Demonetisation process in India has not started well
I refer to the report “India cenbank says enough cash available as millions throng banks” (Nov 14).
I refer to the report “India cenbank says enough cash available as millions throng banks” (Nov 14).
The abolition of 500-rupee and 1,000-rupee notes has caused frustration and discomfort as people are forced to stand in long queues at the banks just as one would queue for food in war-torn cities.
The situation in rural India, where 70 per cent of the population lives, is worse owing to the inadequate implementation. Banks and automated teller machines are not easily accessible to villagers.
Since the cash flow is disrupted, the normal affairs of farmers and daily-wage earners have doubtless been jeopardised.
Farmers are running out of cash to buy seeds during the vital sowing season, small traders have no money to buy agricultural produce, and labourers are not paid on time.
With such experiences, the demonetisation process has not begun well.
The Indian government has likened the plan to a “surgical strike”, but it is turning out to be carpet-bombing, where all suffer.
Considering the noble purpose of recovering black money, stopping terrorist activities and nullifying counterfeit currency, it is imperative to recall the demonetisation plan of 1978 and scrutinise its repercussions.
The then Janata government withdrew 1,000-rupee, 5,000-rupee and 10,000-rupee bills, but there was no panic since it involved only 1.8 per cent of the currency in circulation.
Today, 86 per cent of the circulating currency has been frozen.
Unfortunately, the 1978 endeavour failed to control black money and corruption. (It has been estimated that US$510 billion in black money went out of India between 2004 and 2014). This indicates the gravity of the menace in India, where less than 3 per cent of the population pays income tax.
The present government should have learnt from recent history and prepared well enough to handle this task, concerning a population of more than one billion.
When a delicate operation such as this demanded secrecy before implementation, a newspaper in the Indian state of Gujarat published a report on demonetisation on April 1.
I think the mission half-failed before it even commenced.
This was not expected from Indian Prime Minister Narendra Modi, when he was running the country so well. The present chaos will probably be in the black pages of India’s modern history.