Demonetisation: Boon or Bane
Devansh Ponda, IIK Young Reporter
Wednesday, January 18, 2017
As Indians, all of us head back to our motherland, India, at least once, every year. From the moment we land at the airport, we have complaints about petty issues: long queues at immigration counters, no dustbins for waste disposal, limited staff for assistance and so much more. As we move out of the airport and hire a taxi, we again have problems regarding the potholes on the roads, old creaky vehicles, noisy environments and most importantly, the kind of sorrow we feel on seeing little children and old men and women beg on the roads. We are so overwhelmed with so many problems that we do not realize any permanent solution to any problems. So we do what almost every Indian has done so far: we blame it on the government and its policies.
What our Honorable Prime Minister, Shri Narendra Modi and his team has done differently, was to make a ground-breaking observation that all these problems the country faces are a part of the same thing. It is corruption that leads to higher wealth concentration in the hands of a few and keeps the rest empty handed. This leads to poverty which inturn leads to a higher burden on the government to support the poor. Since the governments have to feed the poor they use the resources they gain as taxes, to do so and thus this money cannot be used for national development. Thus, the tax payers do not see any improvement in their localities and lives. They stop paying taxes and develop a resistant attitude toward the government. As a result of lower funds at the government’s disposal, it is forced to increase taxes on the people. This further lowers the number of people who pay taxes and this increases the amount of money each person has to pay, which further reduces standard of living of people till they eventually become dependent on the government for survival. After this, the entire vicious cycle repeats itself again and again and consumes the nation from within. The hoarded money thus damages the nation not only silently but can also be used to fund terrorism, causing global upheaval.
There have been several partially successful or totally unsuccessful attempts aimed at solving one problem at a time. But this time, we attacked the very root cause: black money.
On the 8th of November 2016, Hon’able Prime Minister, Shri Narendra Modi, played his master stroke by making a live announcement at 20:00 hours IST that all the notes of denomination 500 and 1000 will be invalid past midnight and that the new notes of denomination 2000 and 500 have been issued already and can be exchanged at the banks. The nation entered a state of turmoil. What followed was the largest national movement that we have witnessed since the Independence struggle. This time however, the struggle was different: it was against those killers of the nation who hoarded money. But, it was not only them who suffered.
All banks across the nation were shut down for a day, the 9th of November, in order to deliver new bank notes to be exchanged. Starting from the 10th of November, several changes were made to the deadlines and exemptions granted to the people including the use of older notes for emergency situations, like in hospitals, or for other goods like fuel, and for airline and railway tickets. Even the maximum withdrawal limits from ATM machines and exchanges kept on swinging around 3000 rupees. But the deadline to exchange the older notes for new ones remained constant at the 31st of December.
This move met several differing opinions. Many were truly with the move while many were against it. Some used the sufferings of the people as a tool to rebel against the current government while the others accepted the situation as it is.
Almost all illegal activities run on black money and cash as fuel. These were hit the hardest due to the demonetisation move. Human trafficking has drastically reduced in most of its prime centers in India. People who take loans from informal sources with the aim of paying less interest have now been completely demotivated. We can also expect to see less terror attacks and armed rebellions in the upcoming times. There have been talks for decades about some evil politicians, businessmen like real estate builders and agents, gold and diamond merchants, and some government servants who take bribes and taint the name of even the remaining community of hard workers, storing huge sums of wealth as pure cash in their houses. By this one move of the government all their cash was rendered useless. As a result they rushed to banks to get back at least 55% of that money, if not all of it, despite knowing the fact that the Income Tax department will file an enquiry against them. There have already been several raids by the IT department following the event on 8th November and a combined amount of Rs. 2,600 crores has been seized by the government, complementing a deposit of 1,100,000 crores (1.1 Million crores) since the 8th of November. The government could gain back a lot of money and this money can now be put to good use. Creating jobs that will increase the standard of living of poor throughout generations and investing in better education will now be prime responsibilities along with better roads and infrastructure. Since the banks now have such a lot of money, Indians will be benefited with lower rates of income. A self sustaining system of banking will be formed. Investments in digitalization can be made to reduce the chances of bribery in upcoming years. As people start seeing development around them they will also feel that they should pay taxes and be a part of the progress. An alert government will facilitate the development of the truthful and punish the evil. A long-lost trustful relationship between the government and its citizens can be restored now.
The process has not been as simple as it looks. Many people have faced difficulties. People had to wait in long queues to get back their own hard earned money and this lead to frustration. Also, banks and ATM’s ran out of cash at several occasions all throughout the country. Due to lack of medical facilities and gruesome weather throughout the country, and also the stress in the minds of the common men, over 80 people have been reported dead at the time of writing this essay. Even the Stock Market was affected by demonetisation. It hit a 6-month low on the days following the announcement of demonetisation. As a result of seizure of working capital, several industries have reported a drop in production and output which will have serious, but momentary consequences on the GDP.
To sum up, India has been known as Sone-ki-Chidiya (literally, the Golden Bird) in the past. But this gold was tainted and damaged by corruption and malpractices.
Today, as our people undergo difficulties, we stand to melt this gold and reshape it so that once again, we may be called the Golden Bird. Let us all stand to support our Prime Minister and declare in one voice, that we will not let our Golden Bird die.
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