Demonetisation: Have the citizens been shortchanged?

It's a pity that the government is unable to discern what is clearly a straightforward example of a hurriedly thought, poorly planned and shoddily executed strategy.

Written by Radhika Iyengar | Published:November 16, 2016 4:16 pm
demonetisation, demonetisation effects, demonetisation rules, black money, black money eradiacation, bank queues, ATM queues, cashless india, currency demonetisation, rs 500 notes ban, rs 1000 notes ban, demonetisation debate, congress, BJP, NDA government, PM Modi, narendra Modi, Pm Modi demonetisation, indian citizens, india news, indian express news Rural India is taking a big hit. In villages there are few bank branches and even fewer ATMs. (File photo)

Demonetising exercises are nothing new for India. But the ‘deft strokes’ didn’t really kill black money. Why else are we going through the process again?. It is difficult to find a coherent reason for the present exercise. Watching the massive lines of harried citizens on television and reading stories of cash running out in banks and ATMs, and of traders downing shutters because of elusive customers, one can’t help but wonder at the futility of it all.

The Prime Minister assured the nation that the transition will be smooth – there might be difficulties at the beginning, he said, but it’s for a larger cause. The teething problems, however, are spiraling into something more macabre. There have been deaths which have been reported due to cash crunch within the first week of demonetisation. Three of these reported deaths were due to the patients’ inability to receive medical services in time, since they couldn’t be paid for.

Though 86 per cent of the currency (in value) is being sucked out of the system, so far there doesn’t seem to be timely, and adequate, transfusion and circulation of cash. It is hard not to ask how the government expects small and micro enterprises and the common man to survive?

Rural India is taking a big hit. In villages there are few bank branches and even fewer ATMs. Cash circulation is worse there. Landless labourers and small/marginal farmers don’t have money; families are going to bed on empty stomachs. For instance, Malegaon village in Nanded district has only one ATM which reportedly stopped working immediately after Modi announced that the current Rs 500 and Rs 1000 notes were illegal. Villages like Malegaon are heavily agrarian-based, therefore almost 80 per cent of the monetary exchange is based on cash. The banks (only two) in the village inhabiting 10,000 people, are circulating Rs 2,000 notes, which is barely helping the farmers who don’t have small change to return as balance. Their work has come to a standstill. Subsequently, there has been a staggering fall in the price of the goods and grains that farmers sell. In Malegaon, traders have begun taking advantage, robbing farmers by offering to pay Rs 2,500 per 100 kgs of soybean rather than its original price of Rs 2,800. Those who’re desperate are unfortunately taking whatever money is coming their way.

It’s a pity that the government is unable to discern what is clearly a straightforward example of a hurriedly thought, poorly planned and shoddily executed strategy. Three days ago, Finance Minister Arun Jaitely announced that people would have to wait for 21 days longer, before the ATMs would begin functioning properly, since the ATMs weren’t calibrated to dispense new-sized notes. The government should have ensured in advance that new ATMs were privately designed, built (perhaps at the same time new notes were being produced) and replaced as soon as the old notes were scrapped.

People are facing tremendous problems and these problems are escalating each day. Would the step to completely weed out black money work, considering there are reports that people are already finding loopholes in the system and figuring a way around ban? The price of gold for instance, has scaled up. Ten grams of gold which was earlier priced at Rs 30,000, is now being sold by jewelers at Rs 34,000-35,000. Jewellery shops are willingly accepting old currency notes and since purchases made below Rs 2 lakh don’t require a PAN card, the fear of traceability is put to rest.

