Phew! At least there is still some
time left before the next year and I hope am not too late to pass on my pearls
of wisdom (as if anyone cares meh :/) on the much debated topic:
“D-E-M-O-N-I-T-I-Z-A-T-I-O-N!”
Since Didi, Kejru, Rahul baba all of
their attempts have been failed to initiate a demonetization rollback, the time
is ripe to analyze what could possibly be in store for the nation.
Apart from the obvious pains (short
term slow down, discomfort, etc.), the popularly stated gains are: Curbing of
the black money (especially used for funding terrorism activities) will
unconditionally benefit the government (no matter if the black money is
reported or not) and of course transition of the Indian Economy towards
Digitization! (*tiding* here comes another much debated topic)
So, what makes us think that digitization
will curb illegal transactions?
I agree, the building up of a cash
based black money will be a bit difficult after the planned withdrawal of the INR
2000 note. But I think it will become even easier for terrorists and frauds to
steal our hard earned money when a plethora of our critical information is
available right there on the database, in the absence of high online security mechanisms,
which definitely can’t be built overnight!
Coming to the availability and
accessibility.
Firstly, smartphones (the cheapest
and the most convenient way to access internet) will become essential to make majority of the digital transactions possible. But only 17% (lowest among
BRICS) of the total Indian population own smartphones.
Lastly, what about the availability of
internet connectivity at affordable prices?
Umhh ok! Mukesh Ambani is taking care
of that very well, but the actual results would be seen post 31st
march (It’s highly in the interest of the government as well as the nation that
the JIO juggernaut should keep on rolling in order to achieve sustainable digitization).
So, taking the figure of 17% and
adjusting it for the literacy / willingness to migrate, (a highly optimistic guess)
around 15% will be able to reap the benefits of digitization. (The JIO effects
are yet to be seen in the numbers which would be clearer post the “Happy New
Year” period comes to an end.)
Hence, though the intentions of the government
are undoubtedly right, a no hush hush and proper, infrastructure and security mechanisms
for digital transactions, are required in order to avoid another policy
paralysis (and this time we can’t afford the paralysis given the huge amount of sunk
cost involved!).
P.S.: It’s good to see how we, the
Indians are trusting and supporting our Prime Minister. Now, the onus is on the
Modi Government to make our nation walk the path of sustainable economic upliftment
after taking this right, albeit a bold step towards making India a digital-corruption
free nation.
Some People want it to happen, some wish it would happen, others make it happen.
-Michael Jordan
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The other side of the story.
ReplyDeleteIt is indeed a bold and imaginative step by the Modi govt but in a very unplanned manner possible. Might not blame the PM for all of this. It's nice to come up with such ambitious plans but it's the job of the Finance Ministry to either implement it more efficiently or convince pm not do it now given the constraints.
Coming to the more imp point - black money!
Figures say 85-90% of the black money is either stashed abroad in swiz bank, Panama or is in the country but in higher value currencies i.e Dollar, pounds etc that's Less in volume So easier to hide. Also, once you would sell them off you get inflation indexed prices. (Not sure how they plan the SMOOTH withdrawal of 2k notes) but the New 2000 currency will, on the contrary, help this lot because they will have to carry lesser volume once exchanged. These as such remain out of the ambit here.
For the rest 10-15% bank managers and gold dealers have worked over hours to ensure the figure shifts from a pocket to another but doesn't drops!!
The whole exercise resulted in only a meagre percentage of the total black money possibly going inoperative. At the cost of? ? Worth?
Going cashless economy! Think again!
this cash economy coupled with the fiscal measures helped us survive the sub prime crisis of 2008 which was the biggest recession after the the great depression of 1930s. Institutional investment/Banks went bankrupt but the general tendency of us Indians to hold cash didn't erode us of our purchasing power, economy thus kept going.
It's a nice fantasy to dream of a cashless India but mind you even the america isn't totally digitised this day.
Yes, you were saying something.???
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