Demonetization - Boon or Bane

As the world is getting ready for the end of yet another year, it so seems that an average Indian is awaiting the end of nightmare as created by the Demonetization drive by the Government lead by Prime Minister Narendra Modi. From November 9, 2016 till date it doesn't seem that the country has been provided any scope to breath afresh for the queues and the fights for the wait to have own money exchanged to valid denomination. 

The biggest question that the critics are posing for the GOI are - 

1. Did Prime Minister ever consult anybody before declaring the demonetization drive to invalidate Rs. 500 and Rs. 100o denominations? 
2. Did Prime Minister take a decision too much in haste or was it deliberate to cause the panic in the country? Apparently some 55 or 60 deaths have been linked to this demonetization drive 
3. Did Prime Minister over looked the Constitution of India while taking the bold move? Thus voiding the Right to Property and similar other rights? 
4. Did Prime Minister ought to have discussion with the opposition and should he have moved by passing a motion in the Parliament to ensure every law maker would have been informed? 

Though the list may go on and on and on, these are some of the more so common question that need to be discussed to decide if the step to Demonetization is Boon or Bane for the country as a whole. Oh well, I am deliberately skipping the points on controlling Black Money and Corruption, because I feel that the trait that we inherited from our rulers for ages, would not end with this one time drive unless there is a 360º approach to curb the Hawala, Gold, Property and other means of hoarding (Hiding) Black Money.

So coming back to the 4 questions listed above, now let's take a closure look at them one by one in chronological order - 

1. It is for sure that there was a group of few senior and young officers including economists who were involved in the overall decision making process. So the decision to me seems as well thought off and well discussed. Though it seems to have failed miserably when the Risk Evaluation would have been done where the core group missed evaluating the honesty of Bank Employees and the ATM refill Organizations. That appeared to have misfired and caught the GOI on Back foot. Rating - Proves to be Bane: 
2. Prime Minister should have taken the decision to bring the execution with a shocker and without giving time to the targeted people much time to react. However, the communication that went down the line to the masses wasn't handled well and the overall execution also failed to create that long term public interest in the outcome. Though the public sentiment is in favor while they talk in open, but the overall sentiment in closed circles is not in favor and the pain is quite visible for the common bread earner. Rating - Neither Proves to be Boon nor Bane 
3. Regarding the anti-constitutional decision, I would stand by and wait for the decision by the Supreme Court of India since this particular question is being evaluated by the bench. However, I am not sure whether Demonetization can be called as hampering Right to Property. Rating - Doesn't qualify to address Boon or Bane 
4. If Prime Minister would have had moved through Parliament, then the biggest motive of Demonetization drive would have been lost. The millions of unaccounted cash that has now made its way to the Banking channels would have disappeared and the culprits would not have been reported to the law as they are at this time. The mechanism to go with that surprise really helped GOI. Rating - Proves to be Boon 

So when we look at the 4 questions, then the Overall decision provides some 50:50 results. The major point that would prove its worth is the overall impact it would have on the economy in a longer run. The longer run here would be counted for at least 2 years from now. That would be just the right time for the next general elections. 

As for the immediate results, we would soon see it early next year with the results of elections in UP and Punjab. Though the by-election and municipal elections have been voted in favor of the ruling party - BJP and its coalition partners, the acid test would specifically be the election results in UP.

So, Demonetization whether is a Boon or Bane is something that totally would depend on the overall perspective with which it is presented or dissected. We know that the SOLD media would create all the hue and cry to oppose the GOI, but then we need to be wise to actually understand the truth and the actual effect rather than what we see or hear on superficial level.

Demonetization - Perspective of a Banker

Note: This is not my original post, but when I read it on a Facebook Page - Humans of Bombay, I couldn't stop copying and Pasting it here. Kudos to The team on that Page to have brought it out on Facebook and the entire Credit is Due to them, not me. Please Read On -
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“I’m the manager at a bank. On 8th November, I was working a bit late when my husband called me and said, ‘how did you not tell me that 500 and 1000 Rupee notes are getting scraped’ and I was shell shocked. None of us had any idea what was going on…we just knew it was huge. So we went into work the next day, preparing for the days to come but no amount of preparation could fully prepare us for what was coming.

People’s view of the whole situation was limited to the lines they saw outside the bank, but what was happening behind closed doors was entirely different. We became a part of the dirty cycle that runs in this country. On one end there were chaiwallas, istriwallas who are queuing up to deposit their hard earned money but on the other end we're receiving black money that had been stashed away for years possibly and all this cash smells like rotten leather to the point where every one of our branches has ordered masks for the cashiers — that’s how unbearable the stench became! From fights breaking out and the police intervening to educated people storming our offices and violently asking us for money — we’ve dealt with it all. 

Just the other day a builder who’s had an account with us for many years, came forward to finally pay us an amount that he had defaulted on a Non Performing Asset. When we had chased him for months to pay up, he had defaulted but all of a sudden he came forward! He has over 300 crores in black money, but before this he claimed to have none at all — that’s how dirty the business is. 

Don’t get me wrong, i’m not complaining about what has happened — it’s a revolutionary move that will only strengthen our country and I completely understand what the common man is going through as well, but what can we possibly do? There’s only so much cash we have, and only so many people who can attend to such a large population. 

