The demonetization policy of Modi government has been welcomed and appreciated by the common man. Riding high on aspirations, people are ready to undergo hardships.
A euphoria has been created around. It is being termed as a master stroke to remove the whole gambit of corruption. However, this is a far fetched wishlist of the people in the ivory towers of the ministry of finance.
The ground reality is altogether different. It is not that the government does not have data or information to rethink their decision and take corrective action. Rather, they are looking at each action with a biased view. They are taking many more knee jerk reactionary steps. This is making mockery of this “brave bold” move.
To put records straight, I stand enthusiastically behind the brave decision taken by Shri Modi. But I find he has not been supported by his executives. He is now being hoodwinked to accept more decisions to cover up the miscalculations.
In hindsight, let us get the facts about Amnesty scheme that ended on September 30th. Government claims that 65000 crore rupees were declared. If 45% was the amount of tax levied, it would amount to a little less than 30000 crore rupees as revenue. Match it with the costs incurred and the ROI would be evident. Money was spent on publicity, on the raids that were conducted and the massive efforts that were put in. We will easily end up piling up a decent sum running into hundreds if not thousands of crores.
Does the government not have an idea of the black money these raids had generated and the money the people who conducted these raids made? How much was the ROI? The government should look into and see if it was a viable proposition.
An RTI application is not required to get the government to look into the same. The figures themselves will give more clarity.
What actually has happened 21 days after the “brave bold” decision?
The Actual Big Fish:
Every person who had amassed a large sum of money stored in sacks and attics, summoned his juniors. He instructed them to make suitable arrangements to get his stash converted into the new legal currency. The junior officers added their own pool to the one they received from above. Next, they caught their liaison agents who used to work in different tax departments.
The instructions were relayed and deals negotiated. Since none of these people had any immediate need for the money, they all made arrangements to get the money back in new tender after a period of time.
There were others who got panicky and purchased USD or gold bullion at astronomical rates. This just depreciated the value of their stash by a certain percentage.
There is no clarity if their money generation activity will continue to flourish or not. Having assured income already, they are willing to wait for the outcome to make suitable adjustments later.
New Employment and Business Opportunity for the Poor:
Young people made a killing; standing in lines and converting currencies at a sum of 500 Rs. per 4500 Rs. converted, for everyone and anyone. Some people were making as much as 3 changes on a daily basis. A large number of organized people were doing this work and it went well for the next few days.
People under Pressure:
Every petrol station owner, bank employee, post office employee and other government department employee, authorized to accept old currency, were under immense pressure from their friends, relatives and associates. They wanted them to accommodate and arrange for the switching of currency. How many made a killing and the amount of money these guys made during this period, is for the readers to guess.
Financial Middle Men:
Professionals from the finance industry got a great opportunity. They were looking at the peculiar needs of different clients who sprung up. They now became liaisons for people who had the bank accounts (in which they could deposit) and people who had the money that needed to be deposited.
The percentage and terms keep varying with all sorts of permutations and combinations doing the rounds. People who had worked hard to earn are not willing to give any percentage to convert their currency. While people who earned it using unfair means like status and power are more flexible and agree to hefty cuts. The money that was in, say few hands, is now distributed among more hands as a fees. The so called ‘black money’ is finding its way back into our financial system. Unless the system changes and the generation of black money stops, it will find a means to return the original people in the new legal tender.
The Small Business Owners:
Braving high financial costs risks and a plethora of inspectors, there were unfortunate people who were in business. Their next generation is in a dilemma– whether they should continue the ancestral activity or not. This thunderbolt was devastating and pretty hard on them. Their business was brought to a standstill and uncertainty prevailed. They were happy that the inspector raj will come to an end and they will be free to do business better. In that hope, they withered all the troubles and are still standing with the PM. They complain about implementation but are still willing to undergo more difficulties for the next 30 days.
The Common Man:
He was the most affected but was just happy that rich are in for a soup. People cheered in joy for their leader who had taken on the corrupt. They were willing to stand in queues at length with high aspirations that the country will become a better place to live in.
The government is not able to overcome the obsession with the Income tax department as their only tool. They are ignoring the fact that they have a very corrupt executive machinery that will belittle their honest intentions. Even the good intentions by finance minister needs execution. The majority of the bureaucracy has been hit hard by this decision. And hoping that the same bureaucrats will implement these decisions in true spirit is like living in a fool’s paradise.
There are many other use case scenarios but I am not diving into them. People are trying to come to terms with demonisation as a reality. There are another 30 days left. During this time, more deposits will be made. The kind of knee jerk resolutions the government is taking, we can expect more twists and turns in the journey ahead.
As of now one thing is clear; the PM has proved that he is capable of taking tough decisions and the public including me are openly supporting these steps. Hopefully the next strike would be more focused with better implementation tactics. For now life has moved on.