“These notes are just papers from tomorrow.”- Narendra Modi
With the US Presidential Elections having the world glued to the News, a speech by Prime Minister Narendra Modi has stolen the thunder. In a televised addressed to the Nation on Tuesday night, Narendra Modi announced demonetisation of Rs. 1000 and Rs. 500 notes with effect from midnight. The country’s biggest denominations are being discontinued as a fight against black money, corruption, and tax evasion.
Exceptions have been made for emergencies, where the Rs 500 and Rs 1,000 notes will be accepted till midnight on November 11. This includes hospitals, railway ticket booking counters, government bus stands, and airports.
The notes in circulation can be deposited in bank and post office accounts from November 10 till December 30, by producing a valid identity proof such as Aadhaar, PAN card or voter ID card. While there is no limit in depositing money, there will be a cap of Rs 20,000 on the amount of money that can be exchanged in a week and Rs 10,000 in a day.
In order to ensure proper implementation, ATMs across the country will be closed on November 9, and they will not function in parts of the country on November 10, the prime minister said. Banks will remain closed on November 9.
New notes of Rs. 500 and Rs.2000 are to come into circulation. Rs. 1000 will be abolished all together.
How is it going to help?
With a four-hour notice at hand, an exchange cap of Rs. 10,000 a day, and lakhs of black money stuffed at the back of their cupboards, the tax evaders will have a hard time finding a way to keep the circulation of black money going.
With most of the corruption taking place in notes of 500 and 1000, the circulation of black money will come to a standstill with the notes becoming redundant. Even if they find a loophole in the procedure to convert their black money to white and save themselves from the retrospective payment of taxes, the ghost of black money would have successfully been burned for the future, since the cash circulation would now be thoroughly accounted for, and all white!
Not to mention, this is an extremely well thought out plan, and not a random statement. Modi’s policy of disclosure by Nov 5 was leading up to this for easy implementation. Who would have thought!
What do we look forward to?
From a much required drop in corruption levels and a rise in deflation, this step should cover it all with the right implementation. Property rates will drop, and hopefully only the onions will make you cry and not their prices.
The economy will be refreshed with new legal money, and will increase the ease of doing business.
Also, every Rs.2000 currency note is embedded with a Nano GPS chip, so that the note can be tracked. What a time to be alive!
Is there a problem?
It’s never all good and merry, and every policy must be taken with a pinch of salt. Enlisted are the problems with this step:
- The Swiss Problem: The question which arises is what about those who don’t even play in rupees? Most of India’s black money is safe in Switzerland, where the cash remains cold, and the pockets remain warm.
- The Investments: The smart ones don’t have their money locked up in their houses, but in properties. From jewellery to properties, black money flows in investments. Does this policy manage to touch upon them?
- The Common Man and Industry: With a fifth of the country not having bank accounts, several households save in cash. Also, what about the extremely weak money flow which will affect small scale industries and our Auto-waale bhaiyas, with PayTM taking over?
- The Implementation: With the lack of infrastructure and efficiency, the banks are not even capable of performing their daily assigned tasks without mishaps. Isn’t it too much to ask for with the entire country hustling to them to regain the legitimacy of their notes? Even us, the ones with all the legal money!
- The Tyranny: While a little ruthlessness is required to tackle the evil of corruption, what about due process? Are we moving from a country of democracy to a country of authoritarianism? After all, the Emergency was justified by Gandhi on similar lines.
What can we do?
Corruption hinders development in ways more than way, and any step taken towards it demands to be applauded. Whether the policy passes its tests or not is a question only the future can answer, all we can do is the following:
Exchange all Rs.500 and Rs. 1000 notes, since they are going to cease being a legal tender from 9th November 2016, midnight.
- Inform. Educate. Help. A lot of people who might be affected by the change might not have the requisite knowledge or resources to know the invalidity of the notes, or might not understand the procedure to go about it. Help save a life!
- Pay your taxes on time!