Hundreds of people must have had a sleepless night yesterday. Vijay Sekhar Sharma is one among them. Unlike many who were sleepless due to anxiety, Vijay Sekhar would have had a night of joy and excitation. His company, Paytm would have skyrocketed in valuation. By taking a bold step in withdrawing its guarantee on 500 and 1000 rupee promissory notes, the government of India has made all Indians shift focus on themselves rather than some elections happening in a far away land.
Black money is the prime reason behind the fall of rupee value. As long as the rupee minted in India and the currency notes printed in India, stay in India and circulate, it is fine. But if they cease to circulate, it creates a gap in the wealth of the nation. This can happen by either stashing away the rupee in form of dollars and gold bonds abroad or by creating an excess of currency through counterfeit notes, which are all actually a form of warfare on the Indian economy since it is still predominantly an economy which deals in cash. A gap can also be created by suffocating circulation by hiding lots of large denomination notes under bedroom tiles and buffalo sheds (if you take it literally, stop watching Indian movies for sometime!). It is right time for those who can, to move towards digital transactions because they are perfectly safe and now are actually safer than currency transactions. RBI has published FAQs on this matter.
Black money is the prime reason behind the fall of rupee value. As long as the rupee minted in India and the currency notes printed in India, stay in India and circulate, it is fine. But if they cease to circulate, it creates a gap in the wealth of the nation. This can happen by either stashing away the rupee in form of dollars and gold bonds abroad or by creating an excess of currency through counterfeit notes, which are all actually a form of warfare on the Indian economy since it is still predominantly an economy which deals in cash. A gap can also be created by suffocating circulation by hiding lots of large denomination notes under bedroom tiles and buffalo sheds (if you take it literally, stop watching Indian movies for sometime!). It is right time for those who can, to move towards digital transactions because they are perfectly safe and now are actually safer than currency transactions. RBI has published FAQs on this matter.
Who will benefit from this: a common man's view
A popular TV channel rushed to ATM centers in cities like Mumbai and Kolkata and towns like Bhatinda and interviewed people standing in long queues. Almost everywhere, people resonated the same idea that they are ready to face hardships for a day or two if 'black money' is controlled because of this move. Just three and a half hours before midnight, the prime minister announced that high denomination notes cease to be legal tender from midnight. This has shocked common people but the move was quickly welcomed because HONEST PEOPLE HAVE GOT NOTHING TO LOSE if not gain.
One need not worry about traders, small or big and the middle class. They are well informed (social media made sure everyone knew the news in no time) and have enough time to deposit all their legal money in the banks in time by December 30, 2016. In case the deadline is missed, they can go to RBI branches until a later date.
Those who wish to exchange all their money would be getting four thousand rupees and a withdrawal of ten thousand per day is possible until November 24, 2016 which would be good enough for the small traders. For larger transactions, cheque transfers, NEFT and everything else is still the same. Those who are scared that all the black money will be exchanged into hundred rupee notes, no, it cannot be.
All those farmers, teachers and middle class people who generally get paid and deal in cash have to walk to the banks and wait in long queues to deposit money [sic]. After all, when we support nation wide bandhs, why not this. That in one stroke is going to increase the money in banks and thence their lending capacity of banks for which they have been waiting for like a drought struck land waiting for rains.
In the end, the commoner is going to benefit from the wealth that can be saved from illegal money.
A win-win situation
Suppose a person has jewellry and some of his friends, unknown to him got fake jewelry made, it would be a disaster for the person if he plans to exchange the jewellry with other commodities because the jewellry value is not what it should have been. Counterfeiting money is one form of indirect war on the country and needs to be put in check. Second, all the excess money generated through hawala transactions or tax evasions or by skipping large loan repayments is being used to fund terrorism, example of which is influential people buying gold and lands, thus making black into gold. Putting this money in check would first bring down the amount of gold being smuggled into India. If gold purchases drop in this country, it will reap gold for the common people. Say no to Dhanteras more than crackers during Diwali.
As for the government, the timing and the secrecy behind the move is absolutely applaudable, especially in a country like India with so much population. If all the good that is supposed to happen, happens, it is great. Either way, the big political heads who have illegal money stored and ready for disbursement during the UP elections are hit hard. Obviously, two months from now, life is going to be the same for the common public who are now happy that government has taken a courageous step considering the history of demonetization in other countries. They will forget that they all stood in long queues but the PM can go back to voters and tell them he tried.
New five hundred rupee notes will soon come into circulation and daily routine will be the usual. The new two thousand notes can be used for higher transactions, better than the earlier one thousand notes. Maybe this is required. After all, the times of Marching to places like Dandi are now replaced by race to planets like Mars through the likes of Mangalyaan.
However, it is still not a lost situation for people like Vijay Mallya i.e those with accounts in the British Virgin islands and other such places. The Enforcement Directorate tirelessly continues to try and fish out all it can from the wealth that Vijay Mallya had accumulated.
New five hundred rupee notes will soon come into circulation and daily routine will be the usual. The new two thousand notes can be used for higher transactions, better than the earlier one thousand notes. Maybe this is required. After all, the times of Marching to places like Dandi are now replaced by race to planets like Mars through the likes of Mangalyaan.
However, it is still not a lost situation for people like Vijay Mallya i.e those with accounts in the British Virgin islands and other such places. The Enforcement Directorate tirelessly continues to try and fish out all it can from the wealth that Vijay Mallya had accumulated.
Future?
It is a great thing to know that we are concentrating on two things connecting exclusively India: air pollution and black money. While we have to congratulate the judiciary, legislators, economists, RBI and the GoI for such a bold step, the big doubt does remain as to how long the new notes will stay put from being counterfeited. Maybe it's time that the old dons and criminals are done with and new blood has to come up. It is important that black money in any form, needs to be wiped off, in and out. We all should do our bit facilitate this. Until then, rest assured that those 500/1000 notes which are buried in the politician's and businessmen's backyard remain buried forever.
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