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  1. P
    Prakash
    Nov 16, 2016 at 1:19 pm
    so, what's the harm if that 30000 came into circulation rather than staying in black market?
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      Anandan
      Nov 16, 2016 at 12:02 pm
      Well said. Captures the true picture
      Reply
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        Fazalhusein Zainuddin Patvi
        Nov 16, 2016 at 2:47 pm
        "hurriedly thought, poorly planned and shoddily executed strategy" Sums it up.
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          sham
          Nov 16, 2016 at 12:17 pm
          People are facing tremendous problems and these problems are escalating each day. Would the step to completely weed out black money work, considering there are reports that people are already finding loops in the system and figuring a way around ban
          Reply
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            sham
            Nov 16, 2016 at 12:16 pm
            Though 86 per cent of the currency (in value) is being sucked out of the system, so far there doesn’t seem to be timely, and adequate, transfusion and circulation of cash. It is hard not to ask how the government expects small and micro enterprises and the common man to surviv
            Reply
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              gc
              Nov 16, 2016 at 11:32 am
              Even if they are selling gold for old notes, they WILL HAVE TO go to the bank to deposit them and declare it in the system and pay tax.Are you not intelligent enough to understand that whatever loops might be there, eventually money will end up in the system, rather than circulating in black market.That by itself is huge achievement, even people without any economic degree can tell you that.
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                gc
                Nov 16, 2016 at 12:58 pm
                Even if those who are selling gold for old notes will have to go to bank, declare it, pay tax,balance their books,ultimately money will have to come into the system, whosoever takes the old note.That itself is big enough achievement of this scheme.Are you not intelligent enough to understand this, you don't need any economics degree for that.
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                  RSJ
                  Nov 16, 2016 at 3:21 pm
                  Fools continue to buy the story of Modis strike of black money. This article sums it very clearly. Very few black rats are being killed by Modi strategy of burning the w house. Same rats are being tempted with 2000 notes at the same time. This chanakya niti is turning on its head.... actually people think it's so poorly planned and executed.
                  Reply
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                    arvij
                    Nov 16, 2016 at 3:44 pm
                    Typical Congress motor-mouth media, what is the point of this ic article ?
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                      Lalit Mohan
                      Nov 16, 2016 at 12:49 pm
                      Like a narcotic trader who initially distribute free samples, lt;br/gt;Sample of corruption has been distributed by our leaders for 70years how can this corruption be removed so easily, especialy when we see media highly pro Islamic and profemine.
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                        R.Mehta
                        Nov 16, 2016 at 4:07 pm
                        People have no new currency notes. Banks have not much new currency notes .There is limit on exchange and withdrawal of notes .The people are standing in queues leaving their work .There are no buyers at the shops .There are not many people going out for food. There being marriage season ,people dont know how to attend marriage without giving shagun/gift.The tourism and travelling by people has gone down ,Farmers have no money for seeds .People are wondering how to pay hefty bills in pvt hospitals .The propery deals are not getting through and where advance has been given ,those deals are also falling . The revenue of govt.from registeration of properties wil, go down.The number of people going for movie has gone down .How the daily wagefs workingbwith contractor on construction sites will be paid.That wil, compel labour to go back to villages and construction projects which are already dela will, get further dela w markets also there is no business for want of sufficient cash with small traders ,who come from various places to butvtheir stoch for theircretail shops . After 24th people will, have shortage of cash for petrol ,medicines etc..and many more problems are there ,but the govt. is least bothered and without any open support by public is making false claims that people are with the govt for this decesion.
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                          syed
                          Nov 16, 2016 at 12:29 pm
                          A Man buys gold using black at 34000 Per gram, four gram more than normal rate. Jeweler goes and deposit this 34000 in bank account, he pays 4000 as tax and keeps 30000 for himself, when bank inquires, the jeweler says the transaction took place before currency ban, he does not discloses the name of buyer as he is not required to because transaction is less 2lakhs. your black money converted into white. hope you understand it now.
                          Reply
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                            syed
                            Nov 16, 2016 at 12:56 pm
                            A Man buys gold using black at 34000 Per gram, four gram more than normal rate. Jeweler goes and deposit this 34000 in bank account, he pays 4000 as tax and keeps 30000 for himself, when bank inquires, the jeweler says the transaction took place before currency ban, he does not discloses the name of buyer as he is not required to because transaction is less 2lakhs. Black is coverted to white.lt;br/gt;lt;br/gt;only 10% of black money is in cash, most of it will be easily converted in white though GOLD, though religious places and by other mean which we do not know. a very little will be destro those who have too much. for this little amount invinience, cost of replacement of notes is too much..
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                              Prabirkumar Duttachoudhury
                              Nov 16, 2016 at 4:40 pm
                              Bring down those s and throw them in such village with only one 2000 re notes to feel the state of empty stomach for 50 days.
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                                Rohit
                                Nov 16, 2016 at 3:35 pm
                                IE I can tell you for sure, your readers have been short-changed by this mentally weak, insipid article.
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                                  Rohit
                                  Nov 16, 2016 at 3:33 pm
                                  Yawwwn. Of the 30,000 articles on demonetisation, this probably is the most bland, copy and paste. Even a school kid could write a better essay.
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                                    Rohit
                                    Nov 16, 2016 at 11:53 am
                                    The demonetisation move is primarily to stop factors that threaten our country's security - viz., terrorist organisations, maoists, naxalites, etc. This move has literally choked finance to these elements - see the sudden calm in kashmir, and the effect on the red corridor. The effect on the black market is a side effect of this.
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                                      sk
                                      Nov 16, 2016 at 4:48 pm
                                      Its purpose is to remind sanghi motor mouth what an their supreme leader is.
                                      Reply
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