Demonetisation will have huge benefits for India

As the dust and debris over the demolition of cash settle, one thing is crystal clear. The benefits of the move far outweigh the collateral, even unforeseen, damage. The latter is obvious.

Everywhere we see depleted and forlorn ATMs; cash is still largely unavailable. Even if the serpentine queues have dwindled, the populace has been inconvenienced, the local economy crippled. Worse, many daily-wagers have not only lost wages, but jobs, forced to return to their villages.

Once again, the poorest and most vulnerable sections of our society have suffered the most. They have also shown the greatest patience, tolerance, generosity, possibly even fatalism and resignation, in face of such a crushing calamity. Somewhere, they have been sustained by the hope that all this pain will turn into gain in the long run.

Faith

They have reposed their faith in their “fakir” PM, whose courage in making this unprecedented surgical strike against corruption has struck a sympathetic cord in their hearts. It is all the more incumbent on the present regime not to let them down.

The drive against dishonesty must be taken to its logical conclusion, which means that political parties and processes must be made financially accountable to the nation. Without such cleansing, not only the black economy, but also rampant corruption will once again return.

But in all the discussion and debate over the issue, most commentators have overlooked certain basic benefits of demonetisation.

The most glaring of these is the fact that all undeclared monies will have to take recourse to official channels to get legal tender. This means that whatever the loopholes used, whether these be tax-free Northeastern states, tax-free farm income, or even fake accounts to launder money, the government will still have unprecedented information on all such transactions.

Therefore, nabbing the culprits is only a matter of intelligent data mining, followed by swift action from the ED or tax officials. Here, the government must demonstrate continued political will and determination. Doing so will not only redound to the sincerity of its intentions, but also pay rich dividends at the electoral hustings in 2019.

Some have claimed that political parties will get away with their ill-gotten gains by simply filing a declaration with the RBI after December 30, 2016. Because they are tax-exempt, turning in their hoard of cash will prove no hurdle. They will not only laugh all the way to the bank, but also emerge smiling with bundles of new notes.

Really? Will it be that simple?

Actually, turning in all their unaccounted cash will also reveal how much they were hiding. This information, when outed by the media, will cost them plenty. The Indian public, knowing how much cash was stashed away by each party, will come to their own conclusions.

Another huge advantage is that the finance ministry can discover precisely how the leakage and hoarding of the new notes occurred. The guilty parties, whether cooperative banks, jewellers, or even liquor vends, all will be exposed.

Once the money train is exposed, so will their modus operandi of subverting the system. Once that is known, steps may be taken to punish the guilty and plug the leaks.

Explanation

The sheer volume of data at the government’s disposal will give it unprecedented access and insight into both the means of generating and laundering black money. All the FM needs to do is to ask for information from all branches of banks and post offices about deposits over, say, Rs 5 lakh from November 9 to December 30. A simple notice, asking for an explanation, will put the onus on offenders.

On the other hand, those who can establish the source of their funds no longer need be troubled. In the process, not only will thousands of crores of undeclared income be unearthed, but many individual and entities will perforce come under the tax net. All this will overall conduce into a more trustworthy and transparent economic system.

This will not only boost investor confidence, but also bring India on par with advanced economies in terms of financial integrity. As the year of living in unexpected times comes to an end, another fact is also incontrovertible — the incredible resilience and resourcefulness of Indians.

I myself encountered this several times trying to cope with cashlessness. Indeed, the only cash I needed during this period was for one taxi ride and for tips. Everything else was possible with plastic or e-wallets.

Solution

On a rainy night, however, riding in an airport taxi from the Bangalore international airport just after the cyclone had hit Chennai, I thought I would get stuck. I had not enough cash for the 55km ride, with the ATMs at the airport out of cash. Besides, the driver’s e-wallet wasn’t working either because the cyclone had affected wireless connectivity.

The driver came up with an innovative solution. He pulled into a petrol pump and asked me to fill diesel equal to the estimated value of the ride. My credit card worked at the gas station, which was connected to its bank with a landline. I reached my destination without a hitch.

We will soon tide over the glitches of cashlessness. Cash will not, need not, be abolished. Indeed, less cash rather than cashless should be our motto. Bharat, it would seem, has vaulted from cash to digital, leaping over the intermediate steps of cheques and credit cards.

We did this once before, transforming our public culture from oral to television, jumping across the barrier of literacy. Similarly, we bounded from hand-written letters to mobile phones, bypassing landlines.

Now, the time has come, similarly, to go from cash to digital. If the change in our mentality is anything to go by, this goal has already been accomplished.

The Opposition may cavil and complain all it likes — in vain.

(Courtesy of Mail Today.)

Also read: Demonetisation is a huge success

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