D Effect

The letter D in India has become synonymous with the Demonitisation of currency . Friends, you will all re call when PM Modi announced the demonitisation of Rs 500 and Rs 1000 currency notes in last Nov, there was much hue and cry in the country. The opposition parties reacted against govt’s decision and started saying that poor people are suffering, they have to stand in queue for depositing and exchanging old currency notes. But the real facts that all the political parties and their politicians were under shock because of  fear of losing their unaccounted wealth. At that time no political party came forward in helping people’s suffering, they did not even arranged for water/snacks for people standing in queue and they say we are for poor people. The fact of the matter is these politicians were more concerned with  how to exchange their old currency notes with new currency notes.

Let us see what happened after the announcement of demonitisation:

1. Agreed that people suffered a lot, but almost 99.9% 0f the population could deposit/exchange the old currency notes which they had.
2. It so happened the corrupt politicians and other black money hoarders got in league with corrupt bank officials and started exchanging their old currency notes, which in the end resulted in new currency shortage and thus increasing the suffering of general public.There were incidents when people were caught with new currency notes worth crores of rupees, when with drawl of Rs 24,000 maw was permitted in a week,it would not have been possible without the involvement of top bank officials.
3. The reason given by govt for demonitisation was to curb black money  and cash transactions, to curb printing of fake currency which is being pumped in Indian economy, and lastly stop funding of terrorism by fake currency.
4. At that time govt also gave a hint that new Rs 2000 notes are  being issued, but after few years they also might be demonitised when digital and cash less transactions become prominent.
5. It is a fact that  after Nov 2016, the digital transactions are gaining popularity. The increase number of credit and debit cards, increase in internet banking operations, even small vendors, Auto & Taxi Drivers, Pvt Cab operators and Shop Keepers have started using  digital payment options like Paytm etc. There have been substantial increase in online shopping and people have started buying even grocery and vegetables thru on line payment system.
6. Initially there were panic among Pak sponsored terrorists as they did not have money to pay to their operatives as what ever fake currency notes they had, became use less and there was lull in terror activities for few months. The fake currency notes also could not be pumped into Indian economy.
7. The terror activities slowly increased may be after six months when fake new currency notes started entering market.

Recently there was a release from RBI which said that old notes of about Rs 15.3 Lakhs Crores have been received by them, which amounts to about 99% of currency in circulation in Nov 2016. After this news item opposition parties started criticising the govt that demonitisation was a flop process as 99% of the money has come back to RBI and there is hardly any black money in the country. My few observations on this:

1. It is very difficult to believe that there was hardly any black money in the country, every one was aware about the parallel cash economy being present in the country.
2. P Chidambaram and Manmohan Singh made a comment that they had said earlier also that the demonitisation is not a solution and RBI figures have proved the same, and PM Modi should apologise to the nation .
3. Yesterday, I was watching on you tube an interview(in Marathi language) by Anil Bokil, who along with other economists, had given the Power Point presentation to PM Modi on this topic and he said they had given same presentation to UPA govt also. He made one point which was note worthy, which is, RBI had said that the value of the currency notes is so much,  they have never said how many of these notes are real and how many are these are fakes. RBI in their statement have also said the quality of notes are being checked and it is going to take much more time to come out with the statement about the value of fake notes.
4. Anil Bokil, further made a statement which was really shocking..he said that Rs 1000 currency notes were issued by RBI in 2002 and by the end of 2004 their circulation was in the tune of approx Rs 10,000 crores, then how come their circulations by end 2016 was  having a value of  approx Rs 13 lakh crores. It only means that during those years cash economy, black money and corruption increased .
5. Can P Chidambaram and  Manmohan Singh  give a reply why the circulation of Rs 1000 currency notes increased so much in their rule or Manmohan Singh and RBI were under pressure to print more Rs 1000 currency notes to facilitate the corruption arising out of Coalgate scam, 2 G scam, CWG scam and other scams where UPA ministers and politicians were involved.
6. Now Congress and other opposition parties will be harping on RBI’s figure for next few months and will create a ruckus in Parliament on this issue,  and make the halla gulla in  meetings of coming state assembly elections.

I wish to make a point here that, we the general public is least bothered whether demonitisation was success or failure. We all should move forward and look into brighter points which have  been brought by this process of demonitisation like increase in digital payments, ,  increase in net banking and increase in on line shopping and these are the first steps toward cash less economy. Most important being that now people have realised that you can live without having much cash in your pocket.

What you say my  friends.

Awaiting for your feed backs and comments.