Media has been reporting about people standing in serpentine queues outside banks. The government’s timely move to cleanse the corruption and black money is a laudable move. Demonetisation of Rs.500 and Rs.1,000 notes has some benefits, but it cannot stem the flow of unaccounted income to be generated in the future. The markets for gold and property are highly concentrated, with relatively few sellers exerting considerable control over supply. Nonetheless, demonetisation of the two currencies as part will help to tackle the triple menace of black money, fake currency and terror financing. According to one estimate the quantum of black money in circulation in domestic economy is three times the regular circulated currency. The prevalent system of cash transaction and most of the black money being involved in realty sector and hospitality industry, needs to be brought within the system for tax purposes.
Black money and corruption are the biggest obstacles in eradicating poverty. When the quantum of black money was so enormous that it had created a parallel economy, making monetary policy ineffective, government’s effort is commendable. The evil of corruption has been spread by certain sections of society for their selfish interest. Prevention is better than the elusive cure. Accumulation of black money should be nipped in the bud.
The rich and powerful, whose black money is stashed in tax havens outside the country, are leading hassle-free lives. The bold stroke of demonetisation may rattle people but it will definitely inject dynamism in the moribund economy. The government’s decision to decommission higher denomination notes has really evoked positive response from economists and industrialists. This master stroke will eliminate the counterfeit notes in circulation and bring black money-holders under the scanner to a large extent. It will also help us move towards a cashless economy. This is good for the reeling banking sector and for the economy as deposits help in lending loans.
This is the first time in Indian politics that PM Modi has showed actual leadership qualities, which is fruitful for every non-corrupt individual. No doubt the common man would face hardships by this decision but soon everything will be alright. It is laudable that the PM without giving any indication for such a drastic move, carried out a surgical strike and parties who thrive on black money are dumb founded. The Congress is the worst affected and crying foul and creating panic. The PM has been slowly taking action by bringing maximum people in the Banking system. Most of the real estate transactions in the country are done using unaccounted cash. When, black money and corruption are the biggest obstacles in eradicating poverty, steps like this will indeed strengthen India’s economy and democracy despite some short term dislocations that are inevitable, and more must follow for ferreting out undeclared wealth stored in other ways. People who have amassed cash illegally in large quantities will find their business terminated suddenly. Government need to introduce laws where transactions and service payment above a certain amount has to be made through crossed-cheque, debit/credit cards or direct bank transfer.
Vinod Chandrashekhar Dixit
(The views expressed by the author in the article are his/her own.)