Friday, 9 December 2016

Post Demonetization: Phase II


Finance ministry has waved off service tax for e-transaction below Rs 2,000 as the first step in the direction of cashless economy.  To boost up the cash less economy the government affirmed discount offer on purchase of petrol and diesel (0.75 per cent), monthly or seasonal railway tickets (0.5 per cent), railway accidental insurance cover up (Rs 10 lakh), railway catering, accommodation, retiring room services (5 per cent), buying insurance policy from PSU companies (8 – 10 per cent) and toll plaza (10 per cent).  ‘The Government wants to increase the pace of this switch over’ Finance Minister said.  The ministry will provide two lakh Point of Sale (PoS) machine to villages free of cost; and Kisan Credit Cards holder will be provided with Rupee Kisan Card for digital transactions.  Paradigm shift was noticed at petrol pumps; Rs 360 crore (40% of total) transaction per day is through digital mode.  The ministry is deploying PoS machines at those places where rural masses do cash transact. The e-payment will reduce down burden on cash transaction on Rs 2 lakh crore in petrol and diesel and Rs 3,000 crore on railway.  A major section of society (58%) is utilizing railway’s e-ticket facility.
         
On 30th demonetization day the government agencies have seized more than Rs hundred crore old and new currency notes and gold bars costing more than Rs 100 crore.  Names of politicians, businessmen and actors are surfaced in print and TV media.  AIDMK leader and businessman Shekar Reddy, TV actor Rahul Chelani, bank officials, contractors, middlemen and many more are detained and questioned about its source.  Bank account of hundreds of Mumbai residents has been allegedly used paying 15% commission.  Rs 30 lakh has already been recovered from the person who has deposited the amount.  The businessman, agent, sub-agent, account holders and many more are under IT scanner.
 
Prime Minister of India said ‘yagna against corruption, terrorism and black money will empower the poor people and benefit coming generations’.  He tweeted that the short term pain will pave way for long term gain.  While commenting on PM move none other than Congress Vice President Rahul Gandhi said that ‘the bold decision can be a foolish decision’.  He said more than hundred people died due to single handedly autocratic decision and PM is changing narratives again and again.  ‘The centre has turned into a salesman trying to sale plastic cards.  PM has no moral right to continue and must resign.  People must have hassle-free accesses to their own money.  Who is responsible for death of 90 people’ Manta Banerjee Chief Minister of West Bangal said.  Lalu Prasad Yadav RJD chief asked if no change is observed after 50 days, will PM tender his resignation.  Shiv Sena Chief is going to spell their stand after 50 days period.  The party is neither opposing nor welcoming the move; however want reprieve to common man soon.
 
In Parliament, the opposition party wants discussion without any condition, whereas the ruling party is demanding apology from opposition for stalling the proceedings for 16 days.  It seems the whole session will be washed out without any discussion.  ‘Responsibility of running the house is that of government and speaker’ Rahul said.  When Congress was in power it has not taken single step against black money, said Finance Minister.  Rajya Sabha Chairman Hamid Ansari rebuked the treasury benches for disrupting the proceedings.  ‘How can the treasury benches be agitating?’ asked Ansari.  The demonetization policy has given abrupt shock and surprise to the people, has been referred as Tsunami by economist Lord Meghnad Desai.
      
The ministry of external affairs is in contact with finance ministry to resolve monetary issues of some of the embassies facing cash crunch.  The assurance for smooth functioning was given to the Dean of Diplomatic Corps Frank Hans Dannenberg Castellanos who represents the voices of 157 foreign missions.  He sought the PM intervention and said the present situation is the serious breach of Vienna Convention.

Mr Devara serving IAS officer and former Secretary, Department of Cooperation, Maharashtra State studied the role of co-operative banks in the context of socio-economic development of a farmer.  His findings are the eye opener for the policy makers.  The scheduled commercial banks in India have 1.33 lakh branches and 2.2 lakh ATMs spread over metros, medium and small cities and towns.  While, the post office has 1.55 lakh branches across the country.  There are about 370 district cooperative banks with 14 thousand branches; also 93 thousand primary agriculture credit societies.  The society and co-operative bank is spread over Maharashtra, Karnataka, Kerala, Tamil Nadu and Gujarat.  There network is rural based.    The RBI has not allowed them to exchange old notes with new one.  It has affected routine functioning of banks that are catering the daily needs of the farmers.  Primary survey indicated that it has untoward effect on harvest during kharif and sowing during rabi season.  The societies and co-operative banks render short term loans to the farmers.  National Bank of Agriculture and Rural Development (NABARD), state co-operative and district co-operative are linked together.  NABARD is the controlling authority.  The policy has dried off their liquidity thereby shattered the trust and confidence among rural flock.  The plea of politician was to let them function as that of other PSU and if fraud or irregularities happened then take stern action as per rules and regulations. 

Demonetization policy has direct impact over agricultural economy.  The prices of sugar, jaggery, paddy, vegetables and what not are falling down than the production cost.  The market price is lesser than minimum support prices.  The demand is subdued as there is little cash available in market.  The sugar mill owners have not paid cane prices to farmers for the year 15-16.  The move is definitely suicidal for the agrarian population unless urgent steps are taken at once. 
                     

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