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Saturday, October 20, 2018

Demonetization: Struggle for Existence | Hard Reality


Demonetization in terms of India

When government revoke the legal tender written on the Indian currency i.e. Oath ('मैं धारक को “xx” रुपए अदा करने का वचन देता हूंor “I PROMISE TO PAY THE BEARER THE SUM OF xxxxx RUPEES”) signed by Indian Reserve Bank Governor Would be no longer valid.

Personal Experience with Demonetization

I still remember the date 8th Nov 2016, I was travelling from my office back home, It was late around 9:00 PM, I was bit tired & and also thinking about my sister wedding arrangements as we were already on the countdown as it was scheduled for 17th of Nov.

I received a phone call from my wife & I was used to start/hear phone discussion with my wife with magic words “ILU”.  It was a bit different as her voice was a bit shaky, I said what happened & she replied where are you? I said on my way back home. She inquired again: On your way back, is it possible for you to visit an ATM? It was a bit awkward & I again asked what happened & this time she replied: Demonetization post-midnight & I said what?? She again said firmly “1000 & 500” currency notes are no longer valid, I again said what? She replied you heard it right, I said OK & dropped the call. I was shell-shocked as we were already less on cash& all the arranged wedding vendors’ were dealing in cash only. I visited multiple ATMs but all in vain as almost all the ATMs were having old currency notes & others are having panic/long queues but no money. I came back home dejected & slept.

Next day early morning, I again visited many ATM’s to get some money & what I had seen was never-ending queues outside the bank & ATMs, total chaos, panic, hue & cry. The only thing missing was the money in banks & ATMs. I never left hope, with my father I visited every Bank/ATMs/relative/ bureaucrat/political leader in order to get new currency notes, most of the efforts went In vain. I still remembered that whenever I said that Idea is idiotically implemented, most of the so-called pseudo-economists within family/relations/neighborhood tried to interrupt me & justifying the fact it is all for our good, during that daunting time I heard the best punchline of my life i.e. "You are in pain but the Nation will Gain" another one is "Indian customs are flawed do marriage in court, save un-necessary wastage of money". With luck & with the help of few good people/relatives/family/vendors we were able to arrange some money & marriage was done in the whatever mere/silent way possible.

As I lived that pain & dejection, after my sister marriage I felt bit relieved & immediately decided to dig deeper into the implementation of demonetization as what I saw/observe on the ground (I was a bit more on the ground simply because I have to arrange a lot more money for the wedding) i.e. Panic/chaos/pain in Banks & their ATMS was completely different from what was shown in newspaper & news channels. Things were fishy, everyone is suffering but still, there were only two kinds of people one pro & the other were anti demonetizations.

Government version in favour of abrupt induction of Demonetization

There was no absolute version of government for abrupt induction of demonetization, the government keeps on changing their primary goalposts/version on the basis of outcome from day 1 to this day. The way the government keeps on changing the objectives it seems even they were unsure of the outcome/results of the demonetization.

Pilot Version (8th Nov 2016) # Demonetization was inducted primarily to target black money & to counter fake notes/currency which was in circulation during that period.

Goalpost shifted to (27th Nov2016) liquidation of currency & step towards a cashless/digital economy, It was not even mentioned during the pilot version of government & to target the corruption of the privileged. Then again Goalpost shift to (7th Dec 2016) force Indians to put “domestic savings lying idle at home” into the banking system, so that banks can use that money to “give loans at lower interest rates”, further shift to version (27th Dec 2016) demonetization had neutralized the money held by Maoists, terrorists and human traffickers, thereby cutting off their business. Again a shift (11th Jan 2017) “It is to target verification of suspect substantial deposits is likely to widen and deepen the tax base" after demonetization.

Final Version/Goalpost (30th August 2018) # After the RBI released its data on 99.3% of demonetized, Government said that people had not understood what demonetization was. The goal of demonetization was redefined once again. "Object of demonetization was that India is predominantly high cash economy therefore that scenario requires to be significantly altered."


Flawed Implementation

I said it earlier & I am repeating it again that the way government abruptly inducted demonetization was way off target. There were flaws in planning & implementation, what economist observed that government had not assessed risk factor well & whatever we had seen was a mere reactive action rather than proactive to deal with complications post demonetization, which was eventually never enough.

