Col J P Singh, Retd
Dedicating his 31 December address to the honest and law abiding citizens of India, Modi told Indians that only 24 lakh Indians have declared their yearly income more than Rs 10 Lakh. This news was amazing when every third person in Jammu itself appears to be millionaire. Coming this from him means every eligible tax payer is going to pay taxes in future which means more money for development and poverty alleviation. He took the onus responsibility to convey the bitter yet crucial decision of demonetization to his countrymen himself and again he took it upon himself to thank the countrymen for standing with the govt despite hardships. This is appreciable. This time he focused on inherent goodness and keen desire of Indians to adopt honesty and probity in public life by which they can contribute in the nation building.
From the beginning people hailed demonetization. Reciprocally Modi has hailed their spirit and called the 50 days of ordeal as their ‘finest hour’ of life, elevating their pride particularly of the poor, who endured the most. Never in my memory, have so many suffered so much for the sake of their country. Collective endurance in a war is known but unknown for other reasons. The world undoubtedly sees it as rise of India. It is remarkable.
Surprisingly some politicians, media-men and the financial experts failed completely in understanding the sense of national interest and mood of the poor. They failed to see the urgency of ending corruption and eradicating parallel economy. Amusingly Indian populace saw chameleon colours of political parties which always talked against corruption, the media who once carried a sustained anti-corruption drive and the financial experts who confused the nation by their delusional versions. They are talking about hardships of standing in queues. It is expected that, now these three entities will look beyond politics, talk truth and shun the demonetization as a political weapon against Modi.
In this article, endeavour is to search some symptoms which led to demonetization and were overlooked by the above three entities.
Terrorism
Nation today is obsessed with terrorism. We in J&K have suffered the most. On 8 November we were back to 1992 situation. We are not naïve to the role of currency in fueling militancy. To curb militancy, curbing its financing is one of the effective method. That is why many countries ceased accounts of various terror outfits. Use of currency for smuggling arms, drugs and contrabands into India and other sabotage activities such as burning of schools in the Valley is no secret. The foremost symptom before the govt and RBI was use of the fake Indian currency in financing terrorism and drug trafficking.
Fake Currency
It was no secret that Pakistan prints fake 500 & 1000 rupee notes in India currency. The int reports say that each year over Rs 5000 crore are pumped from Pakistan into India through Hawala for fuelling unrest. This is nothing less than economic terrorism. From Pakistan, fake notes are either moved directly or through other countries. Nepal and Bangladesh are the major transit points. Both neighbors have porous borders. Dubai and China are other routes that the traffickers use to smuggle fake currency. The same money is used to fund terrorist groups in India. Terrorists of many organizations have been found carrying fake Indian currency. Modi has solved this border problem and reiterated it in his speech. Javed Khanani, ‘fake currency king’ is said to have committed suicide on 5 December in Karachi by jumping from a building. Malda in West Bengal is termed as India’s fake currency capital. According to security forces, the trans-border trade in fake currency is done mostly through couriers from Bangladesh. In April 2014, Pune police arrested a resident of Malda with fake Indian currency valued at Rs. 1,96,000; which had been sourced from Bangladesh. In December 2015, Special Operations Group of Mumbai crime branch arrested two brothers from Murshidabad with fake notes worth Rs. 8,00,000. No wonder political parties in West Bengal are against demonetization and want roll back.
Stone Pelting in the Valley
Rs 500 a day were allegedly paid to the stone pelters. Demonetization has hit the infamous stone pelting agitation in the valley hard. The cash crunch has made their job difficult. They no longer have the money to pay the local youths to pelt stones and stage violent protests. Youths have started going to the schools. Their future is looking up again. Demonetization has fractured the backbone of ISI-Separatists nexus. Normalcy is coming back in the valley.
Setback to the Naxals
Bigger casualty in terms of sheer volume of funds is the Left-Wing extremism. Annual collection by Maoists is estimated over Rs 1,500 crore. Tendu Leaves and road contractors and big industrial houses carrying out mining in Chhattisgarh and Jharkhand are their main sources of finances. There were int inputs that Maoists may loot banks and cash vans to make good their losses. Vigilant security forces and administrative actions prevented such instances. Maoist leaders did use their trusted relatives and friends to exchange stashed cash and succeeded to some extent. Maoist fronts in metros like Kolkata and Delhi were in the forefront to publicly oppose demonetization. Mamta Banerjee, CPI (Maoists) and Arvind Kejriwal sought roll back. If demonetization and intensified crackdowns by security forces can control Naxal-Maoist menace in Chhattisgarh, Odisha, Andhra, Bihar and MP, the credit should go to Modi. Naxal affected areas will see development and inclusive growth. 469 Maoists and their sympathizers have surrendered before the authorities since November 8 in Malkangiri district of Odisha; thanks to demonetization.
Parallel Economy
Black Money is running a parallel shadow economy in India. In 2007 World Bank estimated the size of shadow economy of India at 23.2% of the GDP. Similar estimates have made by other Indian and international agencies. Hence it had become necessary to cancel the legal tender character of the high denomination currency notes to eliminate black money’s role in the parallel economy, real estate and benami deals. Shadow economy eats into the vitals of the country’s economy. It generates inflation which adversely affects the poor and the middle class. It deprives govt of its legitimate revenues which could have been otherwise used for welfare and development activities.
Rising Prices
Prices have been shooting by leaps and bounds. More money in the market promotes demand. More demand means higher prices. Kitchen basket was becoming costlier. Since November 8, prices of many commodities have fallen because there is less cash and lesser demand. Prices of vegetables have drastically fallen. Peas and tomatoes last year in winter were Rs 40 to 50 a Kg. It was Rs 15 each and onion was Rs 14 and potatoes Rs 12 last week. Price is one single magical number in the supply chain. The best thing about prices is that they don’t have an agenda. Since Nov 8, we heard stories that Mandis and Stores are empty. Amazingly, prices aren’t rising. Nothing has disappeared from the Mandis or grocery stores. If demonetization can stablise prices, it benefits common man. Preparation and Implementation
Lack of preparation and bad implementation of demonetization scheme, highlighted by the media, was felt everywhere. But 1.25 crore Indians graciously ignored it. They endured long queues and locked/empty banks/ATMs. There was no unrest in the country and no price shocks. Surprisingly Modi hasn’t said much about it. Instead he praised the bank staff for working day and night to minimize the hardships despite various alleged involvement in illegal diversion of new currency notes.
Resilience of Common Man
The common man has with all inconveniences accepted the motive behind the note ban. He suffered but never reacted to dent the drive targeted at black money and corruption. He is learning digital transactions and changing over to digital mode. He may be cashless but sees ‘acche din’ ahead. Those who had stashed notes are feeling haunted and doomed. People trust Modi and want him to put his words into practice, end corruption and alleviate poverty as fast as possible.
End Results
Jan-Dhan accounts have suddenly flourished. Bank are brimming with cash to lend on lower interest rates. Businessmen are declaring their income. Jewellers’ are being issued forms to declare their daily sales and stocks. Tax defaulters are clearing dues. Small vendors are switching over to Apps and card scratch transactions and are being rewarded.
Modi Govt has done extremely well on transparency and honesty. Bureaucracy is clandestinely trying to let him down. Present seizures and disclosures revealing large scale frauds in banking system shows involvement of insiders in sabotaging Govt drive against black money. By repeatedly calling himself a ‘maha sevak’ he is trying to tell the bureaucracy that they will have to work honestly and exhorting common man to fight the injustice themselves.
Let us resolve to be cashless in 2017.
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