Saturday, 12 November 2016

Common man view: Indian Surgical Strike on Black Money

9/11 - I don't know if this date was used intentionally or not.

Yes, I am talking about the Currency Ban, Government of India's decision on banning ₹ 500/- and ₹ 1000/- currency note circulation.


To




Many people are accepting this decision, many are against it. A complete state of undesirable effects and chaos are in India. Some are suggesting to withdraw this decision while some are standing for it.

In this situation, I was compelled to gain some knowledge on the whole matter and also write something if it can help understand what is going on.

Disclaimer: I am not a political entity, neither an economist nor a Government Employee. I am just a common man of India, my love. So, this article will be completely biased to India and its people. That's why I am right now writing on the issue which created a surge of chaos all over.

So, let's start with understanding the very basic idea of a currency note. All of us has observed the promise of the Governor of RBI in any note.

What is the promise ?
The promise is, 'I PROMISE TO PAY THE BEARER THE SUM OF <AMOUNT>'.

What is the use of this promise if it clearly states a ₹ <Some amount>/- currency note ?
Yes, it has some value to it. Let's start by understanding how this currency notes start flowing through market. It's simple, RBI acquires paper, ink and some other stuffs, uses machinery to convert the paper and ink to currency note. A very simple concept of producing pretty anything and sell it.

Now, hold back for a second and think, when we create something and want to sell it, what happens ?
We provide some measure, let's say ₹ 10/- for a product and then any buyer comes to us, pays the amount and takes away the product. If the buyer returns the product, seller has to pay back the money he took from the buyer. Similar is the case of RBI. It creates currency notes and start selling it to people of India.

Confusing, right ?
Yes, it is true that this very basic concept is very much confusing. To get it clarified, let's go back to the era where no currency note was present and things were dealt with some exchange measures like conch shells, gold and pretty much other stuffs like that. Basically one was exchanging his own effort with some other's effort.
For example, paddy is exchanged with Gold. So, a man mining gold for two years can exchange with paddy that will suffice for him for two years.

Clear ? OK.

Time has changed and many up and downs have been passed, era of Kings, Empires have also gone and now it has become a sophisticated society we are living in.  Now, we have some authority to comment on the exchange measures. For example, for a KG of GOLD how much rice needs to be exchanged. These all measures have been taken into utmost sensitivity and clarity to all people of the country and with that came the standardised and easy-to-use measure, commonly known as Currency Note that we use in our daily life. The promise in every currency means that, Government of India has promised to pay the bearer of the note the corresponding measure of Gold.
We don't have anything valuable other than that. It's just our belief towards our Government that we carry in our pockets, nothing else. The currency note contains materials worth almost nothing when compared to the value it carries. And that's pretty much how it is and how it works.

Now, let's come back to the situation we are right now in. Government has banned ₹ 500/- and ₹ 1000/- currency notes.

People will tell me that, it's not Government of India, rather Prime Minister Modi who has taken the decision.

For people like them, its not Modi alone but the whole related ministry has taken the decision and it was circulated by Modi. He is just the spokesperson added with his own values. That's it.

The decision has been taken very early in his career as Prime Minister. I don't know if he was planning for this to happen earlier in his time of being CM of Gujarat. Whatever it is, it has been successfully taken care of and the decision has been circulated and people are working on it.

Impact

Now, let's see how this will impact our economy.

Curb on Corruption

India is a cash driven country where pretty much anything you will get with exchange of cash without proper intervention of RBI. And with that keeping in mind, India adopted itself - Corruption. Pretty much everyone is corrupted.

You will ask, what did I do to corrupt India ?
Remember the time you paid to someone for your Vehicle License, Passport, PAN Card or any other Government ID Proof. Remember the time you opted for cash payment over Credit Card payment for discount while buying something. Remember when you paid someone to get your work done.
Hold on, I am not out of corruption too. I have also done the same just to save some time and for my own convenience.

Next question to me, why are we doing this ?
because, we are lazy, we are reluctant to wait for a period of time to get things done in a proper way. Also, due to some corrupt officials, if we follow the proper path, our works are not done. To avoid that hassles, we need to be corrupt at times.

Next, I am not corrupting India but the people who took the money did.
No, you are also responsible. I understand, we did not do it but, did we take the step to stop it ?
Have we reported it anywhere ?
Have we tried to follow the standard procedure ?
Did we raise voice against it ?
Even if we raised voice, reported it somewhere, did we follow it up properly ?

All the answers - NO. Shame on you, shame on me. In a nutshell, shame on Common People who wants a clean India but cannot stand for it.

So, you will ask me what is wrong in that ?
Yes, it is wrong. Without any valid receipt, any transaction becomes invalid. Because those are not monitored by any authority. In case of Virtual Currency (Credit Card or Debit Card or other form), all transaction becomes valid because, it is monitored though banks and keeps track of everything.
So, the currency notes used in such transaction becomes black money. Now, if the currency notes are invalid for use, so that means the black money becomes invalid.

