Currency quandary : Uttar Pradesh in sight or Modi jumla?
The saying Failure’s the pillar of success, aptly fits with the Prime Minister Narendra Modi-led BJP government’s move to scrap Rs 500 and Rs 1000 notes. Failing miserably to unearth the names of the account holders of the ‘infamous’ Swiss Bank, Modi has resorted to a plan B thereby zooming into small-time traders who evade meagre taxes that amount to few lakhs. But, then, what about the individuals who have unaccounted wealth of several billions parked in foreign banks?
Now, putting an end to the deadly disease of corruption and terrorism must be on the priority list for any government that rules India; there’s no two ways about it. But the point is the impact of suddenly demonetising Rs 500 and Rs 1000 currency notes without giving the common man enough time to arrange for survival.
Firstly, it has created a financial chaos across the length and breadth of the country and it’s the middle class or the lower middle class that have been at the receiving end as now they are the ones who have been subjected to scrutiny whereas the filthy rich who have parked their money (read black money) in offshore accounts/companies are sitting pretty. The fraudsters who have stashed their money in foreign accounts are left unscathed as they don’t carry briefcases containing those notes of 500/1000 denominations and rather resort to electronic transfers or hawala transactions, which cannot be controlled by the government’s surprise call on Tuesday.
Secondly, by scrapping the Rs 500 and 1000 notes, it has brought the economy to standstill with the highest currency of the country being Rs 100 for the time being. This will create a huge liquidity crisis in the interim period. Consequentially, the stock exchange has already felt the heat and the gold prices have skyrocketed by Rs 4000 per 10 grams. Well, this was ill-timed and poorly planned, to say the least.
Thirdly, this would facilitate for even more corruption with small time traders, who transact in cash, to get individuals below the poverty line to endorse their Rs 500/1000 currency notes in the bank with their photo identities in exchange of few hundred bucks.
So even remotely thinking of the eradication of corruption is too far-fetched despite the move. Rather, the entire purpose is defeated following poor planning and hasty decision making. According to sources, illegal money lenders are making most out of the situation with few even offering to exchange the 500/1000 notes remitting a value of almost 70 percent I.e 350/700.
However, the panicked common man have queued up in front of the ATMs and they have been witnessed carrying on with the similar exercise as and when the banks opened their doors on Thursday.
Now, what warranted this hasty announcement by the Prime Minister? Is it really to eliminate the black money in circulation? Or is it merely a political decision? It’s most likely the second one, because had it been the first case, the government would have targetted the bigh fishes instead of small fries.
With the Uttar Pradesh election round the corner, Modi’s eyes may be set on those whopping 403 Assembly seats (highest among the Indian states). How? The scrapping of Rs 500/1000 notes will have a great impact on the cash flow of both Mulayam Singh Yadav-led Samajwadi Party and Mayawati’s BSP and this move may just thwart the MSY juggernaut that clinched the deal in 2012.
Also, Modi’s dream of digital India gets a big boost with people have been seen resorting to pay through debit/credit cards or through cashless money transfer applications like Paytm at several malls and departmental stores.
By the way, Modi’s announcement that government hospitals and crematorium would accept those banned notes till Friday was hit hard. The writer learnt several violations throughout the day and it’s bound to increase with each passing day. Even the banks would run out of gas later in the week as it will be a huge burden on them to replace approximately Rs 1874 crore with notes of Rs 100 denomination in the economy.
The emerging scenario has already sent shivers down the spine of economic experts and few are comparing the dashing PM with Mohammed bin Tughlaq, who ruled Delhi from 1324 to 1351 and used to be famous for surprise calls whimsical attitude.
But the matter of fact is history didn’t judge Tughlaq too kindly, would it be any different on NaMo? Time will say.