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Thursday, 10 November 2016

Indian Demonetization - Version 3.0

(Tribute - Poem/Opinion) 

On India's Demonetization of Rs.500 and Rs.1000 Currency Notes 

The hazy smog in the capital did little to cloud our judgement,  
But, the shock winds of change called for a massive monetary adjustment.
The public's panic accompanied with a passionate relief towards reform.
Speak of hit & run, shock & awe, and this is something that did set a norm.

Fare thee well, old notes, you did your job, and let the new ones take over.
Let the hoarders fear and suffer, for living in a state of narcissistic doomed hangover.
A setback to those few within and beyond the borders, a current halt for fake currency.
Over the mistaken skill of tax evasion, let honesty and scrupulous planning prevail, without uncertainty.  

Inside those stitched beds and locked cupboards, and within the dark corners of 'hawala' networks,
stashed notes, some fake, some corrupt, all unaccounted- burn them along with the crackers.
But there are those among the honest who suffer temporarily, despite the exemptions to note,
We endure, for the nation to benefit, and now, let this sacrifice be a glorious footnote to quote.

A sinister mockery of the system is expected to end now,
The Pride and Prejudice of the patrons of the parallel economy shall break now.
Into this gentle night, we go uncertain, but the dawn is not far behind,
Is it a good decision? Only time shall say, but let fair play be fair play again!

References (If any)

1. Place and Date -
@ - # 16-7-16, Bhramara (Ground Floor), Saladi Jamindar Street, Palakollu, West Godavari, Andhra Pradesh - 534 260.
On -10th of November, 2016

2. Subject - "Indian Demonetization - Version 3.0" (Tribute/Opinion - Poem)
(On India's Demonetization of Rs.500 and Rs.1000 Currency Notes)
8th of November, 2016 will forever be etched in the minds of Indians as well as in the annals of Indian History, not just for the fact of demonetization of Rs.500 and Rs.1000 Currency notes, but in the way the entire process was carried. The Prime Minister, Shri.Narendra Modi, in a televised address had declared that from 12 AM, 9th of November, 2016, except a few notable exceptions of 72 hours (Hospitals, Railway Counters etc) Rs.500 and Rs.1000 currency notes cease to be legal tender money. Immediately the Reserve Bank of India, in a meeting headed by it's governer, Shri.Urjit Patel, had introduced Rs.500 and Rs.2000 notes (effective from 11th of November, 2016).

The reaction of the public and the events that took place the next day were unprecedented and spontaneous. Serpentine ques of vehicles stranded on national highways as toll operators refused to take the currency notes in question, hardships for travelers and people caught in journey, heated arguments and debates in Railway ticket counters, few middlemen resorting to exchanging currency notes for hefty commission (Rs.100 notes of 2 for Rs.500 note), minor scuffles at petrol bunks, Impact on marriages and other function etc. But, there was support from all quarters for this decision, despite the hardships faced and the feeling that "this could have been timed better".

A few simple facts would suffice, to understand the context and need for this decision -

  • This is the third time, India resorted to Demonetization after the British (1946) and the Janata Government (1978). But, the surprise element (a mere 3 hours time) is unprecedented.
  • According to a study done by Indian Statistical Institute, Kolkata, at any point of time in 2015, India had an estimated fake currency in circulation of Rs.400 Crores .
  • India's Cash to GDP ratio stands at 12.42% (2014), higher than many similar countries. This represents the fact that Indians mostly prefer cash for transactions, ignoring the many sided benefits of cashless society.
  • According to the Transparency Index's Corruption Perception Index, India stands at a dismal 76th place out of 168 Countries (2015).
  • India' tax policy is obviously regressive, and Direct Taxes to Indirect Taxes ratio stands at 35:65. This means, Revenue from India's Indirect taxes is higher than that of the Direct Taxes. Moreover, only 1% of the Population pays Income Tax.
  • The scourge of Black money, a problem which successive governments are loathe to take any action on, had a crippling impact, boosting a parallel economy (Terror Financing etc,.).
  • From the vantage of principles of natural justice, for two consecutive years, an undisclosed income declaration scheme with rather lenient provisions had been introduced (the last one incidentally ended on 30eth of September, 2016)
  • A periodic demonetization and subsequent re-introduction of high currency notes (Rs.500 and above) would go a long away in severely impairing fake currency networks and currency hoarding tactics of the corrupt. 

At the end, this is a laudable decision! Only time would decide the success of the bold initiative. But, it is a welcome step in the right direction, however small and troublesome it may seem. 

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