Tots of essays have appeared in the print media of the goodness or otherwise of the demonetisation of the Indian currency of Rs 500 or Rs 1,000, without really understanding the origin of the term “Demonetisation”.
“Demonetisation” was first and primarily used to derecognise the use of metals with emblems as a legal currency. Once the metal emblems was disused and derecognised, it was never again re-introduced in any other form but done away with for eternity.
However what the BJP government has done is to derecognise one print of Rs 500 or Rs 1,000 note and introduce another paper note of the same kind or other forms. This is truly not the spirit of demonetisation. Rather it is a breach of promise or a cowardly act of manipulation of a governmental promisary exercise. The German Mark, the French Franc have been demonetised and Euro now is a legal tender.
Till today no one has attempted to study and quantify the adverse impact of the “Modi exercise”. Even after one year of pre- November 8, 2016 notes of Rs 500 & Rs 1,000 becoming extinguished as a legal currency, there are no comments on the “actual costs” of the so called “Demonetisation process”. The currency once declared illegal has to be surrendered by individuals, collected by banks, which in turn transferred to the RBI, which in turn would mark, count and destroy what it had received. There are millions of man hours, days, months and even years which would go to complete the entire process. This process would involve energy from individuals, officials and security staff let alone those in governance, but also those involved in sidelining the governmental process like the black marketers or the hawala operators. The old currency notes were also going abroad and are finding their way back through custom declarations. Industrial growth is negative now. The unorganised trade is still in chaos-leather, brass, bangle, carpet and weaving industries in particular small vendors in fruits, vegetables and everyday commodities are either still struggling or are rendered jobless.
The entire exercise of collection of the old notes and their destruction and the printing of the new notes, calibration of machines and their distribution cost the nation nearly Rupees One hundred thousand crores of public money. This figure mentioned is on the lower side because it does not take into account the loss due to slowdown in growth, lowering of GDP and loss of lives and livelihoods. Actual GDP has slumped from 9.6 to 3.7 percent in real terms of growth.
As such 15 lakh crores of the 15.3 lakh crores of rupees in circulation at the time of announcement of de-recognisation of Rs 500 and Rs 1,000 notes on 8th November, 2016, have already found their way in banks across India. Now 99% of the currency notes are back with the RBI and only the Income Tax officials are left loose to harass the individual depositors, in an attempt to squeeze out the “so called black money”. Rather the black money has now become white. True that tens of thousands of Jan Dhan accounts have hundreds of crores of ill-gotten deposits. But it is impossible to identify and pin down the black money as in our country a person is innocent until proven guilty, and our judicial process would take time energy, man hours in the study all these at the cost of productivity, growth, and the dignity of those questioned. The RBI which was supposed to accept old notes upto March 31, 2017 refused to accept old notes from genuine citizens who did not comply as of December 31, 2016 - What a Shame. The matter now is in the Supreme Court as genuine cash is not accepted by banks.
There are very few honest I-T officials and thus the already burdened judiciary is at sea to take up the cases arising out of this unearthening black money exercise. It would be much easier to find a needle in the hay stack than identifying truly the “so-called black money” from the 65 lakh of bank accounts across the length and breadth of our vast country. It is amusing to hear our common man asserting that the “Demonetisation exercise” was good but that the implementation was rather faulty. This is a bogus statement devoid of the understanding of economic science. There is no compartmentalization of black or white money. Money as such has no colour. Since there is no colour to money, but there is colour to the deed of the individual handler of money. Hence the so called black money becomes white or black again, as per our The twin blow of demonetisation and GST has made traders jittery and the common man made to suffer because shop keepers and hoteliers charge GST even on a hand written bills with no GST code quoted. With the common man paying on everything he buys or sells on his discarded wastes or garbage and even on his savings, he has to pay tax. Just keep paying taxes all round the year.
As far as GST is concerned unless the confusing slabs are reduced from six to only two with the existing slab of 5% on commonly used commodities totally done away with, the poor will suffer. Keeping one month and three months slabs for two businesses filing GST returns is absurd and chaotic. Do Goans realise that a water bottle attracts 5% GST and the discarded plastic bottle which is empty attracted 18% GST! Food and Vegetable products attract 5% GST but the food wastes, garbage fees and treatment costs would result in 22% GST. Do the people realise that the tax-payer now pays Rs 11 lakh per day to run the 100 tonne garbage at the Saligao waste Treatment facility, through public funding.
Acche Din is for those in power in the government the common man is only to pay digitally or in cash.