes to the public, more than the bank branches, had to be re-calibrated to dispense the new notes which are different size to the old withdrawn notes. The technical problems coupled with some logistics issues of sending the new currency notes to the different parts of the country added to the misery of the common man. But the common man bore the entire issue of demonetization adroitly without much complaints looking forward to the streak of light at the end of a dark tunnel.
The media and the opposition parties made hay while the demonetization sun was burning for 50 days. The blamed even a natural death on the government's action of demonetization. The globally renowned economist former Prime Minster who was totally silent during the decade he was sitting on the chair of PM, who kept a studious silence on the various scams that was being bandied about, came out strongly against the actions of the government calling it a blunder and an organized loot. The former finance minister a Harvard Business graduate and a lawyer chose to deride the demonetization and later even told an interview that he would have chosen to resign if he was asked to preside over such a move when he was finance minister. The usual suspects became the voice of the nation against the move of the government. Whatever be the stated agenda of the government in going ahead with the move, the opposition parties and a large section of media controlled by powers that are inimical to the present dispensation went to town denouncing the move and claiming the move of the government had failed totally.
The Vice President of the GOP had gone one step further that the prime minister should apologise to the nation for this blunder of demonetization currency notes. If his yard stick is to be adopted for various political stunts performed by his ancestors who were prime ministers of the country at various times, the entire family members should be apologetic ever. From the failed centralised planning dispensation and socialism when the world was trying to get out of that failed concept, JN adopted it against sage advices of Rajaji and others. IG was always harping on her more famous stunt Garibi Hatao. So far not much had been done on this front except that the poor had become poorer. RG was arrogance personified and he had scant respect for state chief ministers. His statement that earth will shake when a great tree falls justifying the kiilings of the Sikhs by the congress workers in the aftermath of IG's assassination has no parallel in history. SG was lording over the decade from 2004-2014 like a puppeteer directing the Prime minister with absolutely no constitutional position or responsibility. The various scams that shook the country and brought about a economic doom during the period require no recapitulation. With such an illustrious parentage and ancestry, the vice president - to be annointed president - of the GOP should have been little more careful in choosing words.
In the earlier instance in 1978, when the then government headed by Morarji Desai demonetized the high value notes of 1000, 5000 and 10000 such notes were not widespread in circulation and the only agency allowed to exchange was RBI. Therefore, the number of high value currency notes that were not returned in 1978 in percentage terms was very high. As against this, in the present case all the banks in the country were permitted to accept the Demon notes either for exchange or for credit into the account. The notes were also widely spread among people in all corners of the country. Hence the percentage of notes returned was higher. The fact that 90% of the Demon notes were returned to the banking system does not mean that all the notes were white and there was no black money. The notes that were deposited in the accounts are being scrutinized for the legality of the notes prior to demonetization. As it is a very laborious labour intensive task it will take more time for the RBI to come out with exact number and amount of forged currency notes deposited into the accounts.
The ED and ITD are already on the job of getting the reports from the Financial Intelligence Unit of MOF and working for identifying the people who might have deposited the ill gotten wealth into the bank accounts. The fact that about 3000 companies had been identified of having deposited the demonetized notes into the account which was not in consonance with their activity or sales or revenue speaks volumes about the amount of black money channeled through the banking system due to this move of the government. Another smart move of the government was to de-register more than 200000 companies for being just shell companies and proceeding against the directors of such companies. This move has already sent shock waves among corporate and businesses which were all along merrily carrying on their illegal activities.
The political parties that were hit hard by the move of the government as they had collected huge horde of cash in the old high denomination notes - they could not convert them into the new notes nor they could deposit them into the accounts - are the ones who are shouting the shrillest against the move and making all sorts of allegations and denouncing that the move of demonetization is a failure etc. The anniversary of the announcement of demonetization i.e. 8th November is being celebrated by almost all the political parties as a Black Day. The question that begs answer from all these political parties is that whether they are sympathetic towards the hoarding of black money, funding of terrorism be it internal or external, forged currency notes circulated into the country with an intent of destabilisng the raising economy of India.
One of the leading news papers in the country much respected for its neutral stand even during the harsh emergency days of IG in 1975-77, was seen to have spent close to two full pages of its paper to denounce the move of the government. The Maoists and the girl and women traffickers were the worst hit thanks to the demonetization move. The Naxals had been caught not able to spend the money they had collected forcefully from the hapless villagers. The foreign terrorists who were getting money for inflicting a thousand wound cuts on the country faced the other music with the notes supplied by the neighbour found to be no more useful than a toilet paper. The traffickers were not able to get the money to abduct the girls and selling them to the brothels. The forged Indian currency notes (FICN) that was being pumped into the country by the neighbour became useless piece of paper. How much impact these illegal activities were affected has been seen/ read in the last year since the move was announced by the government. The actions initiated by the government against the many politically influential people have made them jittery. The people in the valley had hailed the move of the government where the people pelting stones at the security personnel were being paid money in old 500 and 1000 notes. The people who are now shedding crocodile tears for the hardship faced by the common man and the small business have never done anything for the development of these sectors during the last almost 60+ years while they were in power.
