Not being a huge fan of news channels, I was blissfully ignorant of the recently trending news of currency ban till my mother came in and related the same and what a stir it has created. Switching on the T.V, listening to the aims and approach of the government, it felt like a step has been taken in the correct direction. It felt like the time has finally come when a huge benefit could be reaped of a few days discomfiture. However, as days passed, the queues in front of the banks and ATM’s lengthened, almost all the ATMs in our locality were rendered ‘Out of Order’, people had to wait for 4 hours to get a mere amount of Rs. 2000 withdrawn and some returned empty handed after a long wait. Somewhere between these scenarios and trying to get a change of the Rs. 2000 in my hand, my perception changed. A whole new series of events unfolded before my eyes:
HOW WILL I PAY MY GROCER? :- One of my friends was travelling in an auto with an elderly widow who was openly crying. On asking the reason behind those tears, it was revealed to her that the lady was a pensioner and was returning from the bank. She had waited 3 hours in the queue and then the bank had declared that they were out of cash, resulting in her worrying about procuring her daily needs and how she will manage to queue up long hours, considering old age and infirmity.
While my friend and I were discussing the plights of the lady, a self proclaimed Bhakt friend of mine proceeded to comment that she should go ‘cashless’. Such comments bring us to the next big question—how many people can afford to go cashless? More than 22% of the Indian population lives below the poverty lines, could such people afford debit and credit cards or Paytm? Will such people be able to afford to buy a phone, android at that and then maintain the cost of regular recharge? So far it has been true, that the daily wage earners and small scale businessmen have been the worst hit by this decision because most local grocers and vegetable sellers do not have such cashless means of transaction. Seeing no other alternative, people will flock to the retail chains like Big Bazaar or Spencer’s. Who would be the one’s losing out here?
The maids working in our houses are paid a minimum salary of Rs. 500 a month. They are the ones who though own a bank account, do not have access to credit or debit card facilities. They are the one’s carrying on their transactions in cash. Now if such people also have to go cashless, thanks to government policy, they will have to pay out of their ‘own’ pockets a minimum sum of Rs. 5000 to get hold of an android phone. Will the government provide them with a phone, alongside the necessary training to operate it?
With the imposition of an upper limit in the withdrawal amount, the moneylenders too have refused to fund the small businessmen or farmers. Already, the news of plantation workers and factory workers not receiving their wages and committing suicide has found their way to the stands. The shopkeepers are unable to replenish their stock and the larger farmers are unable to pay the field hands. I couldn’t buy a particular brand of chewing gum the other day and the shopkeeper blamed demonetization and its aftermath for it.
LETS CUT DOWN OUR EXPENSES:– As the banks refused to pay us more than a certain amount a day, we all decided to curtail our expenses according to the money in hand and almost all of us has found it to be the most prudent way. But this reduction in expenses has adversely affected the sellers as the demands for goods have fallen. The manufacturers of goods have cut down on employees as demand and profits have reduced. People who earn to feed their families have been rendered destitute. We have decided to carry on cashless transactions with retail chains who sell only branded products; the brands who launch frequent ad campaigns and sponsor national events. This makes the rich richer and the poor poorer and in some cases, dead.
On 11th November, exchange of new currency in lieu of old currency was being carried on in a particular locality of Kolkata. When most people were growing weary of standing in long queues, “4 lakh ke 2 lakh mil rahe hai waha” quoted a woman. No points to guess who would be found in such places.
Some people were planning to transfer extra funds to their kids’ bank account to evade paying taxes. Some decided to burn the 40 lakh cash stored in their house. Some business houses were paying off their old debts in old currency by making a backdate entry. Businessmen also paid their employees next few months salary in advance, adjustable at a later date. Some paid their maids or private tutors fees for next few months in advance. Some sting operations revealed the bank manager’s suggestion to open 40-45 accounts in various banks to escape penalty.
Pink notes were xeroxed and were paid to a vegetable seller. Recently counterfeit new currency have been retrieved in Punjab after 2 crore of the total amount has already been released into the market.
Did you know some tribes in North East are exempted from paying Income taxes, subject to certain conditions, vide the Income Tax Act, 1961 and the Finance Act,1980? The people of such tribes, residing in the North East do not have to pay taxes on any amount accumulated from any source as long as it is within the state. The money earned by them by way of interest or dividend from other states are non-taxable as well. Some having sources here may exploit such conditions to escape penalty…who knows?
LETS CALCULATE:- We all know that about 85% of our currency was banned as of 8th November. But looking at it from a layman’s perspective, I find the banning of one note each of Rs.500 and Rs. 1000 denomination should’ve been accompanied with the availability of 15 notes of Rs. 100 denomination to suffice our requirement. Instead, a limit was drawn on the money made available to the public. I am yet to see a new currency of Rs. 500 and it has led me to believe that they are rare in circulation. A man standing in front of my father in the bank’s queue was asked to leave as he wished to withdraw Rs. 1500 and the bank could not provide any note but for the Rs.2000 denomination. New currency is being discovered from the gunned-down terrorists in Kashmir valley and some driver is fleeing off with the money he was supposed to deliver to ATM; all the while the common man is facing harassment.
Could the government not have taken some better measure to increase circulation of new currency and combat this chaotic situation instead of asking the people to sacrifice in the interest of the nation? I’ve heard some comparing the situation to the queues to buy a Jio sim or soldiers standing on the front. Meaning no disrespect, but choosing a career in the army or buying a sim card is a matter of one’s choice. One single declaration of the PM had taken away the choice of the whole nation. It has affected every single Indian. Could the government have acted a bit more judiciously?
On 8th November, it was formally declared that a penalty of 200% will be levied on the taxability of the amount of black money retrieved. This meant that if you were in possession of Rs. 1 lakh as black money, you would have to pay taxes@ 30%,(amounts to 30 thousand) and a penalty of 200% on the taxability(amounts to 60 thousand). Thus one had to pay (30+60) 90% of the black money to convert the remaining 10% to white money. But recently our respectable Finance Minister proposed a bill in a parliament to reduce the penalty to 33%of the taxability and add a surcharge to it. Thus, a man with 1 lakh as black money would now have to pay Rs. 30 thousand as tax, 10 thousand as penalty(@33% of taxability) and 10 thousand(@33% of taxability) to convert it to white money. Thus a holder of black money would receive 50% of his money back, 25% instantly and 25% after 4 years without interest.
What brought about this sudden change of policy? Did they recall the virtues of mercy? What deviated them from garnering maximum amount of revenue? Was the amount collected so less so as to bait more people with a lesser penalty?
FINALLY:- The total GDP of India is 600 lakh crore and the total black money in India is 25% of our GDP, amounting to 150 lakh crore. Till September 2016, the government had given a chance to convert black money to white by paying a penalty of 30% on the total amount. The penalty generated was declared to be 67 thousand crore meaning a sum of Rs. 2 lakh crore was converted to white money. 148 lakh crore of black money still remains to be accounted for. The next declaration will tell us how much of this amount was retrieved at the cost of so many lives, anarchy, lost jobs and numerous obstacles in the life of common man. Even if they retrieve another 10 lakh crore from the recent initiative, would you worship a person scoring 12 upon 150 in an examination?
One question still lingers in my mind—people who died due to trials and tribulations resulting from demonetization will be regarded as martyrs or collateral damages?