Notes Ban: Terrible Implementation shows no Planning

The Government of India order to declare the current Rs. 500 and Rs. 1000 notes as not legal tender has initially said as a well planned move against black money. Shri Arun Jaitley, Union Finance Minister as well as Shri Rajnath Singh, Union Home Minister has reiterated the Government stand that the Government had thought through the move and implemented it. However that appears to be complete hogwash.

It seems that the number of Rs. 500 notes withdrawn are 1570 crores. And 630 crores of Rs. 1000 notes were withdrawn by the Government order. The total capacity of Government of India's currency press is 300 crore notes a month. So it would have taken some 7 odd months to print replacement of Rs. 500 and Rs. 1000 notes. So the Government decided to print Rs. 2000 notes in lieu of Rs. 1000 notes. Nevertheless, it appears that it will take some 3-4 months atleast for the Government to fully print replacement currency. So the queues will last for a long time.

The Government initially said that people will be able to draw RS. 2000/- from their ATMs per day and from 19th onwards they will be able to draw Rs. 4000. However, the Govt. again raised the limit to Rs. 2500 and dropped the promise of raising the limit to Rs. 4000/- per day. Clearly they realise that it is impossible.

The initial order said that people will be able to exchange Rs. 4000 worth of old Rs. 500 and Rs. 1000 notes by filling a form. Now that limit has been reduced to Rs. 2000. People will old currencies can however deposit all the money in their bank accounts. However despite the Jan Dhan Yojana accounts not many in India have bank accounts. So that makes it very difficult for people.

The Government has also allowed people to withdraw Rs. 2.5Lakhs if a family has a marriage. This appears to be a fallout of Mr. Modi sarcastically saying in Japan that even marriages have been stopped and the people were heard laughing. The Government has now decided to fight that negative image by ensuring that anyone in the family having a marriage can draw Rs. 2.5L. So this again shows that the Government had not thought about this before ordering its implementation.

The Government realised that many people are going to exchange notes. Some of the people are visiting again and again. So to stop it the banks were asked to put indelible ink on the finger of people while exchanging old notes.  However, there was shortage of such ink, so the banks were advised to use the ink that dhobi's use to mark clothes. Now the Election commission has written to the finance ministry that that since this ink is only for use in elections, the finance ministry ask the banks to stop using it. This again shows how this Government is grappling with a bad idea which was implemented without planning. The Government is moving from one knee-jerk solution to another.

Mr. Modi had come to power by promising efficiency and development. Certainly this muddle headed idea and its poor implementation has left his carefully crafted image in tatters. If this impasse continues for some more days, which it is likely to be, the anger against the Government will rise and no amount of giving it a positive spin will suffice.

His past actions tell us that he will try some other big bang announcement to make people talk about it and forget the pain of notes ban. We haven't heard the last word yet on this issue.

Read the previous article: http://arjunaubacha.blogspot.in/2016/11/blackmoney-politics-way-forward.html

BlackMoney, Politics & Way Forward:

In the 2014 Lok sabha elections, you all would have seen the unprecedented money power. 20,000 crores was spent by BJP. Do you know how much is the official income of BJP in 2014-15? It is 1475.44 crores. So you guys think that the election was fought with “white” money?

According to grapevine, Mukesh Ambani is supposed to have given some 4000 crores. Do you think he gave all that in cheque?

Wake up guys!

Many years ago, Ratan Tata had proposed State funding of elections. It was rejected. Without adequate funding, good guys can never contest elections. Only the rich, corrupt can contest elections. Today they spend anywhere between 6 crore rupees to 10 crores for an assembly election and it varies according to the importance of the seat. That is way more than the stipulated amount that is shown to the election commission as election expenses. Majority of the money spent in elections is black money. During elections when the blackmoney comes out and is pumped into the economy, it becomes legitimate earnings for some and gives rise to a boost to the economy as it has a multiplier effect.

Nevertheless, funding of elections have to be streamlined, else politicians will continue to have a reason to generate blackmoney.

And don’t think the black money is generated only by rich.

Many of you would be paying house rent by cash. Any money that is not accounted for ie declared to the income tax is black. In Delhi, people pay part of the house rent as cash. This is because the owner insists on payment in lieu of pumping water to fill the overhead tank. Much of delhi is like that.

