Demonetization 2016 – purpose not achieved – let us learn for next demonetization which may not be far away

[CA DEV KUMAR KOTHARI]

Demonetization 2016- no longer feeling good:

At the beginning action of Demonetization was felt good by public at large. However, very poor planning and implementation has made it a source of continuous problems and harassment of general public and poor people in particular. ₹ 500 and ₹ 1000 High Denomination Notes (HDN) were frequently used even for disbursement of wages for a day or few days, week ,  fortnight and month. Announcement of discontinuation of HDN on 8^th November, 2016 was at such a time that many salary and wage earners and other people has not withdrawn cash for monthly requirement.  The RBI was also not prepared to replace adequate old HDN with new suitable currency notes. Notes of ₹ 2000/- are not suitable when there is lack of adequate currency.  Thereafter various announcement including  ceiling on small  amount for change, withdrawals, deposits  short period allowed for use of old HDN for making certain payments and deposits etc. and frequent changes therein clearly shows that our bureaucrats have not acted in a planned and foresighted manner. In earlier article author has pointed out that more foresightedness was required and will be required.

Unfortunately, even after  experiencing our authorities have applied whims and prejudices, just in manners which can put public to harassment. Recent policy about deposit to be allowed only once if made for more than ₹ 5000/- and quick reversal of the same clearly shows that our authorities are working without proper application of mind. Sorry author would like to put it in words that “our Public Servants (authorities)  are in habit of applying mind just to harass poor public”.

In case of demonetization also we have felt that the policies announced and applied were designed to create panicky situations and to harass public. Perhaps any government officer joins government  service with a pre-set mind to harass public as much as he can.

Purposes of demonetization:

Purposes of demonetization, as announced were to:

• Reduce terrorist activities in which High Denomination Notes (HDN) are used
• To reduce corruption in which HDN are used.
• To curb fakeHDN
• To put a check on black money.

Let us examine whether these purposes have been achieved

Purpose	Whether achieved Yes/ NO with reasons
Reduce terrorist activities in which High Denomination Notes (HDN) are used	NO    Cases have been loot in banks and other places and money was looted by people engaged in terrorist activities. HDN of ₹ 2000/- will be more convenient for funding such activities which involves larger spending and  HDN of ₹ 2000/- is more convenient to use than ₹ 500 and ₹ 1000/-
To reduce corruption in which HDN are used.	NO.    ₹ 2000/- HDN will be more user friendly in handling and storing use than ₹ 500 and ₹ 1000/-. Once supply of ₹ 2000/- is increased, corruption financing will be much easier. As per news report, a new class of corruption has cropped up by which rich people are depositing money in account of poor people in utmost trust and good faith that the same will be returned to the real owner.  The person depositing such money in his account is trustee. IN ordinary course most of them would have returned money. However, our honourable Prime Minister is making such trusted persons (trustees) dishonest by  advising that they should not return such money. This will rob a very Nobel and important attribute of Indians being honest and trust worthy in personal dealings.  Such statements or advices from Prime Minister were not expected.
To curb fake  HDN	NO  We have reports of fake currency of ₹ 2000/- We also have reports of huge amount of ₹ 2000/- notes found. All these are indicative of development of fake notes of ₹ 2000/- The government machinery must be used effectively to curb fake currency. If a person receives a fake note, he must be fearlessly allowed to report it to the police without fear of police arresting the person reporting such receipt of fake note. Police must trace source instead of putting the person who report to have received fake note in the Jail  In view of large amount of HDN deposited with banks, public are having fear that fake HDN of ₹ 500 and ₹ 1000  might have already been deposited in banks and scrapped. This may be reason that RBI and Government authorities seemingly making excuse that amount of HDN in circulation as announced earlier has been revised substantially.
To put a check on black money.	NO- HDN of ₹ 2000/- is more convenient to use, handle, store than ₹ 500 and ₹ 1000/- Black money is generally kept in HDN. There was lack of foresightedness in policies because usually black money is kept in currency form for a limited period of 6-12 months only by people who require it for retail spending- like politicians for bribing voters. Otherwise black money is stored in kind – property, bullion etc.

Failure of Government Machinery should not have lead to demonetization:

We have adequate machinery in our Government Departments at Central/ state and Local levels of governance.  There are POLICE authorities, Armed forces, and various investigation agencies to keep vigil on all such activities, which prompted demonetization (see purposes as discussed above.

The public feeling is that authorities engaged for achieving various such purposes themselves are by-and large corrupt. Bribery in most of government departments is common, Even highest authorities in many  departments have recognized the fact of corruption. Merely publicising that this office is corruption free zone is not enough. The government officers must remember lessons and stories of honesty which they were taught by parents and teachers when they were kind. However, unfortunate fact is that most of people who want to join government services are lured by scope of Upari Kamai.

Commission for any work in government departments, bribes for moving files and getting any work done, bribes to avoid harassment are very frequently felt by public whenever one has to get work done at any of government department.

Corruption can be reduced only if the government officers are made strictly accountable for their wrong doings, and inactions. So long they have discretionary powers which can be used against public without any penalty on government employee, corruption shall continue because greed is god made, and power make it possible to accomplish greed by extorting money by public servants from public.

Next demonetization:

If we consider purposes of demonetization 2016, it can be said that same set of purposes will still prevail. Now we will have HDN of ₹ 2000/- which could be a stronger reason and source of generation and storage of black money, and same reasons prevailing after 5-7 years may prompt another demonetization. Lt us hope that at the time of next demonetization, the government will act in more planned, reasonable and fore sighted manner.

Discussions to this article

[Ganeshan Kalyani]

Nice and bold article. You have rightly and truly presented the real situation of todays' scenario. Without money nothing is possible, needless to say, in fact. But then it is fact that common public got used to these harassment. Everyone has accepted it as a part of life. Ofcourse there is no choice for the poor public because they have family and dependents to be fed and taken care. They dont have time to run around forums to seek justice and also dont have money to approach advocates/ consultants. In fact some advocates creates wealth by charging hefty amount from clients who visits to seek legal help. No humanity. Instead of helping they extract money. Client instead of fighting for the justice they get trapped into the harassment of some advocates. (Not all are same). Everywhere there is corruption. So many victims are silent because of not having money and without money nothing is possible. Thanks.