This is in continuation of our blog-post No. 734 Click to go to post No. 749.. My Readers can also peruse post No. 734 Click to go to post 734 In 749, we have discussed the issuance of 5gm and 10gm gold coins introduced by RBI. The title of the blog-post 749 was '749 (Part 4/100) of Indian Economic Enigmas. Will Reserve Bank of India follow Rice Standard?'. Here is a link to the reputed Indian NewsPaper theHindu which contains the news report of demonetization of Rs. 500 and Currency Notes Click to go to TheHindu to read the news.. A quote from the report: "...8:15 pm: From midnight of November 8, 2016, Rs. 500 and Rs.1000 will cease to be legal tender. "These notes are just papers from tomorrow," says the prime minister. ...".
ybrao-a-donkey's comments, which you have every right to differ with and comment freely below.
1. While, there is no need to strongly object to the demonetization of high denomination notes, the decision to implement it HASTILY is deplorable. It needs lots of prior preparation, to ensure that common people are not put to hardships.
2. The Government seems to be under the impression that only Super Rich persons hold Rs. 500 denomination currency notes. Reverse is true. Reasons: With UNCONTROLLED INFLATION, UNCONTROLLABLE INFLATION (there are numerous reasons for its uncontrollability ), Rs. 500 notes have become the chief staple denomination of Indian currency (like staple foods rice, wheat) along with Rs. 100/-. Rs. 50, 20, 10 denomination notes have become equivalent of small coins. Rs. 5 coin has become a paisa (paise). Rs. 2,1, coins can't buy anything. Today, even a Building-construction cooly is paid a daily wage of Rs. 500/- per day. Suppose his employer pays him 1 Rs.500 note as daily wage, or 7 Rs. 500 notes as weekly wage, the building laborer cannot today spend those notes because nobody will take them. Tomorrow he will have to go to some bank, or post office or some other Govt. Office, fill up some forms, stand in the queue, suffer some lathi blows or undergo stampeded. Nobody knows, what will be in store for him tomorrow 10.11.2016. Finally, he may get back his wages. But why should he undergo all these hardships, for the fault of the rich black-money holders? This may happen only because Govt. has not planned its action for calling 'surgical strikes' properly. It is acting like a lay person holding a fencing sword in his hand. and brandishing it everybody whoever crosses his way.
3. When we go to ATMs to draw cash, say Rs. 1000 we get any of these: Rs. 1,000 single note, 2 notes of Rs. 500x2, 1 note Rs. 500 and 5xRs. 100 notes. If we draw Rs. 10,000/- we get Rs.1000x10 notes, Rs. 500x20 notes, Rs.500x19 notes + Rs.100x5 notes). Thus Rs. 500 note cannot be avoided altogether whether the money is white or black, or whether the money belongs to business tycoon or a retired pensioner or a farmer who sold his chillies or a rickshaw-wallah. Th ATM machine does not know. For example, today I have in my pocket: Rs.400 x 4 notes, Rs. 100 x 4 notes, total Rs. 2,400/-. Now, Rs. 2,000 in my pocket are blocked. Nobody will take from me. With Rs. 400, I have to pull on for two days as Banks will be closed for one day, ATMs will be closed for two days.
4. This is not just my problem. There may be persons who have their relatives in hospitals. Now, hospitals, will not accept the Rs. 500 notes. Everybody may not have internet banking 3rd party payment facilities or knowledge. How the hospital payments are to be made? How medicines are to be purchased?
5. There may be people in TRAVELLING CONDITION. While performing journeys, without ATMs, and with only Rs. 500 notes in their pocket, how they will buy their food? How they will pay for their bus tickets?
6. It may be incidental that super-rich persons may be holding their black money in Rs. 500 & Rs. 1000, if they have not already shifted to gold, shifted their money to accounts abroad, or converted their money into white through some other method such as SHOWING AGRICULTURAL INCOME. The fact that Rs. 500 remains the common man's currency, because people are not getting ample supply of Rs. 100 denomination.
7. Now, during these two days of ATM closure, and 1 day of Bank closure, the Govt. and RBI may be arranging to stuff our atms with Rs. 100 denominations, after removing the Rs. 500 notes already in the machines.
My 90 year old father, who suffers physical and mental problems because of old age left home a few days back without telling anybody. We are searching frantically for him. Today, we (i, my brothers, my sons) are planning to release news paper advertisements, hire a four wheeler to go on a search for my father in pilgrimage places. They may insist on cash, that too only in Rs. 100 denomination.
My 90 year old father had in his hand bag a little money, something like Rs.5,000/-. But, I do not know what portion of it is in Rs. 500 denomation !
8. What ought to have been the correct step: As a prior secret preparation, the Government and RBI should have got Banks to install Rs. 100 denomination only machines in every ATM booth, in addition to the Rs. 500/1000 only ATM machines. When the Govt./RBI want to demonetize Rs. 500/1000, there would have been no need to close ATM booths. People might have used the Rs.100 only ATM Machines.
