Demonetisation
DEMONETISATION
Executing ideas that haven’t crossed your mind is an apt phrase for our PM
Narendra Modi, whose out of the box ideas for the last two years leave people swooning
and opposition fuming but his “who cares” attitude, when it comes to nation, has
garnered enormous support as well as acrimonious criticism at the same time. From
Swatch Bharat Abhiyan to Make in India and then to Digital India, his ideas won both
laurels and criticism but suddenly like a bolt from the blue for many Demonetisation
appeared out of the blue.
On 8th November 2016, Mr. Modi announced on all national television channels
that ` 500 and ` 1000 currency notes would not be legal tenders from midnight. Like
a thunderbolt, it struck many, from tax evading businessmen and corrupt officers
stashing money in their lockers to terror funding organizations causing bloodshed
and massacre with help of fake Indian currency and black money. Demonetisation
jolted the nation out of its slumber after decades.
Demonetisation is the act of stripping a currency unit of its status as legal tender.
The Union (Parliament) has the sole power to make laws regarding currency, coinage,
legal tender and foreign exchange under entry 36 of first list of schedule 7 of the
constitution. Demonetisation took place in India in 1976 as well as in 1978 when `
10,000 notes were demonetised along with ` 1000 in 1954 and along with ` 1000 and
` 5000 by the Morarji Desai Government in 1978. This is the third time, similar
decision has been taken.
The decision of Demonetisation was taken mainly because of three reasons. The
first one was to tackle black money, the second was to check corruption and cash
circulation and the third was to stop terror funding. Is these problems are considered
in as grave manner as they really are, this move had in fact been due for a long time.
In India, all sections have been accustomed to using cash for all petty transactions
and even high value transactions for a long time. This has resulted in a parallel
economy and has caused inflation and grave problems like insurgency, black
marketing, terrorism etc. Inflation has sent the price of land and building sky-
rocketing and owning a house has become a distant dream for a common man.
This weapon of Demonetization shall be used to fight against undisclosed income
which is converted into assets like gold and real estate. Government officers have
their palm greased and the money find its way to properties usually benami. Within
days on his decision on Demonetisation, our PM attacked benami properties. These
properties are those that are bought by people with black money on fictitious names
or names of other people but enjoyed by the black money holders. Under the Benami
Transaction Prohibition Act 2016, a transaction is termed benami, if a property is
owned by one and paid by another. The act prohibits recovery of the property held
benami from benamidaar by the real owner. Also benami properties are liable to be
confiscated by the government.
Demonetisation has severely attacked terrorism too. Where earlier the anti-
national elements had a free run through India’s security apparatuses, now the
absence of cash will hit all terror activities that thrive on black money and fake notes
for their survival. Lack of hawala transaction will hit activities of Maoist and other
insurgent groups too as the stocked currency has become useless and the availability
of new high-value notes is not in abundance.
Demonetisation though has multifaceted positive effects on the health of our
country yet it brought hardships in the life of the common man. While black money
hoarders and tax evaders are finding ways to make their black money white; a common
man is still standing in long queues wasting thousands of productive hours. Besides
this, the black money stashed in terms of gold, properties, foreign assets, foreign
currencies and in foreign banks are still out of purview. The large fishes are at large
while the small fry has been trapped. Several labourers and hawkers have lost their
livelihood as there is no cash to pay them. A daily wager committed suicide as he
wasn’t getting work and a few old and feeble died while waiting for their turn in queue.
No pain, No gain may be the right phrase to sum up this discussion on
demonetisation. With a windfall of approximately ` 12 Lakh crore back to the banks
and people’s support to this move of cleaning the system, Mr. Modi is raring to go
ahead. Only time will tell us how this step has been taken by the history of India. Of
course the government, its spokesperson and pro-demonetisation economists
constantly speak of intangible long term benefits such as a move to a cashless economy
and widening the tax base while the analysts are asking, “Did the achievement of
this whole process merits the pain and disruption caused by the demonetisation
exercise?”