1). India simply doesn't have the infrastructure for a cashless economy.
2). Introducing higher denominations (Rs. 2000 note) facilitates black cash.
3). The government was completely underprepared new ₹2000 notes were smaller than old notes and ATMs have not been modified to dispense them. Thus, ATMs were storing less cash and thus running out faster.
4). Sensationalized the move and announced with great drama caused chaos with Many myths were spun around it, which made people panic. ATMs reporting long lines and establishments refusing to offer change.
5). In the absence of cash & POS device in hospitals, some hospitals were even denying treatment.
6). Cash is a tiny portion of black assets only 6%, the Major portion is gold &properties.
7). A study shows it is worthless in India case to go demonetization as printing cost of new currency (12000 crores) will be more than the fake currency (400 crores) in circulation.

Demonetization Aftermath

After effects of demonetization are a mixed bag, we gained some & we lost some. At last when we are summarizing the facts that what we actually gained & what we eventually lost. The resultant is disastrous we have no point defending & we have to admit that we lost much more than what we eventually gained.

 99.3% of old currency back in system, Fake currency claim backfires as printing cost of new currency (12000 crores) was way more than fake currency (400 crores) in circulation, Government claim on attack on terrorism also prove fishy as fatal incidents after demonetization increase to 93 leading to deaths in Kashmir, including security forces, militants, and civilians. The sensationalization of demonetization created chaos & panic everywhere Bank & their ATMs reporting long lines and around 150 citizens lost their lives. GDP received a severe beating & India also lost the status of the fastest growing economy, Country lost 2.25 lakh crores rupees to develop demonetization background infrastructure. India lost 15-20 lakhs jobs & more than 50% of the micro, small& medium scale industries due to unavailability of cash in the system, Number of tax filer increase by 11 lacks but all of them file income of 2.7 lakh i.e. beginning of tax slab that means a very small taxable amount. Housing/property sector seen constant price tags after a long time, that kept on spiking in the past.

Opinion on Demonetization

The way demonetization was bulldozed with flawed planning & implementation due to which government left with only option to keep on changing its versions/objectives but at the same time never come short while sensationalized it & advertising/portraying it as a great success. The opposition may doubt that the immediate objective was just to weaken other parties for UP elections & get immediate attention from the voters as they initially projected it as the biggest attack against black money.

“We must understand that Implementation is important but it is equally important to understand the intention. In my view, if the intention was holy/evil, the outcome will only be the mere reflection of what was planned/drafted behind the curtain”

 After the RBI released its data on 99.3% of the demonetized currency was came back to system & attack on black money proved out to be a mere myth & Outcome of demonetization also reflected that we lost much more than what we eventually gained.

It seems the government is now trying to divert attention from the real deal & at the same time shifting its goalposts/objectives further. While seeing all this happening, I want to quote two lines written by a known Shayar”

“Tu idhar udhar ki na baat kar, ye bata ki kaafila kyun luta..
mujhe rahzano se gila nahin, teri rehbari ka sawaal hai…..

I have lived that pain when people were in the dilemma to either celebrate the national interest or cry against their own misery. Every time I think about it the oath will go by my eyes & it seems it remains always be in my subconscious mind for then, now & forever.

'मैं धारक को “500/1000” रुपए अदा करने का वचन देता हूं

I have seen some people advocating the implementation of demonetization with their non-existent logics & trying to bully others with their pseudo-national aggression. The truth is out & as expected demonetization had not done well but so as our democracy.  No-one can take that out from me that I was not criticizing the demonetization but its implementation from that day to this day & I felt my version was/is right.

 "When I criticized the implementation of Demonetizations, people called me sick & ask me to think in the national interest, which I was eventually doing. I have learned with all my experience that a "sick person" is 1000 times less dangerous than a "bunch of blind followers" for their own motherland"

Disclaimer # All the information provided in this blog are from various sources & the interpretation above is only as per my understanding, it is just a blog & not an article. Please do your own research before reaching any conclusion. I am leaving rest to you & your fine sense of judgement.


@Viv Amazing Life

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