Demonetization – Essence and Hopes

J Nandakumar

On the eve of Nov 8, India heard a firm voice from the Prime Minister of India, Mr. Narendra Modi, a powerful revolutionary financial decision Indian have ever witnessed post Independence. 500 Rs and 1000 Rs notes will not be legal tender from now onwards. A well kept secret which was in planning for the last 9 months was finally announced to the Public by PM Modi himself. Its not easy to deal with such a massive move to terminate currencies which is accounted to be 85% of the currency in circulation which is used by 125 crore population which is world’s second largest in number. But only a closed group was dealing with this historic planning and the planning, execution and organizing everything went as per plan. This is the perfection of execution to handle such a big decision. It is said that even thefotorcreated8-e1478773228941 Ministers so close to Modi didn’t a hint of this decision. The essence of this decision is secrecy and suspense. It was maintained till the last minute. We have amble instances from the history to differentiate failed and successful missions based on how they carried out the mission. Former  Congress PM Narasimha Rao planned to carry out a Nuclear Test during his time in early 90s. But couldn’t succeed because the plan got leaked out by his own party men. Later Atal Bihari Vajpayee did a series of nuclear tests successfully with a six sigma execution mode. So like his predecessor and guru Modi learnt from the past experiences and implemented a successful strategy according to that.

In the Nov 8 speech itself  Modi reminded that, people may suffer inconvenience due to this decision till everything settle down and comes in to track. In spite of all the inconveniences and disruption caused in daily life due to the demonetization still more than 90% of Indian Population says that, they are with PM in this historic move to curb black money, Terror funding, hawala, Fake notes and money laundering. They stood firm with the PM of the country because they clearly knew that this decision is not based on political drama or not an election gimmick to win the upcoming election. It’s a bitter pill and a India need to take at this point of time to give a check on the turbulent economic situation of the country.  902879newwwBasically it’s a decision from a reformist who aims at a brighter India and a brighter future for the coming generation, not for an immediate benefit in his or his party’s favor. He clearly knew that the undercurrent is not at all favorable and this decision if turns out to be bad, it may be a waterloo for him. But keeping politics apart, Modi as a reformist took the baton forward. Opposition expected a riot like situation, but people kept calm, waited patiently in the queue and proved Modi is right. Also the efforts taken the bank employees across the country to materialize the mammoth mission assigned to them is commendable. To fight against the internal enemy of the country like a soldier at the warfront. They worked hard even 18 hours a day and on holidays also, continuously for 2 weeks to make things stable and to help public to meet their daily needs without any complaints. Government of India, RBI , PSU Banks, Armed forces all came forward hand in hand to support PMs decision. Indian Airforce deployed its mammoth Globe master C 17 carrier aircrafts to M17 helicopters for carrying cash across the country. Special aircrafts of Air force and Indian Army shuttled to  difficult areas which cannot be easily covered by rail or road carrying cash to ease the inconvenience of the people in that area. Entire India pulled their socks up and stood in front foot.

During these days politicians in the country made a hullabaloo  and was shouting for the blood of  PM with absurd negative comments. Look at them closely u can realize them, they are the same, the Award Vapsi gang, Same Azal Guru supporters, Same Break India brigades, Now campaigning for Black money vendors, just for the reason that they hate Modi because Modi will make India good. Among them, the surprise voice came from none other than our former PM Manmohan Singh, renowned Indian economist, who was policy maker in the1477118356_rbi-head-office-reserve-bank-india-notes-currency-denomination-2000-1000-500-100-mysuru economic main frame of India right from 1972 to 2014. He is Ex. Chief Economic Advisor to GOI, former RBI Governor, former Finance Minister, Chief of planning commission of India and finally as the PM of the country itself. He said Indian economic scenario is going to collapse because of the irresponsible decision of Modi. He quoted the figures to substantiate; majority of India’s rural area is unbanked. But the same question came back to him like a Boomerang. If so, What Manmohan Singh was doing from 1972 to 2014 when he was sitting in the driver seat of Indian economic and financial system. He held all the key posts responsible for the same.  By this time he would have realized the blunder in the question raised by him by own or by force. There are chances that, the question was not from a brilliant economist like Mr.Man Mohan Singh but from a cheap congress politician ManMohan Singh. Only a congress man can make such a foolish comment. He also asked another question which confused the public a little. Press raised that question for a while.

“Is there any country in the world where a person is not allowed to withdraw money from his own account, other than Modi’s India ?”

We know Eminent Economist Mr.ManMohan Singh is playing his political cards to please his Bosses. He knows the answer very well. But he is helpless like a puppet now also.

Why you are not allowed to withdraw your own money from your own account. Why you are allowed to withdraw only Rs. 24000 from the account now. ?

We have seen when there is scarcity for an essential commodity or factor, which is in high demand in the market, naturally a black market will evolve in parallel.  Like that there is a parallel currency black market has evolved which is controlled by the Black Money nic1Holders. The people who have hoarded 100s and 1000s of crores of black money are running in panic now. They have sleepless nights. The crores of unaccounted money with them will turn in to a piece of paper very soon. So they are trying hard to collect as much as newly introduced 2000Rs notes by hard selling their existing demonetized 500s and 1000s rupees notes. Say for double money. Let’s see how it works.

A person in the bank queue is given 40000 Rs by the black money holders to remit it to his account in old notes of 500s and 1000s denomination. He will withdraw the allowed limit of 24000 Rs in new 2000 ruppee notes from the account standing in the queue. Then he will sell the new 20000 ruppees back at 40000rs which he already received. Again he will take 40000rs and remit it in his account and take back 24000rs next week as new currency and sell again. Consider the compounding effect of the same if this one person is replaced with 100 people, 1000 people. So if the withdrawal limit is eased and people are allowed to withdraw as much money they want, people will hard sell this currency at a double rate till all the black money held by the hoarders become newly issued usable currency. So the effect of demonetization will be compromised and will be of no use at all. So anticipating this scenario the Govt and RBI has put a limit on withdrawal only up to a weekly limit of Rs.24000 which is more than sufficient for a family to survive. So how ever these black money holders try, whatever circus they do, they can hardly convert max to max 5 crores through all these illegal means. So all the remaining hundreds of crores of black money will be of paper value by December 31. Also the people who use illegal modes to convert black money will be trapped after Dec 31 using the newly amended Benami transactions Act and Money Laundering Act. All these law amendment, Jandhan accounts, Rupay cards , UPI was a part of efficient planning by the ruling NDA government to put a halt to the cancer called black money  affecting the economy.

During yesterdays Man Ki Bath radio program PM Modi pointed about the importance of cashless economy. It’s a first step of India towards a successful developed country. All the

developed countries will have a cash component of only 5% or less to form the GDP indicator. India now has almost 12% of currency in circulation as a part of our GDP figure. This need to be reduced. Cashless economy or an economy in which majority of the transactions are routed through non cash modes can only achieve successful growth figures very fast. So as a no.2 fast developing economy in the world, India need to have a paradigm shift in its banking system as a whole. Let this be the first step of that.

We request all countrymen to be a part of this historic attempt to clear the backlog of 60 year old unpardonable, scandalous and corrupt law prevailed in this nation. Open your eyes, analyze things by your own, take decision in favor of our motherland for this time.  Let’s be patient, calm and bear a little inconvenience for a better India and a brighter India. Let our next generation wake up and witness  a Bharath which has regained all its glory , fame and honor which we lost somewhere in the past.

Jai Hind.

J Nandakumar