PM Modi’s sudden announcement during the twilight hours of November 8, of banning two prime Indian notes, the Rs 500 and Rs 1000, in daily circulation, has taken the nation by storm. A step not easy to judge on its face value, with an apparent objective of eradicating black money and a parallel economy is a bold step towards the right cause.
However, a few ifs and buts cannot be ignored.
The doubts veritably emerge because of the all-pervading, widespread corruption in our daily lives, especially over the last few decades. Bribing to beat the system is a normal affair. In fact, a generic term, ‘speed money’ has emerged, authenticating the presence of this behind the system economy.
Income tax departments have been digitally equipped for almost a decade now, yet, do 100 per cent of our population pay the taxes they are required to pay?
This is not only because there are lacunae in recording financial transactions, but because of loopholes within the system itself.
The same could be argued about this historic step by the government. Is it a full proof one? Though it is difficult to gauge at this moment, one cannot rule out doubts. A few points that strike me at this moment:
- What is the extent of estimated black money in the form of liquid cash? It is well known that a large proportion of black money is pumped into sectors like real estate, durables, and the like. Undoubtedly, the largest chunk is transferred into foreign banks and might have entered into the country through forms of investment via countries like Mauritius and others.
- The majority portion of black money in different forms continues to lie with people in power and authority. It is not too difficult for people like these, with the kind of control they exercise over the government machinery, to somehow convert the black money into white and easily tide over the current situation. A few minutes ago, a neighbour informed that gold is being sold at a price 1.5 times its current market value in Ghaziabad in Delhi-NCR. The time given to deposit 500 and 1000 currency notes till December 31 with an extended period of March 31 further strengthens this doubt. One can purchase gold under different names to re-convert it into currency at a later point of time.
- I have no idea why the new Rs. 2000 needs to be introduced with a nano-chip. If that chip is developed by a certain technology, the same technology can destroy the effect in a few months’ time. Thus, fake currency notes may be stopped for the time being, but not for long.
Overall, my perception is that what we are thinking of eradicating through banning of 500 and 1000 currency notes may perhaps make a comeback later with the new 500 and 2000 currency notes.