Monday, November 28, 2016

Demonetization or Demonization - Much Ado About Nothing?

Hello Friends,

It has been a few days since the 1.2 Billion Indian population was caught completely unaware with the Prime Minister introducing what is now termed as "Once in a Life Time Change".

A Political and Economic Risk - will it pay off?

There have been reams written about it along with countless hours of electronic media coverage as well. I am here to add a perspective from a "Every Day Indian" as the other word is taken over by a political party.

To start off, I would like to put out a few questions as they seem to bother me the most.

Frustrating to stand in queue to take your own money!
The Timing - Agreed that there never is the best time to take such decisive and "bold" decisions, the timing is not ideal with Rabi season mid-way through in a nation that still depends on agriculture for the GDP. The hard felt impact on the agricultural laborers, farmers and of course the middle-men (who we love to hate) is bound to put things in perspective when we get to the harvesting time. With the marriage season commencing and with seemingly stupid guidelines (marriages only between certain dates)on who becomes eligible for the 2.5 Lakh withdrawal, the move will impact the average middle class citizen.
  • The Process - With a grand standing and an emotional quotient, the PM appealed to all the citizens to "bear" for 50 days with the promise of fair days ahead! The very first thing that went wrong was the announcement that money will be available from 10th November which did not happen. Each day, the government is forced to react and change rules - 4500 exchange to 2000 with indelible ink and so on. The rules kept changing through out and led to the earlier confused and in some cases frustrated people.
  • The Assumptions - It was a huge Leap of Faith assumption from the people in power that enough accounts were created under "Jan-Dhan" so that the deposits and exchange can be easy which even by looking at RBI's statistics of March were wrong. The assumption that folks who said Yes on an App on Smart Phones is being brandished as a vindication of the move - does the government truly believes that the rural folks who are suffering the most will have logged a response? 
    No one is spending - will it impact the Economy?
  • Accountability - It is widely understood that the PM stands accountable for this huge political and economic gamble, what is not clear yet is the reluctance to do so in the parliament which represents people's elected representatives. This is not the first time that this PM has done that - largely disappointing especially the former PM mocked for not being eloquent stands up and delivers a rousing speech!
  • The Growth - The long term growth seems to be still on track even with the current turmoil. That alone is still making people like me hope for a better future with the troubles that all of us are going through.
  • The "Digital" interpretations - The world around has changed dramatically of late - every sane question directed against the people in power is being branded as Anti-National in the social media. Even in the current scenario, questions asked of the actual process followed are ridiculed and jeered. Can't we agree to disagree instead of indulging in loud rhetoric?
    Higher Denomination - Easy to hoard in future?
  • Why not "200"? - This is perhaps one of the biggest questions in my mind - when the government banned the higher denominations and introduces a new higher denomination, it stumps me! It is a nightmare to exchange a tough gotten 2000 Rs note - why did the government not think of introducing a 200 Rs currency instead?
  • The "Black" Money - The creation of "Black" money is a process and needs to be addressed in a end-end fashion. I am sure that there are concrete steps waiting to be taken which will address the issue (Gold, Property, Benami accounts etc.) as the current exercise subjected inconvenience and hardship to at least 90% of the population and the others listed perhaps will not impact the "White" population. I will hope to see the details on the real black money found during this exercise and the tax earned by the government.
ATM - All Time No Money :)
I will end the note on a positive "note" that the people are waiting to see "Acche Din" and hence are supporting this huge step. However, if those days are not coming soon, the patience on the ground will run out faster!

Here's to wishing to a "Cashless" and "ATM less" economy in the lines that the PM is expecting us to be! Till then, let's stand in the line, hope for the "cash" to show up in the still defunct ATMs and wish for a Digital India to come upon us soon!


  1. Pavan, Thanks for writing such a nice article you kept everything in writing what exactly my understanding is and I try to explain same to lots of people. In India when we plan to take such a big step we always take middle class for granted and never even think about the poor. But unfortunately India consists of 90% of middle class and Poor and this move is making them suffer more. Sometimes I wonder is this the same country which says “for the sake one innocent I can sacrifice hundreds of criminals” then why not the same is applicable for making economy changes and decisions? I support recovery of black money but without causing any problem to the others. I don’t know when we realize the significance and existence of a common man.

  2. Stone pelting in J&K stopped the next hour Modi announced demonetization. Cross border strikes reduced, fake notes stopped coming into public, people who came out to exchange notes are half caught, other half are not caught because IT department do not have enough staff. People like TTD officials have close to 100kg's gold lakhs of cash with new notes and many were caught with new notes. Did you now realize that banks are the main doors for black money? Look at the bigger picture, where dharma samstapahan has to happen then yes there will be trouble, I am ready to face it. I am ready to face it, I am one of the 2.9% out of 125 Million indians who are paying tax. I am paying tax and I am patient, give time to some one who not only dares to think like this but also implement something lie this. Days will come where every one will have to pay tax not just middle class, I want to see a day where I can go buy real estate the way I can buy a car today. I am patient for that day.