The decision came out of nowhere. No one expected it. People were startled and shocked at how little time they were given to take out some cash for their daily needs but the government was tough and brave in its stand. They claim they’d warned people. Declare your income or face terrible consequences. People didn’t listen believing that it is mere rhetoric but out came the news that shocked the entire nation and news reports suggest that some people committed suicide believing that their money is worthless. It is impacting us abroad as well. The tourist inflow is high during winter and tourists will find it difficult to get their foreign currency exchanged.
- Massive decline in black money: – There is a parallel economy run on Black money and this decision is a massive setback to them. They were given enough time to declare their income but they continued ignoring and not paying Tax for this income.
- End of Counterfeiting: – To counterfeit means to imitate something. Counterfeit products are often produced with the intent to take advantage of the imitated product. The word counterfeit frequently describes both the forgeries of currency and documents, as well as the imitations of clothing, handbags, shoes, pharmaceuticals, aviation and automobile parts, watches, electronics, software, works of art, toys, movies and any other types of products such as those. Counterfeit consumer products have a reputation for being lower quality and may even include toxic elements. This has resulted in the deaths of hundreds of thousands of people, due to automobile and aviation accidents, poisoning, or ceasing to take essential compounds (e.g. in the case a person takes non-working medicine). Now, paper money is the most popular product counterfeited. I have explained in the 2nd point that fake currency rackets are now ruined. This will deliver a massive blow to the unethical counterfeiting industry which runs on fake currencies and we can expect better quality of consumer products soon. Counterfeiting costs India $ 7.8 billion annually. Thus, our Indian GDP also increases due to this measure.
- Obstacle for terrorism: – As said by PM Modi “From across the border, our enemies running racket in India through fake currency”, We all know he was referring to Pak and China so this decision will put obstacle in their path.
- Reduce in corruption for few months: – This decision will put an end to corruption for the time being but as has been seen in the past, the corrupt always find an alternative to keep their malpractices going.
- Fair Election: – There is a chance that elections will be fought on issues and performances rather than on the back of economic power of a political party. Political parties will find it hard to find the finances to fight the elections and pay for the votes that they have been accustomed to doing in the past.
- Inconvenience to people: – Common people or Aam aadmi will have to shoulder the burden of exchanging notes. We already have read news reports of how few people committed suicide because they thought the money is no longer valid. Most of the working class have to skip work to stand in massive queues at Banks and Post offices to get the currency exchanged.
- Stock Market: – People without having a clear idea about the situation would try to save their fortunes and would start pulling out their money from the stocks that are going to be hit by this storm.
- Loss to common People: – Because the Fake Currency market is so streamlined and effective in India that even ATMs and Banks give fake notes and they are in circulation means a lot of common working class people will have these notes. Getting them exchanged will be a massive hassle and probably impossible. Who will compensate them for this loss?
- Rise in corruption: – The corrupt will use corrupt means to get their illegally acquired currency notes exchanged. They will bribe the bank employees and because of such a huge rush, it will be impossible to keep vigilance on this.
- Loss of Tax Payers Money: – Taxpayers money will be used to print the new 500 and 2000 notes and the 500 and 1000 rupee notes that are in circulation will need to be destroyed and there is a cost attached to that as well. In this interview Manoj Tibrewal Aakash interviewed IAS Topper of 2014 Batch Gaurav Agrawal (Full Interview)IAS Topper Gaurav Agarwal said that “it will reduce corruption but it’s impractical because it will increase transaction cost etc etc.” Let’s make it practical.
- Powerful Politicians are converting black money into white easily: – Reports have surfaced of how politicians are giving loans on very low or zero interests rates to people who are in need. And they will payback it using new currency notes.
- Inconvenience to foreign visitors/tourists in India as they don’t understand the legal system of India. This will leave a negative impact on India as a tourist destination.
- Indian Housewives: It is an accepted tradition in India that Indian housewives save money secretly so that they could be of help during times of financial crisis in their households or to pay for the dowry of their daughter (another shameless, but socially accepted tradition). The accumulated money of our respected Indian housewives is of no use now until they exchange in the banks and post-offices.
It is a very brave decision by Modi and it’s success highly depends on its implementation. No one is questioning the objectives but everyone seems to be questioning the methods to achieve these objectives.