Debunking myths about Modi's demonetisation drive

Prime Minister Narendra Modi's announcement that high-value notes worth Rs 500 and 1000 would no longer be accepted as legal tender was aimed at breaking the back bone of counterfeit notes, terrorism financing and black money in a single blow.

The Reserve Bank of India has, time and again, cautioned the public about counterfeit notes being peddled across the country. According to its latest advisory, RBI has advised people to accept currency notes after careful scrutiny as the fake currency was differentiated from the legal tender only after closer inspection. Business Line reported that out the total counterfeit currency notes in circulation, 41 per cent was in Rs 500 denomination, 35 per cent in Rs 100 denomination; and 23 per cent in Rs 1,000 denomination.

A lot has been written about the subject, but here I seek to answer some popular apprehensions raised about the demonetisation drive in the DailyO article,"Unanswered questions that make Modi's demonetisation drive a major worry".

The author argues about the "market share" of Pakistan in the "Fake Indian Currency Notes (FICN)? business and whether Pakistan has a monopoly on it. But is this question valid in current context? FICN racquet run anywhere within India or beyond its boundaries is affected badly.

Now, one argues, will this prevent further attempts of making counterfeit currency notes?

The answer is obviously a big NO. This will not prevent any such attempts in future but will certainly keep it in check provided the designated agencies undertake measures to identify and prevent the FICN production bases in their objective.

As per reports, Indian transactions in cash are above 80 per cent of the total transactions while USA has around 10 per cent transactions in cash. Are we ready for this transition from cash-transaction economy to cashless economy? No we are far behind. We neither have adequate security set up needed for plastic transactions nor do we excel in the organisational set up for the same.

The finance minister has said that demonetisation is a logical step in journey towards cashless society, and certainly didn't imply that we are ready for cashless transactions.

The cyber security arrangements needed for an ideal cashless economy are many and India definitely doesn't have apt cyber security set up; as exposed by the recent hacks and cloning of debit cards from foreign land. Finance minister Arun Jaitley did count demonetisation as one of the steps towards the journey of cashless economy, but if he thinks (highly unlikely) that we are ready for that transition, it would prove a costly blunder.

The election commission of India is supposed to verify that the "legal" limit of election expenditure is not crossed by any candidate. Demonetisation will not have major impact on that aspect of elections.

The author says "Indian election will continue to remain a costly affair". With this, I assume he is pointing to the corrupt practices prevalent in election campaigning and that political parties are unaffected by demonetisation and will continue resorting to malpractice. I think the majority are affected by this step and this will be evident in the upcoming Assembly polls.

Some think the BJP has saved its skin by equipping itself with funds for elections before the demonetisation announcement and are strengthening their claims using the social-media circulated photograph of a Punjab BJP wing worker posing with a bundle of new notes on November 6 - two days prior to the announcement. It is up to the opposition as to how it will grapple the BJP government on this accusation.

But if PM Modi is indeed serious about his war on corruption and black money, the important question to ask is whether he will get all political parties under the ambit of the RTI.

The writer suggests that the government expects Indians will begin to live as law-abiding citizens in a corrupt-free atmosphere post-normalcy in the aftermath of the currency cleanup.

While we can hope law enforcement agencies will be more vigilant post the drive and the government will do its share to curb corruption; the writer himself answered the question with his emphasis on "self introspection" and change.

While we expect the government to clean up, we - as citizens - must have the conviction to not add to the mess. It is the only way we can collectively tackle corruption.

Now the above argument is the only one I agree with. I am waiting for the Rs 15 lakh promised to my bank account by Modi in 2014, as eagerly as everybody else in India. But I also know that political parties often exaggerate and make promises that cannot be fulfilled or are difficult to negotiate. "Garibi hatao" is one such political gimmick that parties have used since Independence - it hasn't brought dividends in their own fortresses.

Not only this, there are but other deep concerns that Modi must address:

1. According to some reports, a lot of time has been invested by the government in planning demonetisation. Were currency notes being printed six months before the announcement?

If yes, why do most have RBI governor Urjit Patel's signature? If no, is the move well-planned and the execution poor?

2. The finance minister ascertained that it will take two-three weeks for the ATM machines to be recalibrated for dispensing new notes. The ATM machines identify and differentiate currency notes based on their physical appearance (length, width, thickness and weight).

If the freshly printed notes were designed resembling the physical appearance of the demonetised notes, wouldn't the recalibration be reduced to mathematical limits and be down by a few days?

3. If the PM is serious enough, will political parties be forced to function on financial transparency?

4. Will he strike on all illegal (gained by corrupt ways) assets, like he had vowed to strike on benami property?

5. Will he take strong measures to curb corruption once the cleanup drive is over?

6. When will we get back black money stashed abroad? The demonetisation drive is a good step with poor execution. I hope the government doesn't drag the public to the end of its patience and the 87 per cent currency notes declared illegal tender are replaced without any more delay.