Even, if the person wants to exchange, he needs to reveal his identity to do that and also, if it exceeds the limit he is supposed to hold, then he needs to pay some portion to government and also the effect came immediately. So, corrupt people did not get enough time to exchange it to be useful currency notes.

So, instead of the stakeholder, Government becomes rich in turn.

Clean Fake Currency

This is the most useful thing that is going to happen. All the fake currency pushed by Pakistan to India are now going to be none of use. In future also it is going to curb this thing.

You will ask me why.

Earlier Indian currency was printed using the paper from a German Company Louisenthal. The same firm was also selling paper to Pakistan. So, it facilitated Pakistan to print Fake  Indian Currency and push to India.

So, what happened, Indian Government was in more debt that it can pay back. If you are thinking why, remember the promise of RBI Governor on each currency note of India. So, in turn Govt. of India was more debted towards people holding Indian Currency than it has been produced ever.

How will the currency ban help it ?
If you don't accept your creation and start refusing it for exchange, you are not supposed to return anything if the buyer wants you to return the product he purchased. Now, India is not accepting old currency notes. So, whoever is holding fake currency, it will get obsolete.

The same situation will again arise in some time.
Yes, it will definitely arise, Pakistan will again try to produce Fake Indian Currency and push it. But, this time, it will come with a basic scarcity of materials. because new notes has been produced in a mint in Mysuru with different paper than earlier paper used for printing notes. On top of that, some new security features also introduced in new notes to strengthen the security.

Lower the Indian Government Debt

As mentioned from the very beginning, having a currency note means, Indian Government is owe to pay you back. Now, people holding black money will be in trouble. And the majority of people holding black money use ₹ 500/- and ₹ 1000/- notes. These have become invalid now. So they are left with two options,
  1. Go to the bank, declare everything, pay a big  portion to Government, get into the radar of IT and exchange.
  2. Sounds hectic, right ?
    Destroy the wealth you have made by corrupting.
So, the major strike has been against the corrupted people.

So, Indian Government are less in debt and have become richer than it was earlier. So, it will gain some momentum in Global Economy as well.

The mistakes

While that was the bright side of it, now let's look at the mistakes that has been in place while issuing this immediate effect.

Lack of proper Infrastructure

While the cause was very noble to put things up in place. But before that Govt. should have thought of the post effect of it. Majority of people in India does not even hold a bank account, forget about Debit Card, Credit Card, Online Transaction and Virtual Currency.
So, before making such a drastic decision and imposing it on public, Govt. should have taken care of the proper infrastructure. Even many of the Govt. related transactions itself are being dealt in Cash only. So, to impose some rule, Govt. should have imposed it earlier.

“Be the change that you wish to see in the world.”

― Mahatma Gandhi

Lack of proper education

Its easy for educated people to get acquainted with the new form of currency but it is not easy for uneducated people. While writing this, I am in no mean intimating the literacy rate of India which is hopping at 74.04%. What I mean is about the proper education about Virtual Currency and Plastic Money. This illiteracy is creating the mess allover.

Lack of proper communication

The new rules are just rules to many people which they will follow blindly without any proper insight of what is going on. While some politicians are against it. So, it seems to be a burden to common people. So, proper communication channel must have been placed before this decision to be rolled out to clear the misunderstanding among the common people.

While all the information has been put on internet and Govt. can ask everyone to get to internet to clear the confusion, it must be kept in mind that till today only a 15.01% of Indian population are using internet and that too mostly for social network usage.

So, this one point must had been placed earlier.

Lack of Medical Help

While introducing the new rule, Govt. should have provided the facility to all medical facilities like Hospitals and Diagnosis centres to issue a receipt and accept ₹ 500/- and ₹ 1000/- notes and later on producing these receipts the medical service providers can exchange the money in bank. That would help the medical service providers and could save many lives all over India.

Come on India, you also know that not all Government hospitals are capable of handling all medical emergencies all over India.

Lack of proper man power

India is a country of 1.26 billion people. So think about the cash transaction that will occur in this period. To facilitate this volume of transactions, India lacks the man power it needs. So, the long standing queues outside the banks are visible everywhere.

Improper timing

Many of the wedding rituals are about to start all over India. So, people are facing trouble while arranging such auspicious festivals. Some has to postpone it. Its bad to see them in trouble.

On the another hand, there are some elections coming in some days. At this point of time, the currency ban was not so wise decision. This will impact the popularity of Government which will impact upcoming Loksabha election.

Rise of political pressure

To be on the safer side, Government needs to take utmost care of the pain public is going through and educate people properly about the Currency Ban. Otherwise, it is supposed to dig the graveyard. Political pressure will be high on rise and political entities will defame Government in every way possible.

See, many people stand with the Govt. without having the deep root knowledge. So in turn Govt. at least should show some respect to its people and share all the thoughts and data about currency ban after the period is over. I acknowledge that this was kept a secret for convenience but show to the common public on the returned money how Govt. has dealt with it. If this is shown periodically, people will understand and also be proud to take the pain. In turn, more public support will be available to Indian Government.

