Post Demonetization: 38th Day

            For employment generation and for self-employment enhancement, cleaning the system of black money and corruption is very high on agenda, PM Modi reiterated.  Economic transformation using digital and cashless economy, the country is witnessing, he told while addressing video conference on ‘Economic Times Asian Business Leaders Conclave 2016’ in Kuala Lumpur.  In his remarks, Najib Razak, Malaysian Counterpart praised PM Modi “being good reformist he has attempted something that lessor mortals would not have attempted.  If you are courageous enough to implement reforms, you will reap the rewards”.

            To carry far ward the massage, more than a dozen ministries have given presentations to PM Modi regarding spreading awareness on digitization of transactions.  In contrast, Kerala Opposition leaders protested the policy in connection with role of co-operative banks that has direct impact on co-operative and agriculture sector movements of the state, and also on non-resident keralites that have deposited money in these banks.  Rahul Gandhi, Congress Vice President described the move as “monumental disaster”.            

            The Central and State Government are exerting in the direction of PM Modi’s cherished child ‘cashless economy’.  They are launching new schemes; the Haryana government recently notified that the state employee (2.35 lakh) should make at least one digital transaction within a week time and will have to submit the proof.  While, the employee organization has condemned the move, and said that the state government has no right to compel the employees to do online transactions.  The motive is good but implementation is inappropriate.  In Chennai, both, the cash crunch and Vardah cyclone are hitting the people hard.  The cyclone has disrupted the electricity supply and also telecom and internet services.  So, Chennai faces one or the other type of calamities – cashless, the additional - during December month.

            Controller General of Accounts, M J Joseph has warned Central Government in view of pressurizing e-wallet transaction involving government services and utilities.  He said “we should think through procedures first so that we don’t land ourselves in a mess later”.  Safety, custody and control and flow of funds along with procedure details are the liability and must be streamlined to ensure that the money reaches the coffers.  So, government in association with Reserve Bank of India shall have to decide the procedure first, otherwise, it may lead to scams after scams.  The CGA has no objection on new technology, but things being complex and auditable, the fund at last must reaches the RBI is the foremost duty with transparency.

            There are many firms/manufacturing units that have given lay off to the employees and the last payment is in demonetized currency.  Many workers are agitating on streets.  First and foremost, the employer should be send behind the bars - at once – for illegal old currency transaction.   Good news has been reported from Pune; after demonetization the export of grapes has substantially been increased.  The vineyards activities have not affected by the policy; all payments are through banks.  Some voluntarily and others because of compulsion are shifting towards cashless transaction.  The live example is of Agriculture Produce Marketing Committee, Nashik has initiated the process whereby farmers are receiving payment through cheque.   The problem lies in long serpentine queue as time is precious for them.  North East region of India is in severe cash crunch.  The majority of people are not connected with banks.  They have not yet opened the bank account.  Border villages are severely affected.  They are using Bhutanese currency in exchange of Indian.

            There is need to ascertain the effect of policy on investment of Indian companies abroad. At present, the investment plunged by 70.9% in November month.  While, foreign portfolio investors have pulled out over Rs 56 thousand crores since inception of the reforms.  The impact would remain for further six months, experts quoted.  The rupee has been depreciated by 2.4% in these months against US dollar.

            The income tax rate and interest rate is likely to come down, said A R Meghwal, Minister for State for Finance.  Opposition is likely to raise this issue in Parliament as the announcement is the breach of secrecy of the forthcoming budget.  The Income Tax department will take action against those who will revise and file their IT returns.  Rs 500 old notes is out of circulation from today midnight, however, the notes can be deposited in banks.