India is known (historically) as a caste/class ridden society. There are many social, economic reasons for the same, but the continuation of classism in India has no justification except the political one. The makers of the Constitution had stipulated an end to caste based reservations in 10 years after India became a Republic, but our politician have managed to reinforce the caste system further during these half century . Elections have been won; governments in power have lost majority, all on caste equations. Therefore every political party and every politician is fully conscious of the relevance of caste based politics, a bane to Indian’s growth but an inevitable truth as long as the existing system of democracy continues in India.
In India, now there are various classes of people. They are those who pay tax, those who avoid tax, and those who are exempted from tax
The first classes of persons are the poorest, the poor and the middle class Indians, the poor of course pay tax mostly indirectly, the middle class mostly pay income tax barring a few exemptions, the second class are those who enjoy all kind of government concessions, tax holidays and all kinds of privilege and enjoy the largesse of huge bank loans and very often control the politicians like pawns in a game of chess. They are the super rich and politically connected class of people. Persons like Vijay Mallaya, Lalit Modi , Subrata Roy of Sahara belongs to this class. Whether caught for crime or not they always enjoy political patronage and protection. The next class are the the political parties who now enjoy total blanket immunity from all taxation and also now can act as a via medium for all black money holders to escape tax liability by donating their black money to various political parties, what a generous move by the ruling dispensation and no political party or politician worth his name will oppose such a move, nor will the media highlight such a largesse for they are directly or indirectly controlled either by the corporate masters or by political parties . There is nothing like free press in India except in the imagination of few idealist thinkers and academicians who are often not aware of the reality. Then there is the emergence of a the new class of internet based entrepreneurs , the new one on the block, who were quick to jump on to the band wagon of demonetization and claim that cash free economy should be India’s future and of course for their future. All this rhetoric about digitalization will result in windfall of profit to these new classes of entrepreneurs, some they say have Chinese connections or base, whatever they stand to get maximum benefit. The other day an economist friend was showing a simple arithmetic of digitalization, he opined that every 100 rupees transacted digitally would entail a processing fee/commission to these service providers may be just1- 2 % but imagine the same money being transacted many times over in a year, so for just a Rs.100/- with multiple transaction , the service providers earning can reach lakhs of rupees, imagine the volume of these transaction , even if India gets only partially digitalized, we are going to have a new set of super rich class, whose presence and activities will boost up the cost of goods and services for, no seller or service provided will bear these costs and they would naturally fall ultimately on the consumer and who are these ultimate consumers, the poor, the needy and of course the gullible middle class. Presently India is holding some sort of record in the world starvation grading, and India certainly will have more starvation.
Another greater concern will be how far local traders ,all and the sundry even in remote places can be trusted with these paying machines surely there will be huge scale stealing of data’s and robbery of the poor and the gullible, will the government compensate for their loss. Is the government efficient enough to check and prevent such tampering all over the country? The inefficient and sometimes corrupt way in which many of the banks functioned during the recent currency conversion is a clear indication of what might happen with total digitalization. It is of course a very good campaign phrase for our politician but reality is far removed from their pretended imagination.
Currency, after all is a medium of exchange, convenience and availability are two factors which promote the use of currency. The fact remains, the poor, and the rural population will always need cash in hand for their day to day small, sometimes menia,l transactions and so also the urban middle class, who do have daily sundry expenses which would be often limited to a Rs.100 to Rs500 range. The likely consequence may be people will lose trust in Indian currency and may switch over to a foreign currency like what is happening in neighboring Nepal, where the traders are more willing to receive their payment in US dollars or Chinese currency. What happens if China seizing the opportunity floods the market with Chinese currency the Yuan Renminbi (CNY), like how they did with Chinese goods of all kinds . People will look for convenience and reliability. See what is happening in some parts of Goa especially in beach shops and beach restaurants, where Russia, Ruble (RUB) has become most accepted currency than Indian rupees.
Indian economy is on the brink, will it collapse or flourish only time will tell. When it happens who will be the victor and who will be the vanquished only history will be the witness. Certainly the vast majority of the Indian population has nothing to hope from their experiences during the past month.
(The writer is a Professor of Law & Former Dean, faculty of law, Goa University.)
