By MM Special Correspondent,
New Delhi: More than 150 eminent citizens, including Prabhat Patnaik, Nayantara Sahgal, Prashant Bhushan, Jayati Ghosh, Anand Patwardhan, Syeda Hameed, M K Raina, Vivan Sundaram, Pamela Philipose, and Justice (retd.) Chandru Krishnaswami, have come out strongly against the PM’s summary way of demonetization Rs. 500 and Rs. 1000 notes that is leading to a riot like situation in the country. They demanded a rollback or the very least suspension of demonetization to enable the common person to make adequate arrangements for daily needs and for more orderly phasing out of the old notes.
In a statement issued on Tuesday, they raised questions on the efficacy of demonetisation in eliminating black money and counterfeits while plunging the entire country into chaos. At the same time, related developments call into question the PM’s will to truly tackle corruption and pursue accountability of the powerful corrupt.
The common person has been beggared and is struggling to meet even basic necessities. 22 persons have died as a result of the chaos and crisis that the demonetisation has brought. The situation is likely to deteriorate as people’s patience wears thin over the days.
The decision to de-monetize Rs. 500 and Rs. 1000 notes is misconceived and will not address the problem of black money for the following reasons:
1. If it is the Government’s case that high value denomination currency is used to hoard black money, then the decision to reissue new Rs 500 and Rs 1000 notes does not make sense. Issuing even higher value Rs 2000 note is completely inexplicable and puzzling.
2. Black money is generated through evasion of taxes on income from lawful activities and money generated from illegal activities. In the absence of steps to curb the generation of black money, demonetization is a futile exercise, as it proved to be in 1978.
3. In the last 5 years, IT raids have found that only 5-6% of black money is kept in hard cash. Moreover, those who have amassed sizable black money are equipped to find ways around demonetization by converting their existing cash to bullion, gold jewellery, real estate and foreign currencies through brokers and middle-men. In fact, organized middle-men and touts have already emerged to convert black money into white for a commission.
4. As per The Indian Statistical Institute, Kolkata study done on behalf of the National Investigation Agency (NIA), Rs 400 crores worth of fake currency is in circulation in the Indian economy. This is only .028% of Rs 14,180 billion worth currency demonetised in Rs 500 and Rs 1000 notes 5. Experts including a former RBI Governor and the current Chief Economist of the World Bank have spoken against demonetization.
6. 86% of currency in circulation is in Rs 500 and Rs 1000 notes. 97% of all transactions by volume are done in cash. Summary demonetization has created chaos all over the country with people unable to purchase daily essentials and, in many cases, life-saving goods and services. 5 persons, including one infant, have died as a direct result of the impact of demonetization
7. Only about 30% of the Indian population has access to the banking system as per data compiled by the banking division of the finance ministry. Moreover, the distribution of banks is highly skewed with a third of all bank branches in only 60 Tier 1 and Tier 2 cities/towns. Consequently, people in rural India who often also suffer from inadequate information have become the worst victims of demonetisation.
8. Reports have started coming in of digital payment systems unable to keep up with the new volume of transactions with credit and debit card servers also going down.
9. All currency has value only because of the inherent trust in the banking system. Summary demonetization has shaken this trust and will likely impact India’s economy well beyond the initial and widespread chaos. It is evident that demonetisation will not achieve its stated intent of eliminating black money but has thrown the entire country’s economic system in disarray.
They also question Government’s intentions and need clarification: 1. Rs 1.14 lakh crore of bad debts has been waived by Government banks in the last 3 years. At the same time, loans worth lakhs of crores of rupees are still outstanding. Why has the Government not made public the names of the beneficiaries of the waiver and the names of the big defaulters, both individuals and corporations?
2. A key campaign promise was to bring back black money stashed abroad and deposit Rs 15 lakh each from the proceeds in the account of every citizen. Why has the Government not made public the names held by it of Indian account holders in offshore banks?
3. Were BJP leaders and friends given prior information about the impending demonetisation so that they could take pre-emptive measures to safeguard their assets?
[The WB unit of the BJP is reported to have deposited a total of Rs 3 crore in Rs 500 and Rs 1000 notes in its bank accounts in the days and hours before the announcement of the demonetisation.
A BJP leader posted pictures of wads of Rs 2000 notes much in advance of the demonetisation. A digital payments company printed a full page advertisement lauding demonetisation in a newspaper on the morning following the announcement at 8 pm on November 8, 2016.]
4. Why did the Government announce that cash deposits higher than Rs 2.5 lakh will be scrutinized against the tax return with 200% penalty for any tax evasion? [This appears to be intended to dissuade people from depositing money so that the Government can claim success of demonetisation and forewarn people to split their deposits among different accounts and different depositors.]
5. All conversions can be done only after filling a form and attaching ID proof. This has led to major harassment of poor and illiterate people and those who do not have an identity card.
6. What is the cost of demonetisation? [It has been estimated that the cost of replacing currency in circulation with new Rs 500 and Rs 2000 notes will be Rs 20,000 crore. Besides, far greater losses will be incurred by markets predominantly run on cash and the participants (wholesale markets, retail stores, street-vendors, transportation etc) and in lost productivity.]
7. Even if the Government was intent on demonetisation, why was it not implemented after careful planning: new notes printed, arrangements made for distribution, ATMs recalibrated etc? [It has been seen that banks are running out of cash within hours of opening and most ATMs are still non-functional.]
8. We are all concerned about the use of money power in elections. Why hasn’t the Government proposed state funding of elections? Why is the BJP resolutely against transparency in its own funding by refusing to come under the Right to Information Act?
Extremely short sighted and miscalculated move by a PM who has no knowledge of fundamentals of economic system of our country, a Finance Min, defeated by the people but clinging on to a chair.It is worth rolling back, but then how now?
Very thoughtful article.
This needs to be implemented at the earliest.
People in a larger scale are suffering like anything as if they have been placed in a remote village all of a sudden..with new rules and regulations.
All precautionary measures would have been taken well in advance….which was missing in the current implementation and is the root cause of all the problems which common people are facing daily.
Hope and pray……Govt. will reconsider its decision based on common people care in their mind.
Dear PM
Our india already learned in 1978 that demonetisation won’t be able to help to remove shadow economy (today we call it black money). Our former PM morarji desai reverted back the demonitisation at that time to avoid chaos. Similarly to stop this chaos around the country, as a citizen of india I am demanding you to renounce your statement by reverting demonitisation
Hindustan zindabad !
Dear Friends and Countrymen,
I understand and I am myself victim of money demonetisation and the various trouble caused to common people BUT I will and many like me will consider and bear this PM Decision. This is for the betterment of people and even every corrupt being in this country believe that this is for the future betterment and will strong our economy in every prospect. Stop being manipulative and do something for the nation. We are the people who blame nation and deeds and today when someone is putting his efforts to change the system , we can not even take some days pain? The responsibility for developed nation is not only to the government but we and every common man has to join in and support this move, DO it for betterment. The government runs on middle class salary peoples tax and rich people do hold black money and use them against nation in many ways.
HELP PM! SUPPORT INDIA.