By Ashok Kumar and Raj Dixit
On November 8, 2017 we celebrate/observe the first anniversary of demonetisation. Irrespective of the success or failure, the ‘master stroke’ of demonetisation as it was termed a year ago is a move that leaves much to be answered. Surprisingly, it did not occur to any expert on the matter. No media or news channel ever discussed these issues, may be because PM. Narendra Modi is changing the goal posts (narratives) always. Let us examine why and how its declaration came about and the questions it still raises. The questions that come to mind are:
- The assent for the demonetisation was given by the then President. Why did no body question the assent given by the then President Mr. Pranab Mukherjee, being a former Finance Minister? What was the urgency in giving the assent without the matter being deliberated and debated in the right forum which we all name it as Parliament of India?
- Though we all know that the communication or the conversation that take place between the President and the Prime Minister of India is considered to be privileged information and even courts are not allowed access to it. However, the scale and degree of impact the above stated decision which had not only wreaked havoc in the daily lives of millions of people of India where more than 90 % of the economic activity is governed by the unorganised sector that is based totally on cash. The impact became more evident by the scale of occurrence of deaths and personal losses of prestige and self esteem reported by various media sources.
- Moreover this decision was taken by a government who claims to understand the culture and civilisation better than others, at a time which is considered to be time for festivity and marriage season across the length and breadth of the country.
- Innumerable families not only became victims of this draconian step such as deaths in hospitals due to non availability of medical treatments/medicines/life saving surgeries or absence of cash causing disruptions in the scores of marriage ceremonies, for which they did not know whom to blame in this so called in the world’s largest democratic polity- propagator of the ideals of great make in India and epitome of Indian-ness.
- This is the only government in the world which had disabled its own citizens’ capacity to pay and spend knowingly and deliberately without giving them the opportunity for being told and put unreasonable restrictions on their hard earned money (so called in the nation’s interest) which the government of the day has so far failed to explain even after the lapse of one year.
- Therefore, how far do these provisions of having such privileges granted/given to such high offices in a democratic polity serve /protect the interest of its people?
- Isn’t it high time that the law makers and media should question these provisions granted to such high offices when they fail/appear to fail to protect the interests of the very people for whom they are elected to serve?
- Even the President can be questioned as is evident by Uttarakhand High Court ruling in Assembly dissolution case of 2016, where the State high Court Judges observed that “President is not the King and he can go terribly wrong,” “We are not doubting the wisdom of President but everything is subject to judicial review,” the court added.”
- The Rs. 500 or Rs. 1,000 notes bear the signed promise of the Reserve Bank of India’s Governor that “I promise to pay the bearer a sum of five hundred or one thousand rupees”. Did the Governor or the government of the day make sure that his message of notes withdrawal has reached the last bearer of these notes in the country or elsewhere where there are Non-Resident Indians? There was neither a mechanism in place nor any intent to make sure that the message reaches each and every bearer of these notes.
- In most of the neighbouring countries, Indian currency is used. This money could have been used by the state in case of adverse conditions. That stockpile has been wasted.
- Experts and senior media persons have written a lot about the move that it has nose-dived as the much publicised ‘curbing’ black money is back in banks.
In a seven page note to Parliament, the department related committee of finance headed by Congress leader M. Veerappa Moily, the RBI stated the government had on Nov 7, 2016 “advised the RBI that to mitigate the triple problems of counterfeit/ terrorist financing and black money, the Central Board of RBI may consider withdrawal notes in the denomination of Rs. 500 and Rs. 1,000.”
This act proves the point that it was the government of the day that advised the RBI to take the decision of withdrawal of the legal tender of the notes of Rs. 500 and Rs. 1,000. The decision had given a big jolt to the reputation and integrity of autonomous institutions like the Governor of Reserve Bank of India.
The narrative that the demonetisation move was taken with ‘good intention but its implementation was poor’ holds no water. If it was a policy of the government then it must be said it was a very poor policy decision. In a country where the informal sector constitutes about 90 % of the total economic activity and provides maximum employment despite the sector predominantly being cash based the decision was a cruel joke on this sector.
It is surprising to note that even after 70 years of independence there is no single governmental agency or a department made in place where the issues/ sufferings affecting the above mentioned informal sector can be addressed to resolve or to mitigate the problems.
Another argument that cash is linked to corruption and subsequent generation of large amount of black money in the country and therefore the complete cleansing/annihilation of the very framework and the widespread causes ought to be uprooted from all the spheres of economic activities of the country, also fails the test.
While the government is considering digitalisation to curb black money, there are several cash based economies in the developed world but there because of their effective tax compliance and established work ethics based on common public good where the possibilities of generation of black money is either not present or is reasonably reduced to minimal levels. It is not considered to be a gainful practice that could lead to the menace of corruption.
It is suffice to say that as per the recent federal reserve report about 80% of all transactions in Germany was conducted in cash and share of payment made in cash in other developed countries are as follows; Australia 65%, France 56% Canada 53% Netherland 52% and the US, the largest economy of the world, 46% share of payment volume was made in cash.
Even after one year, there is no cost and benefit ratio analysis presented by the government or any non-governmental agency, whether political or apolitical, in regard of the large scale organised destruction of monetary currency notes (Rs. 500 and Rs. 1000) which was undertaken by the Central bank of India (i.e. Reserve Bank of India)- one of the largest banks of Asia Pacific region, without the consent and concurrence of the Parliament of the Republic of India.