People are still missing the wood for the trees and are concentrating on short term effects like long queues at banks and ATMs thanks to the Indian government’s recent #Demonetization initiative where old Rs 1000 and Rs 500 notes were phased out.
This latest move merely happens to be part of a larger grand plan that was put into effect when Narendra Modi became Prime Minister way back in 2014.
Here’s looking at 10 long-term goals of #Demonetization…
1. #SurgicalStrike on the parallel black economy: This is the most obvious one. India has a huge parallel black economy which the government can’t tax and which forms an island away from the main economy.
Nobody knows the exact figure but it has been estimated to be in the range tens of thousands of crores of Rupees in the past to lakhs of crores today. You can be sure that a good chunk of this will come into the main economy.
It is a Herculean task to merge the two streams of white and black money and a great beginning has already taken place.
2. Make the corrupt lose their money: You may have heard of so many scams in the past ranging from Bofors to the one lakh crore plus 2G and Coalgate. A simple question. How much of bribe money has been recovered? Miniscule one must say.
Well this is for the first time that the corrupt are losing their money in large numbers. Huge sacks of money are being burnt, thrown or caught. Some of it is also percolating down as commission for the poor who are converting the old money into new, so it’s an unexpected benefit for them too.
You may remember that earlier also the recent tax amnesty scheme yielded tens of thousands of crore Rupees. The hoarders of black money will always be wary in the future.
3. Get everyone to have a bank account: The bank scheme for the poor under the UPA was a quiet affair but it really picked up under Modi’s Pradhan Mantri Jan Dhan Yojana. This is another push towards that direction.
Money deposited after #Demonetization has been phenomenal. Moreover if you had your own bank account, you could withdraw Rs 24,000 in one stroke in relatively shorter queues. Those without a bank account really had to struggle to convert their old cash.
This is another scheme that pushes more and more Indian citizens into the banking system and this is exactly what the government wants.
4. Get every citizen in India to be monitored online: A cashless economy is not just convenient for citizens, but also for the government to monitor. The government wants each and every transaction in India to be online so it can be easily tracked and taxed. Credit card and netbanking usage is up; debit card transactions have soared while PayTM has struck a virtual goldmine. This is a huge step forward in India becoming a cashless economy. Some may complain that Big Brother is watching, but like it or not, this is the future.
Expect many more Modi schemes which will push ordinary citizens online. Of course all this will be rendered ineffective if we don’t become a Broadband Nation soon.
5. Checking of counterfeit notes: The Rs 500 note came out in 1997 and the Rs 1000 one in 2000. After 9/11 Pakistan entered into a new partnership with America and they looked the other way as our arch nemesis set up a grand counterfeiting operation.
However now fake notes have been removed from the system and new counterfeits will be difficult. Pakistan is facing collapse. Incoming US President Donald Trump is not that favourable towards Pakistan and they won’t be able to operate with impunity.
Moreover the new notes are much more difficult to counterfeit. It was none other than Babasaheb Ambedkar, the father of the India’s economy after Independence, who said that notes should be changed every 10 years.
6. Crackdown on terrorism and Naxalism: It is an open secret that both terrorism and Naxalism run on counterfeit notes coupled with black money. They have been severely hit as their funds have dried up. They are currently down and now is the chance to land a decisive blow and finish off these menaces once and for all.
7. Change the mindset of everyone: Since Independence, we have led a fatalistic “chalta hai” policy. Corruption can’t go. The black money economy can’t be hit. And so on. That changed overnight.
Now the citizens of India know that Modi is serious and any other governments too can crack down if they really want to. More and more people will choose to come onto the white money stream to play it safe.
8. Keep everyone on their toes: Modi has been coming out with a slew of schemes after he became Prime Minister and this one was a #SurgicalStrike. What next? Already there is a buzz that the real estate industry will be targeted.
People are also guessing that the Rs 2000 note itself may be #Demonetized in the future. Then there was the rumour of the high value note having GPS tracking. That’s not possible because the bank note doesn’t have a power source.
However technology is there for notes to be RFIDed. RFID technology can be embedded into a currency note. That means that if you have a stack of high value notes, they can be detected with an RFID reader. The long range ones can do so at a distance of 100 metres. So the tax man can stand outside your home and detect your notes!
However all this is very expensive and may lead to privacy issues and misuse and hence seems unlikely, but you never can predict the future!
9. Boost the economy: For one a good amount of black money will make its way into the white economy and that will only boost the latter. Then with people burning their notes and counterfeit ones being taken out of the system, the value of the Rupee will become stronger. The more the notes there are in the market, the higher the inflation. If bad notes are taken out of the market, prices will fall and the Rupee’s buying power will marginally increase. The online industry has also received a huge boost.
10. Crack down on black political campaigning: It is an open secret that most of the political parties use black money for election campaigning all over India. It has been very difficult to crack down. In fact in some areas, political parties openly distribute Rs 500 and Rs 1000 notes. Well the timing of the current #Demonetization couldn’t be more perfect. There are upcoming elections in Uttar Pradesh, Punjab, Goa and many other States go to the polls in 2017. Black money election funding will be severely hit in these States and parties will be forced to raise white money and use their white money reserves. This will be a good beginning and all Modi has to do is introduce a Bill to regulate campaign spending after that.
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The author is a Bangalore-based journalist and blogger. He blogs here