Post Demonetization: 36th Day

Bimal Jalan, Ex Reserve Bank of India (RBI) Governor pointed out that there must be reason, war or security threat, for demonetization.  Jalan raised the question “why now”.  In the present context, there was no need of secrecy unless the country faces emergency.  People should have taken in to confidence and also given warning to black money hoarders, what he proposed.  He opined that 90 to 95 per cent people are innocent.

      Banks are instructed to preserve CCTV recordings of complete operations until further instructions, as per RBI notification.  It will be helpful for enforcement agencies to deal with matters related with illegal accumulation of new currency notes and many more.  A total of 41 notifications are being issued by RBI.  As per RBI survey, 90 per cent (94.2 crore) of debit/credit card holders are using cards for withdrawal of cash from ATM and not for other purpose such as PoS terminals (8 per cent) for purchase of goods and services.  Hardly 50% of cards are in use even though rate of installation of PoS terminals has increased many folds.  There is an urgent need of campaigning for multiple utility of these cards.  In October, Rs 29.9 thousand crore point of sale transaction was recorded through cards. 

The government has announced waver of sales tax on digital payment up to Rs 2,000, petrol diesel purchase, railway tickets, state own insurance policies.  The loan growth at banks has nosedived to Rs 1 lakh crore (6.6%) in the first fortnight after announcement of demonetization scheme as against average growth rate Rs 30 to 35 thousand crore fortnight before.  At present, the main objective of the bank is to cope up with cash crunch and so the normal business of bank was hampered to a great extent.  The operation costs of banks have gone up after announcement.  Waiver and reduction in charges and fees on credit cards and ATM use and PoS transaction has reduced bank’s income.                                         

            

           Former Union Finance Minister P. Chidambaram is raising questions after questions from day one; though he himself has not contributed anything in strengthening the economy on one hand and action over black money hoarders on other.   “Is the money going directly to them from the currency chest” Chidambaram asked at a press conference and described it as “the biggest scam of the year”.  He himself being advocate, is pressing some trifle matters like the cases should be probed not by Income Tax department but agencies related with criminal investigations etc.  He claimed that foreign investment has brought down by Rs 30 thousand crores.  He is blaming RBI for announcing policies that are pre-scripted.  “The narrative has been shifting from the original objectives of elimination of black money, fake money and terrorist funding to a cashless economy.  Where in the world the economy gone cashless on such a big scale (3% to 100%)?”, he said.

     

           The Parliament is in session.  Perhaps, there will be discussion with brick bat from both side but without voting.  It seems, the opposition will play street politics to garner the votes than discussion in the Parliament; three days are left to complete the winter session.  Contrarily, Income Tax and Intelligence wing recovering huge quantity of new and old notes.  So far, more than 230 crores of notes have been seized.  Bank officials have played a major role in this racket and they are under scanner.

          Surjit Bhalla in today’s article – Indian Express – vehemently stated that all economists are against demonetization, it is the political will that is against main stream of politics.  As per author’s estimate the black money is Rs 8 lakh crores.  If all - Rs 15.44 lakh crore – the money deposited in banks then the government will earn Rs 2.5 lakh crore in form of tax that itself is a big achievement.  The positive response from Union Finance Minister is the tax rate will slash down due to demonetization.

           At least PM Modi has exhibited political will – against the flow - to wipe out corruption. He has no other thought than to squeeze the top echelon of the society that has enjoyed the fruits of our loose democratic system.  We the common citizen wants better infrastructure, better facilities, cleanliness, governance, education etc.   Our demands are meager and for which money is required.  What a person of Modi stature will do is to disturb the livelihood of bad elements and provide money for a good cause.  It is shameful to note that hardly one per cent are controlling major stake of our economy.