My Take
Ever since the Prime Minister
demonetized the higher currency notes in India people have ascribed different
motives to this move. Some called it a brilliant move to cut out Black money
and corruption from the economy. Others termed it election politics and that
which could have been implemented better. The Prime Minister Mr. Modi, himself
has assured citizens through his speeches that the intention is to clean the
economy off black money.
Analysts and the who-who of
creative thinkers have dared to write their piece on why and how it is a
masterstroke or cursed this move which caused misery to common folks. Enough
has been written and debated on the pros and cons of this move and its
intentions or ill intentions. I have a different take and will explain why I think
the analysts are ‘missing the wood for the tree’.
The first question I ask is will
it help curb black money- My answer is No- Why? Well black money is not
something that was once made and remains buried somewhere. Black money is a
continuous process and the fall out of systematic loopholes and mans curiosity
to beat the system. Black money is generated through the system and therefore
the banning of high currency notes will not in the least stop this flow. Let’s
say I am service provider and bill, Mr. X an amount that is lesser than the
agreed value which means that the tax calculation suffers to the extent the
bill value is reduced. The treasury is cheated while the service provider and
person X benefits by not paying tax on the full amount of the agreed value in
the transaction and by paying less tax since the amount is reduced. This
difference so scammed, off the treasury books forms black money. Now will
someone tell me how banning of high value currency notes will stem this rot?
Corruption has a long list of
meanings best amongst which I like is “the process of decay”. It comes from the
Latin origin- “Corrumpere” or “Corruptio” which means mar, bribery, destroy.
When the original is changed it is corruption, be it the thought, word or deed.
Now how can the banning of high value notes stop corruption? I fail to find an
answer. So neither will the generation of black money stop nor will corruption
vanish from our living spaces. Doesn’t the Prime Minister know this then and
why is he still persisting? This is why I say a lot of us are missing the wood
for the trees.
Our economy has been suffering a
lot through the injection of fake currency from across the border. The
machinery on the other side functions with impunity while scrupulous and anti
social elements at home helps in the distribution process. The malice is so
rampant that a substantial portion of the circulated money in high value
currency is counterfeit. It is this that is worrying the Prime Minister and the
country and that is why he has taken on himself the task of shutting this tap
across the border through this move.
Extract from an article in Indian
Express dated June 8, 2016-
“As many as 250 out of every 10
lakh notes in circulation are fake, according to a study conducted by the
Indian Statistical Institute. Typically, at any point in time, banknotes with a
face value of Rs 400 crore are in circulation in the country. The study
revealed that fake currency notes with a face value of Rs 70 crore are infused
into the system every year, and law enforcement agencies are able to intercept
only a third of them — a fact that is acknowledged by the agencies themselves.
The detection rates of fake 100-
and 500-rupee notes were found to be about the same or 10% higher than the
detection rate of 1,000-rupee notes. The study added that fake 1,000-rupee
notes constitute about 50% of the total value of fake notes.
Pakistan’s military spy agency,
the Inter-Services Intelligence (ISI), has been raking in an annual profit of
around Rs 500 crore by circulating counterfeit notes in India, according to a
report prepared by the IB, R&AW, Directorate of Revenue Intelligence and
CBI.
The ISI has been making a profit
of 30-40% on the face value of each counterfeit Indian note produced in
Pakistan, according to the report. The cost of printing a Rs 1,000 counterfeit
note, for instance, is Rs 39 (the RBI spends Rs 29 to print a Rs 1,000 note),
but it is sold at Rs 350-400, according to the report. The total fake notes
that came into India in 2010 from abroad were pegged at Rs 1,600 crore, and
going by this estimate, the report put the ISI’s total profit at Rs 500 crore”.
End of extract-
The prime minster is simply
playing to the gallery and reaping political mileage through this move while we
common citizens scramble to keep up with the system. For Black money and
corruption to be eradicated, the thought process has to change. All of us have
to imbibe non corrupt mind sets and be truly nationalist (not the kind felt
when you unfurl the national flag or when someone across the border shoots down
our soldiers). At best what the nation can thank the Prime Minister for is
shutting the tap for the time being, but at what cost- the debate rages on.
Robin Varghese- robin_vargh@yahoo.com
16th November, 2016