ANOTHER SOLUTION WHICH OUGHT TO HAVE MINIMISED INCONVENIENCE TO PEOPLE
In any given calendar year, there we get several occasions when banks are closed consecutively for 2/3 days. If ATMs are to be locked consecutively for two days, giving some technical/security reasons (without disclosing real intent of demonetizing large denomination notes), they can be closed AFTER GIVING ADVANCE PUBLICITY THAT ATMS WILL NOT FUNCTION FOR 2/3 DAYS FOR RELOADING HARDWARE/SOFTWARE. This would have enabled common people to draw from ATMs in advance and keep sufficient Rs. 100s for survival. During the holiday period ATMs could have been loaded with Rs. 100 notes only. By following this procedure, a panicky situation, and queues could have been avoided. Today, there are people who do not have Rs. 100 notes to buy even milk packets.
TRAVAILS OF INADEQUATE FAMILY LIFE
This type of problems, Mr. Modi cannot apparently foresee because he has never maintained a family with Ms. Jashoda Ben (his dharma patni). His mother and father were looked after by his brothers, when he was staying in RSS/BJP Buildings. I do not wish to say that Mr. Modi was irresponsible, but I wish to say that 'empathy' seems to be missing from his actions, because of inadequate family life.
What, am I worried about?
Mr. Narendra Modi is wasting the beautiful mandate/opportunity given by people in 2014 General Elections, a la Late Mr. Rajiv Gandhi who wasted away his 1984 opportunity. Like the 1977 Janata Party which frittered away its opportunity.
Like the Morarji Desai, Charan Singh, Chandra Sekhar of tho 20th Century India, Mr. Narndra Modi ought not to give an opportunity to Congress to recapture power, climbing the stairs of failures of Mr. Modi. Mr. Modi did it in 2014 General Election to Parliament.
Mr. Modi seems to be guided by Chartered Accountants and Advocates, who under the Capitalist System function as agents of industrialists. It will be better if he takes help from field-level/grass-root (triNamUl) level bankers before taking steps which may result in hardships to common people.
This is not a hate-Modi blog. I have due respect for our beloved P.M.
There are too many leakages to the Indian Economy. It is like a "cilli kunDa (Telugu phrase for a pot, with holes. It can't store water)". While internal leakages can, to some extent be plugged, leakages of export of National Wealth through non-banking channels (havala), leakages through under-invoicing of exports, over-invoicing of imports in connivance with / or due negligence of Customs, exporters not following-up the recovery of amounts due from overseas buyers etc. will help black-money holders to SIPHON their black-moneys to United Kingdom, Switzerland, U.S.A., Hong kong, Singapore, cleverly.
U.K. and Ms. Theresa May seem to be eager to entertain Indian Business Persons
If the blackmoney-holders perceive any trouble in India from Indian Tax Authorities, they will initially go to those countries on business grounds, and may not return from there. We can see how Ms. Theresa May, the British Prime Minister, is eager to promise visas to Indian Business persons to visit UK (and eventually purchase some prime properties in London at exorbitant prices) or to park their surplus funds with British Banks, in the post Brexit Scenario of Britain losing its momentum of investments, to EU. But UK is not ready to touch Indian Workers, Software Professionals, Students, even with a bargepole.
Question: In 1954 and 1978 when high denomination notes were demonetized, there was no problem for the common people. Why do you foresee now?
Ans: In 1954 and 1978, the high denomination currency notes were not in the hands of common people. Today, the high denomination notes are in the hands BOTH OF RICH PEOPLE, MIDDLE CLASS, and the COMMON PEOPLE, all. They are with people in dire need of funds such as persons on travel, persons in hospitals. In 1954/1978 high denomination notes were not DAILY NEEDS. Today, they have become our daily needs. If our Hero Narendra Modi has to shot the villains of our Economy, he cannot trigger his bullets aimlessly. Whether the villains die or not, common people will get hurt. It is like air-bombings on civilian areas, on the ground that terrorists are hiding in the crowds.
Question: You always speak of / write of your true Complete Socialism, if you cannot bear this small reform by Mr. Modi?
Ans: Even introduction of True Complete Socialism requires lot of prior preparation. Nothing can be done hastily. Advance Preparations, and getting the people ready for True & Socialism will need at least 20 years time. Changes have to be swift, and as far as possible, become acceptable even to the worst critics.
TAIL PIECE धूमकेतु తోకచుక్క
A verse by the Great Ancient Sanskrit poet 'bhAravi':
सहसा विदधीत न क्रियाम्
अविवेकः परमापदां पदम् ।
वृणते हि विमृश्यकारिणं
गुणलुब्धाः स्वयमेव हि संपदः ॥ (किरातार्जुनीयम् २.३०)
sahasA vidadhIt na kriyAm
avivEkaha paramApadAm padam
vriNatE hi vimrisya kAriNam
guNalabdhAha svayamEva hi sampadaha.
సహసా విదధీత్ న క్రియామ్
అవివేకః పరమాపదామ్ పదమ్
వృణుతేహి విమృశ్య కారిణమ్
గుణ లబ్ధాః స్వయమేవ హి సంపదాః.
Approx. Gist: 1. Nothing should be done in haste/hurry. (There is also a reverse maxim: Alasyam amritam visham. Meaning: When delayed, nectar can become poison).
2. Indiscretion can become a cause for great dangers/hardships and troubles.
3. Good Results and glory accomplished with virtuosity, prefer those who exercise discretion. In other words, an approximate inference. (subject to revision): Only those who exercise discretion can alone gain virtuosity, and good results.
To continue. सशेष. ఇంకా ఉంది.