[dropcap]T[/dropcap]he Reserve Bank of India (RBI) has withdrawn its December 19 circular asking people submitting over Rs. 5000 in now defunct 500, 1000 denomination notes in banks to fill up a form explaining why it wasn’t done, so far. This decision of RBI was ridiculous and beyond explanation. Many people didn’t get time, many even could not afford to be in queue and many thought that let the line reduce then they will deposit their money. They were following government rules and not deliberately waiting or decided not to deposit their money till the end. BJP and other political parties could have exchanged their money in November but were waiting for rules to change for them. However, it is the common man who is still struggling to manage the rhythm between work, wages and exchanging old currency. Clipping under public pressure, the top bank issued fresh notification recalling its previous circular which means people can deposit more than Rs. 5000 in fully KYC compliant accounts.
People were confused and grumbled of harassment over the RBI’s deposit rule. Despite Finance Minister Arun Jaitley’s clarification over the previous notification, banks went ahead and questioned people. Old currency notes worth over Rs. 5000 can only be deposited once per bank account till December 30, the Reserve Bank of India had said in a notification. Frequent changes in rules demonstrated that Modi’s words carry no weight. A war of words broke out between the BJP and the Congress; many netizens showed their anger against BJP on social media. People are hassled and harassed since demonetization is announced, many died, humiliated, faced horrible consequences, but central government turned deaf ears and it has continued to commit atrocities against the common man. On November 8, Prime Minister Modi declared that people had the right to exchange old currency with the new and deposit invalid currency in banks till December 30, but on Monday RBI come up with another circular. The assurance of the Prime Minister too has been withdrawn.
India’s cash economy has been thrown into turmoil since Modi’s demonetisation announcement and only leaving about one-seventh of currency in circulation. Economists say the move will be beneficial in the long-run as it is targeted at weeding out tax evasion and corruption. Unaccounted money makes up nearly a fourth of the economy. In the short-term, the biggest crackdown on money laundering happened. However, most of the people caught with large sum of amounts are either politicians or bureaucrats. No common man was caught with massive wealth or black money.
The collective impact of demonetisation is the top concern for politicians queuing up to protest about the difficulties the common man is facing. Indeed, the social impact is the most major visible impact of demonetisation. People who do not use ‘plastic money’ such as credit cards, debit cards or online banking will not have usable money for basic necessities. Small time merchants or street vendors who do not posses plastic money cannot buy further stocks. Small time independent service providers like transportation that do not accept other methods of payments will lose business. Daily-wage earners would not get money.
Large-scale businesses that have used unscrupulous means to accumulate non-taxable income will fall in trouble as the piled up currency will not be valid. Small-scale businesses that operate on mainly cash basis would face difficulty initially, but the demonetisation has provided them an urgent push into a cashless method of operation. As a result, more small and medium scale businesses are becoming digital. Online companies on the other hand would flourish as they already have set-up for cashless transactions. Companies that sell high-range products might face initial hiccups as customers juggle cash transactions and digital transactions. Sale of Jewellery and gold, no doubt faced a sudden spike as people rushed to invest the unstable currency into a more reliable format of gold.
The main motive of demonetisation was to improve the economy, especially in long-term. But as a result of notes ban, people have been forced to deposit their earnings helping to fill banks with an unprecedented amount of money in record number of time. Conversely, the value of Indian rupee is at one of its lowest level and may even drop further to Rs. 70 per US Dollar. Economy will become more organised, transparent and cashless, with a long-term benefits. In comparison, developed countries use around 4% cash on a day-to-day basis; while India functions on a 12% cash based system. However, the transition from cash economy to cashless in a very short period is going to be an immense responsibility. Overall, the demonetisation is hitting India hard, due to its heavy reliability on cash. Nevertheless, even if black money is generated in the future, the 2016 sweep will have cleared away a vast majority of it. More than 20 million jobs will be lost per year from 2016 up to 2025. An uncertain future is ahead for the job market and horrible for self-employed guys. God knows, what will be the future of this country and its people? Anyway, this government has dug up its grave and that is for sure.
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