And if you every paid money to the traffic cop for a traffic violation, then that would have been without bill and it is a blackmoney. Did you request the TTE to allot you a berth in the train and given him some money. That is blackmoney. Next time run after the TTE and record video and see what he does. :)

A road side food vendor earns much more than many salaried employees. A TV report suggests a chaat wala in Bhubaneshwar earns 32000 profit per day. That is after paying the mandatory haafta to the police. How many common men and women earn that much money after tax? And all that is black. In Bombay, road side eateries have declared some Rs. 50 crores income. http://economictimes.indiatimes.com/news/economy/policy/roadside-eatery-owners-declare-rs-50-crore-under-black-money-scheme-in-mumbai/articleshow/54618396.cms

The generation of black money is relentless. Modi Govt. has done nothing to stop the generation. Neither it has done anything to hunt the super rich who have already converted their black money to white.

The gems and jewellery industry had grown by 97.1% in FY 2015-2016. Most of that is due to the cash getting converted to gems and jewellery. Govt. mandated the use of PAN card for high value transaction. However, people know how to bypass it by breaking the purchases into instalments as well as lot of those not being shown in the books and through fake id proofs.

The people who are hit by the Rs. 500 and 1000 notes ban are the poor and small time traders. In Delhi when a maid goes to convert her 1500 rupees which she had got as salary by giving it to the sabji wala, the sabjiwala thela guy gives 300 worth of sabji for each 500 note.

An industrialist has got 80 employees. He signed contract with all his employees and gave them 5L each to be deposited in their account as well as their wifes account (2.5L each). So he made some 4 crores white. This is one of the methods adopted. People are ingenious and can figure out a loophole to deposit their notes in the bank accounts.

The challenge is the significant loss in sales in the markets. The economy is hit. There is partial impact of this on some guys who had blackmoney. However for a large economy like India, this is way too less. We order food/groceries online paying through card to tide over the problem. The poor cannot afford to do that. In smaller towns the number of banks are too less and due to lack of media coverage we don't get to know the suffering of the people.

Note ban is More to do with Politics:

There is so much of data these days. The Government should have put people to analyse it. This kind of data analytics is called “big data”. However, the Government decided to create fear in the minds of people to benefit politically.

Else, there was no reason to say that any deposit over Rs. 2.5L in bank will be taxed. What was the point in making that announcement? Let people deposit all their money and then the Government could have just gone and caught the people who had deposited huge amounts and asked them to justify it.

What was the need to announce that the Government is tracking the Jan dhan yojana accounts where money is being deposited. It is simple politics my friend to tell you guys that the Government is actually hunting down the people with blackmoney. It wants you all to have vicarious pleasure in participating in that blackmoney hunt. Remember the Roman era where people used to applaud the bloody man vs animal sports? The psyche is the same. The Govt. makes the aam aadmi feel the same about hunting blackmoney guys. Unfortunately, due to the poor implementation, the poor people instead of applauding the Government have become collateral damage. The Supreme Court has rightly said that it is Carpet bombing.

Citizens can help unearth BlackMoney:

The Government can setup toll free numbers, email ids and fax numbers dedicated to unearthing black money where any person can send a message about instances of blackmoney generation.

Some bhakts say that banning Rs. 500 and Rs. 1000 will lead to more PayTM which is good. Tell me why going with a Chinese company is good?

Govt. App for e-money:

I would prefer that all buying and selling be done via an app linked with mobile and that app should be owned by the Government. It should have voice assisted features, so that even a layman can understand how to use it.

If there is any hacking then the Government should be responsible. When it comes with sovereign guarantee, people will definitely use it.

And the Government will then know all the users using the app to buy and sell even small things like samosa in the road side. Let the Government take the lead. It would be the biggest e-money payment mechanism in the world.

Why bow before chinese and use PayTM? If that can be done, then the entire India will stand up and applaud Modi. No amount of tears can move me. Only visionary work can. I still have hopes that Mr. Modi can do good things based on his mandate, without disrupting lives of common man and making him/her collateral damage in his politics.

Edit: Readers have emailed that there is a National Payments Corporation of India with its UPI (Unified Payments Interface) gateway, where some 30 banks are linked. So one can directly pay from your account. It was done during Raghuram Rajan's time and hasn't got much publicity. May be the Hon'ble Prime Minister can promote it instead of being shown in PayTM advts. However, we are not sure if this UPI will work in toll booths and other places.

Read the Next article: http://arjunaubacha.blogspot.in/2016/11/notes-ban-terrible-implementation-shows.html