The only jarring note in the beautiful symphony of the moves of the government is introduction of the higher denomination note when the two high denomination notes were being taken out of circulation. The government should have kept the 100 currency note as the highest denomination note. Introduction of a new higher denomination currency note and reintroducing a denomination in a new format do not augur well for the stated purposes of demonetization. The printing of lower denomination notes could have been stepped up and the period of the time sought by the PM in his national address was sufficient to fill the gap.
The Vice President of the GOP had gone one step further that the prime minister should apologise to the nation for this blunder of demonetization currency notes. If his yard stick is to be adopted for various political stunts performed by his ancestors who were prime ministers of the country at various times, the entire family members should be apologetic ever. From the failed centralised planning dispensation and socialism when the world was trying to get out of that failed concept, JN adopted it against sage advices of Rajaji and others. IG was always harping on her more famous stunt Garibi Hatao. So far not much had been done on this front except that the poor had become poorer. RG was arrogance personified and he had scant respect for state chief ministers. His statement that earth will shake when a great tree falls justifying the kiilings of the Sikhs by the congress workers in the aftermath of IG's assassination has no parallel in history. SG was lording over the decade from 2004-2014 like a puppeteer directing the Prime minister with absolutely no constitutional position or responsibility. The various scams that shook the country and brought about a economic doom during the period require no recapitulation. With such an illustrious parentage and ancestry, the vice president - to be annointed president - of the GOP should have been little more careful in choosing words.
In the earlier instance in 1978, when the then government headed by Morarji Desai demonetized the high value notes of 1000, 5000 and 10000 such notes were not widespread in circulation and the only agency allowed to exchange was RBI. Therefore, the number of high value currency notes that were not returned in 1978 in percentage terms was very high. As against this, in the present case all the banks in the country were permitted to accept the Demon notes either for exchange or for credit into the account. The notes were also widely spread among people in all corners of the country. Hence the percentage of notes returned was higher. The fact that 90% of the Demon notes were returned to the banking system does not mean that all the notes were white and there was no black money. The notes that were deposited in the accounts are being scrutinized for the legality of the notes prior to demonetization. As it is a very laborious labour intensive task it will take more time for the RBI to come out with exact number and amount of forged currency notes deposited into the accounts.
The ED and ITD are already on the job of getting the reports from the Financial Intelligence Unit of MOF and working for identifying the people who might have deposited the ill gotten wealth into the bank accounts. The fact that about 3000 companies had been identified of having deposited the demonetized notes into the account which was not in consonance with their activity or sales or revenue speaks volumes about the amount of black money channeled through the banking system due to this move of the government. Another smart move of the government was to de-register more than 200000 companies for being just shell companies and proceeding against the directors of such companies. This move has already sent shock waves among corporate and businesses which were all along merrily carrying on their illegal activities.
The political parties that were hit hard by the move of the government as they had collected huge horde of cash in the old high denomination notes - they could not convert them into the new notes nor they could deposit them into the accounts - are the ones who are shouting the shrillest against the move and making all sorts of allegations and denouncing that the move of demonetization is a failure etc. The anniversary of the announcement of demonetization i.e. 8th November is being celebrated by almost all the political parties as a Black Day. The question that begs answer from all these political parties is that whether they are sympathetic towards the hoarding of black money, funding of terrorism be it internal or external, forged currency notes circulated into the country with an intent of destabilisng the raising economy of India.
One of the leading news papers in the country much respected for its neutral stand even during the harsh emergency days of IG in 1975-77, was seen to have spent close to two full pages of its paper to denounce the move of the government. The Maoists and the girl and women traffickers were the worst hit thanks to the demonetization move. The Naxals had been caught not able to spend the money they had collected forcefully from the hapless villagers. The foreign terrorists who were getting money for inflicting a thousand wound cuts on the country faced the other music with the notes supplied by the neighbour found to be no more useful than a toilet paper. The traffickers were not able to get the money to abduct the girls and selling them to the brothels. The forged Indian currency notes (FICN) that was being pumped into the country by the neighbour became useless piece of paper. How much impact these illegal activities were affected has been seen/ read in the last year since the move was announced by the government. The actions initiated by the government against the many politically influential people have made them jittery. The people in the valley had hailed the move of the government where the people pelting stones at the security personnel were being paid money in old 500 and 1000 notes. The people who are now shedding crocodile tears for the hardship faced by the common man and the small business have never done anything for the development of these sectors during the last almost 60+ years while they were in power.
The only jarring note in the beautiful symphony of the moves of the government is introduction of the higher denomination note when the two high denomination notes were being taken out of circulation. The government should have kept the 100 currency note as the highest denomination note. Introduction of a new higher denomination currency note and reintroducing a denomination in a new format do not augur well for the stated purposes of demonetization. The printing of lower denomination notes could have been stepped up and the period of the time sought by the PM in his national address was sufficient to fill the gap.
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