What’s ridiculous is how people are behaving— they’re treating us so badly. Just 4 hours ago I received a call from a man from a place called Nanded who screamed at me non-stop. He went on yelling, blaming me, cursing in Marathi and I’m sitting there just wondering what I could possibly do and we’ve received dozens of such calls each day. Not just that, but the threats have also come. We get calls from people who are politically endowed and threaten to ‘send media to expose us’ or to ‘create a scene’ if we don’t move money — I mean when will we learn? We’re bankers — there’s only so much we can do! We’ve hardly slept these past few days, we’re not taking any weekends off…in fact most of us haven’t even exchanged our own 500 Rupee notes because we’re trying to help others first. 

Our banks are losing money on interest and there’s already enough chaos…do we really need to add to it? We’re all in the same situation, we just need to sit tight and understand that steps are being taken to aid the process — this is for the future of our country and the least we can all do at a time like this is have patience and believe that everything will stabilise soon. And for heaven’s sake, stop trying to use more corrupt methods to get out of an already corrupt situation…we don’t need any more of it!”

विमुद्रीकरण: अर्थव्यवस्था पर प्रभाव?

इस लेख को आरम्भ करते हुए मैं सबसे पहले भारत के माननीय प्रधानमंत्री श्री नरेंद्र दामोदरदास मोदी, भारतीय रिज़र्व बैंक एवं हर उस व्यक्ति विशेष एवं संस्था को बधाई देता हूँ जिसने भारत में आर्थिक प्रगति हेतु एवं भ्रष्टाचार को समाप्त करने हेतु योगदान दिया है। 

विगत दिवसों में भारत में ५०० एवं १००० के मुद्रा विनिमय को प्रतिबद्ध करने हेतु प्रधानमंत्री द्वारा की गई उद्घोषणा के बाद कई प्रत्यक्ष एवं कई परोक्ष रूपेण कटाक्ष किये गये। किसी ने इसे जान साधारण के लिए तो किसी ने अर्थव्यवस्था के लिए हानिकारक कहा। किन्तु कोई विश्लेषण या तर्कसंगत कथन किसी बुद्धिजीवी से नहीं आया, ऐसा लगा जैसे भारत में बुद्धिजीविओं का अकाल पड़ गया है एवं इस समय समस्त बुद्धिजीवी घर में कितना मुद्रा विनिमय पड़ा है एवं उसका क्या करना है जैसे चिंतन मनन में व्यस्त है। 

वर्तमान काल में यह कहना कोई अतिशयोक्ति नहीं कोगी कि समक्ष रूप से कई विचारधारा इतनी सशक्त नहीं हो पाई कि माननीय प्रधानमन्त्री एवं उनकी कार्यकारिणी द्वारा किये गए सारे विश्लेषण को समझ सके। 

जहाँ तक मैंने तथाकथित बुद्धिजीविओं के विश्लेषण अथवा यूँ कहें की विश्लेषण हेतु जो प्रयत्न किये गए, उनसे जो ज्ञानार्जन किया है, उसके अनुसार इससे अधिक सही उपाय और नहीं था। 

एक विश्लेषण में तथाकथित बुद्धिजीवी पत्रकार ने प्रधानमंत्री एवं उनकी कार्यकारिणी के निर्णय एवं आर्थिक सूझबूझ पर प्रश्न उठाते हुए कहा कि यह  कदम भारतीय अर्थव्यवस्था के लिए अत्यंत हानिकारक होगा। महानुभाव के अनुसार यदि १०% कालाधन तो की भारतीय GDP का १% हो सकता है, यदि जला दिया जाये तो उससे भारतीय अर्थव्यवस्था खतरे में आ सकती है। किन्तु जहाँ तक मेरे अर्थव्यवस्था का ज्ञान कहता है की यदि १०% क्या १००% कालाधन भी जला दिया जाए तब भी अर्थव्यवस्था को कोई क्षति नहीं पहुंचेगी, क्योंकि वर्तमान में भी वह धन किसी तरह से राष्ट्र के अर्थव्यवस्था में नहीं गिना जा रहा। 

यदि हम मुद्रा विनिमय के आधार पर देखें तो यदि १०% या  १,५०,००० करोड रुपये का काल धन जल दिया जाए तो उससे भारतीय रिज़र्व बैंक की देनदारी उतनी काम हो जाती है, अर्थात भारतीय रिज़र्व बैंक का मुनाफा उतना बढ़ जाता है, अर्थात सरकार को मुनाफे से अधिक भागीदारी मिलती है, अर्थात अर्थकोश में अधिक धन जिसे राष्ट्रहित में खर्च किया जा सकता है, अर्थात अर्थव्यवस्था सुदृढ़ ही होती दिखाई देगी। 

यदि हम ये देखें की वही १०% यदि सरकारी कोष में जमा होते हैं तो उससे GDP में १% की बढ़ोत्तरी दिखाई देगी, अर्थात इस तरफ से भी अर्थव्यवस्था सुदृढ़ ही होती दिखाई देती है। 

यद्यपि, उस समय तक कि आम नागरिक को यह नहीं ज्ञात होता कि प्रचलन से हटाये गए मुद्रा विनिमय का क्या करना है, एवं उसे किस प्रकार वर्तमान में प्रचलित मुद्रा में बदलना है, अर्थव्यवस्था में बहुत सूक्ष्म धीमापन दिखाई देगा, जो की कुछ महीनो में ही स्वयं विकास की गति में वाष्पीकृत हो जाएगा॥