“It is the mark of a good action that it appears inevitable in retrospect.”
Before we jump the gun and start debating whether the government’s decision to ban higher denomination notes so abruptly is good or bad, let’s put a pencil into a cassette and rewind a bit.
Step 1. Open millions of Jan dhan accounts.
22 crores till March 16, to be exact. Bring the poorest of poor into the banking system. Most of these people never or seldom used a 1000 Rupaiya note. Issue RuPay cards to almost all of them and invite wrath of many intellectuals “They are mostly zero balance accounts”. 19.4 crores people to be more precise. Get the ball rolling.
Step 2. Start steps for bringing black money back from foreign shores.
A rough figure put by a national daily was 13000 cr.
Step 3. Income tax declaration scheme.
It started from 1st June 2016 and was on full swing till 30th September 2016. Even Modi supporters wanted the govt. to do something more stringent than this. Government was able to bring 65000+ cr. rupees in light which was previously undeclared.
Step 4. Here comes the big one. Ban all the higher denomination notes.
Pressure groups like the ones led by Baba Ramdev and few others had been advocating it since quite some time. And the logic was sound on paper. For a nation where a person spending Rs. 32 in village and Rs. 47 in cities is considered above poverty line, who is using Rs. 1000 notes? Why not reduce or totally abolish the cash len-den concept? Surely giving Rs. 10 lakh in bribe would be far more difficult if one had to give it in Rs. 50 denominations. But then there was legitimate use of higher denomination currency too. Not everybody is a black money hoarder, right? Then there was the issue of duplicate currency being pumped in the country which hampers our economy as well. So what does the govt do? Surprise surprise. Release a regilated Rs. 2000 note and ban all the other higher denomination currency.
Currently there is 86% of currency by value of Rs. 500 and 1000 notes in the system.
It does look like a well thought out plan by the government to tackle the shadow economy which runs parallel to the system in our country. Love it or hate it, it is a ballsy move. My best guess – entire political establishment, most of the media houses, many top corporate honchos will turn against one man. Black money keeps them alive. It gives them the instrument to buy whatever decree they want to. This decision may well change how elections are fought too.
I can already see some big people sweat in Punjab and UP. It will be an interesting tale to watch.
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