Improper chaos handling

Apart from knowledge sharing, Government of India must have implemented some chaos handling measurement before it goes out of control. That would make this process smooth.

If proper knowledge sharing channels would have been in place, many deaths could have been avoided and many unnecessary chaos could have been eliminated. Only instructing people to  stand with Govt. and gaining sympathy does not work always. We are with you but we also love to be supported and pampered.

Some suggestions

After all the criticism, it would be very much unfait if I don't provide some suggestions on this issue. So, let's start with the immediate steps that Government can take.

Extend support to all Medical Facilites

In this situation where many people are dying due to lack of support to private medical service providers. So, Govt. should instruct all the medical instituions like Public Hospitals, Private Hospitals, all Diagnosis centers to issue a receipt to the service users who will provide their identity details like PAN, Mobile Number and also provide Currency Note Number. They will also keep a back up copy to themselves. Afer all common people exchange their note, Government should provide another window to these service providers to come with all collected Old Notes and corresponding receipts to exchange money. If anyone comes with more money than all the receipts, the excess old notes will be rejected.

In future also, if this type of situation arises, Govt. Should follow the same principal.

Stop Religious Organisations to exchange Old Notes

Just today morning, I came to know that Tirumala Tirupati accepting donations of ₹ 500/- and ₹ 1000/-. Because they know that, no one will ask them why they are exchanging such an amount of money. So, based on this, they will do the corruption for the corrupted people. Many people will ask these authorities to exchange the money on their behalf.

So, all Mandir, Masjid, Church, Gurdwara etc have to pay the same penalty to exchange notes as a common man pays. Otherwise, their money will be thrown away and not  deposited in bank.

Grow Infrastructure

While India is growing at a fast pace in this sector, it should keep a track of what is going on and how fast this needs to be incorporated. If every cities, small towns and villages get ample Internet Reach, the communication from Government to Common people will be very easy and useful. So, no middle man can tweak it against Governement like it is being tweaked today by some politicians.

Promote use of Virtual Currency in all sectors

While most of the private sector are based on virtual currency, Governement sector should also follow the same principle. Gas Booking. Property Tax paying, Raiway Ticket Booking all should be done via only virtual currency. Then government should mandate all small and medium size shops to at least have the provision for virtual currency transaction like Credit Card, Debit Card, PayTM and others. So, if physical currency gets demolished also, problem will be less far. On this matter, it also needs to be checked that surcharges needs to checked. People often use Cash to buy things because they have to pay the surcharge of Card Transaction.

Also, government should provide some education on virtual currency. This step will not only help common people and Government but as a by-product you will get more employment as well.

I know, this one is hard to pursue but it is far better than Physical currency.

Start using Virtual Currency and educate people about it

While the other points were for Government, this one is for common people. If you are reading this, then you really know what I am talking about. So,, ditch that cash in your pocket and get a fresh start. I know, it is difficult to follow all the time. But it is really not that hard to talk to people and spread the awareness of Virtual currency.

It will be painful for a period of 3-6 months but once everything goes digital, we'll have a great time in long term.

Some thoughts

It is really a bold step against corruption but it came with lots of glitches along with it. While I support the decision personally, I am feeling pity for public inconvenience.

While, we cannot change the situation but we can at least make it a better place. I have spent time collecting the required resources and tried to put my views. While I am not sure many people will accept it or not, it is actually a good initiative. We now have the option to give Government a feedback on its decisions. So, we should give it.

We all want to see a better India and we should also stand for it. To the people reading this, I would request to share knowledge about the situation. Please get yourself up and make it a smooth period. If Governement has failed at this, try yourself to get into the menace and help people out. You are not going to stand in the LOC and fight against enemy, all you have to do is reach out and help people understand the situation and curb the chaos.

Watch the following video. If we can come across all these, we will surely go ahead with this period and shine again...

Let's join together and hope for a better India.

Jai Hind !!!

Information Resources

  1. https://en.wikipedia.org/wiki/Literacy_in_India
  2. http://www.ndtv.com/india-news/number-of-senior-citizens-in-india-is-growing-more-so-in-villages-report-1398393
  3. http://indianexpress.com/article/india/india-news-india/india-population-growth-people-over-sixty-senior-citizens-2764848/
  4. http://indiatoday.intoday.in/story/black-money-surgical-strike-pakistan-fake-currency-network-modi/1/806903.html
  5. https://www.google.co.in/search?q=Internet+users+of+india&oq=Internet+users+of+india&aqs=chrome..69i57.5007j0j7&client=ubuntu&sourceid=chrome&ie=UTF-8
  6. http://www.hindustantimes.com/india-news/new-indian-currency-notes-to-clamp-down-on-pak-s-fake-currency-racket/story-bOurqNK67dGT2VFYQkYmaI.html
  7. http://indianexpress.com/article/india/india-others/german-bank-note-paper-supplier-with-pakistan-link-barred/

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