After decades of dilly dallying on countering the menace of black money by successive political establishments, for the first time ever, a daring government under prime minister, Modi announced on November 8, 2016 a revolutionary step of demonetizing Rs 1500,000 crores of money embodied in 1000/500 notes.
Black money has been at the root of continued impoverishment of the poor, suffering of common man, high inflation, slow growth and declining credibility of India in the comity of world nations. Demonetization has the potential of annihilating the black cash and attendant problems.
Further, to rein in generation of black money, the government has taken a number of steps including a concerted drive towards ‘digitization’ and promoting ‘cash-less’ mode of transactions. This will ensure that India can catapult itself to double digit growth path in sustainable manner along with low inflation and reduction in poverty.
Despite these benefits, opposition parties and a section of media have castigated the move. While, some [chief ministers of Delhi and West Bengal] have questioned the very intent and want a roll-back, others see serious flaws in implementation and have gone that far to say, that Modi has imposed a ‘financial emergency’.
Arvind Kejriwal and Rahul Gandhi see in demonetization biggest scams of independent India. The former alleges that common man’s money being deposited in banks will be used to cover the loans to big business houses that were never returned. While, the poor stands in queue, hoarder of black money is merrily enjoying.
All these are frivolous allegations and are part of a malicious propaganda aimed at discrediting Modi – government which has taken this bold and self-less decision keeping the predominating interest of the poor and common man in the forefront. Here is how these are nothing but figment of their imagination.
First, a state of ‘financial emergency’ arises when the government expropriates assets of a citizen and prohibits him from doing any financial transaction. It throws people in a state of economic paralysis, blocking all channels of income generation and rendering it impossible for him to even meet his basic requirements for a good living. Modi has done nothing of that sort.
All that he has done is to put some restriction on cash withdrawal from their account. A weekly limit of Rs 24,000 for an individual is a fairly reasonable amount to cover family needs. And, even if a particular bank puts it own limit during certain period [due to non-availability of adequate cash in the branch], heavens will not fall. This is the bare minimum sacrifice, he/she can make for a much bigger cause.
Likewise, for small and medium enterprises [SMEs] wherein workers do not have accounts and salaries paid in cash [regrettable! considering that under ‘financial inclusion’ mission launched 2 years ago, Modi has been goading all and sundry to have accounts and directed banks to open accounts under Jan Dhan Yojna; there are 250 million such accounts under JDY], higher limits have been prescribed.
For persons working in ‘informal’ sector and farmers who have thus far been transacting mostly in cash, the government has galvanized its entire contingent of 125,000 bank branches, 150,000 post offices [90% of these in rural areas] and an equal number of business correspondents to ensure that cash in required quantities reaches to meet their requirements. Besides, NABARD [National Bank for Agriculture and Rural Development] has released over Rs 20,000 crores to district cooperative banks [DCBs] to meet farmers needs.
Additionally, the government has allowed farmers to use old currency notes to buy their requirement of fertilizer, seeds, pesticide etc from cooperative and state department stores [purchase from private companies is excluded to prevent misuse]. It has also directed all fertilizer companies to sell material to farmers on extended credit till such time the supply of new currency improves.
Even so, the restrictions are for a short period and will be removed once the induction of new currency reaches comfortable level. But, those who harp on freedom of citizens being crippled need to note that they can do transactions through all other modes viz., debit/credit cards, net-banking, e-wallet etc ‘without any limit’. There is no trace of emergency even in remotest sense.
As regards the ‘scam’ charge, while Congress vice-president has not divulged as to where he sees a scam in demonetization, Delhi CM’s allegation is preposterous. The money residing in the bank account of a person belongs to him. He is its lawful owner [unless it is a ‘laundered’ money]. The bank cannot even dream of taking it away and shall have to return on demand.
Putting a restriction [on withdrawal of cash only; use by other means is permitted without any limit] for a short period by any stretch of imagination cannot be taken to mean that the bank/government [as its owner] will plunder it; something that Kejriwal would want people to believe. Far from that, Modi – dispensation is only goading them to go for electronic methods of transacting business under mission “Go Cashless” so that their money is safe and easy to handle.
The charge that the demonetization move has made poor and common man stand up in queues while the hoarders of black cash are enjoying/sitting comfortably at home too is fallacious. The latter are going through a harrowing experience [the most painful period of their life time]. At the stroke of a pen, all of their wealth [albeit ‘black’] has been put on the chopper. They are burning their mid-night oil to find ways to convert it in to white and even beg the poor [stand up in queue at their homes, to cite the euphemism used by Modi] in these efforts. Yet, they are getting trapped from all sides.
A related charge that Team Modi has done a deal [50:50] with them by making them pay 50% and get away is abhorrent. They are referring to a recent amendment in I-T Act but, selectively giving half-truth. The full truth is this: Those who admit till December 30 that their deposit is black, they will have to pay 50% plus another 25% will be blocked for 4 years [with interest on this, effectively they will shell out 65%]. And, those who do not, they will part with 85%.
This amendment was done to nullify a ‘loophole’ in extant I-T Act which would have allowed them to declare black cash as ‘windfall’ income in current year and get away by paying normal tax @30%. So, the government has nipped their game plan in the bud by making them pay much higher @65%/85%. Plus, they will be forced to become regular tax payers as their details are with I-T/banks.
In a nutshell, the entire operation was meant to annihilate the black cash and it is on way to success. It was also meant to give relief to poor and common man in medium to long-run. This too will be achieved. True, the men/women in queues are undergoing some pain now. But, they must not get carried away by malicious propaganda unleashed by hoarders and their empathizers who do not want this mission to succeed.