Does The Black Buck Stop Here?

Last night I was hooked on to My Kitchen Rules , the cookery reality show on Colours Infinity channel when my reverie was rudely interrupted by a phone call. It was a relative who urged me to switch over to a news channel as good ol’ NaMobhai was making an earthshaking announcement.


My first impression was he had declared an emergency to lock up anti-nationals like yours truly for writing blogs that his followers would love to brand unpatriotic, against his government. Nope. He declared that Rs 1,000 and Rs 500 notes had been demonetised presumably to fight black money and counterfeit currency.


Of course NaMo was kind enough to allow us to exchange notes of these denomination for smaller currency until November 24 or to deposit them in our bank accounts by December 30.


Now does this measure really help combat black money and counterfeit currency allegedly printed by Pak’s ISI to bankroll terrorism? Let us start with the black money bit.


The move seems to be playing on the popular notion that people stash millions and even billions of notes in their homes, say under false ceilings or have hidden trapdoors at home which when opened, reveal an Alibaba’s cave packed with currency. I don’t know whether this is naiveté or an unshakeable faith in the naivete’ of people who are neck deep in such misconceptions.


The days when income tax raids brought out wads of currency from the homes of rich and famous are long over. The smart businessmen and politicians stash them in overseas banks while showing fake tax compliance by doctoring their accounts and paying taxes far less than what they deserve to pay.


The money of course returns to India through participatory notes of foreign institutional investors (FII) which ensure that the actual investor’s identity is not revealed though the other means of laundering black money, the infamous “Mauritius Route” which Indian entrepreneurs exploited through dummy firms to bring back their money to India with little help from a very favourable double taxation avoidance agreement was shut down in May.


The real black money remains stashed abroad, in Switzerland, Cayman Islands and other such havens. Half hearted attempts to bring the overseas stash back has not yielded any results. The promise of the present ruling dispensation that every Indian would have Rs 15 lakhs in his account when the black money abroad is brought back to India, remains just words.


Now even if moneybags in India had a cache of unaccounted cash, what makes you think they have not already converted the black money in Rs 50o0 and 1000 into smaller notes?. They are not blind and the move to demonetise the 500 and 1000 rupee notes was not taken at the spur of the movement and it was being planned for long.l These guys have eyes and ears in the government. I am sure they would have known what was coming and acted accordingly. That way the move I must say IS really futile.


As for the opposition howls that it would hit the middle class and poor , let us take a balanced view. Enough time has been given for exchanging these higher denomination notes at banks for smaller currency and a choice to deposit them by December 30 in your bank account. This works well in cities and small towns. But the problem is how about the backwaters of India? Have all these areas where currency rules the roost and not cheques, credit cards or electronic transfers have access to facilities for exchanging the devalued currency? I doubt it. So these poor chaps are the ones who are bound to be hit by the move not the urban middle class or the rich.


The second reason given for the move is it would block financing of terrorist activities through counterfeit currency by ISI. Seriously? What makes you presume that ISI would not be able to fake the new Rs 500 and Rs 2000 notes that would replace the demonetized currency? In the short run demonetization might halt counterfeiting but in the long run it does not help in any way.


Thus what we have here is partly a cosmetic move and partly something that could adversely hit the people in India’s hinterlands and even urban poor like domestic hels and daily wage labourers. Sorry, but the black buck needs to stop here, but this is no way to do it.


If the government had real political will to tackle black money it would zero in wholeheartedly on overseas stash like many other countries have successfully done. But considering its track record so far in this respect and the names of some people close to it popping up in the Panama papers money laundering scandal this seems to be a tall order.

 

Satchi this move is mere shadow boxing for the simple reason the lion's share of black money is stashed abroad and the real big fish , say Ambanis or Adanis don't run around with cash in their bags. Adanis have already been named in the Panama paper money laundering scandal. And those who have black money stashed in India are not fools. They would have their links in the government otherwise they would perish, and would have known that the move was coming and taken countermeasures. This is why such measures would not help in any way. We shouldn't be awed by the very fact that the government takes decisions but stop and examine whether the decisions are right and would really benefit the nation instead of just being a cosmetic step.

 

Forget plastic money and checks. How many Indians are connected to the banking system? In the cities it is fine but banking has not become a part of life in vast rural backwaters of India. The dealings here are in cash and people prefer to stash their money at home than in a banki. In such areas the demonetization will cause massive suffering, particularly to the rural poor. Even in cities, people like daily wagers are bound to be badly hit. As if demonetization is not enough, the draconian measures include a 200% fine on bank deposits of people with over two and half lakhs in their account if they deposit at one go more than their known sources of income! This is ridiculous and will hit only the middle class and not the moneyed.If he had any sense, he would have learnt from the adage Those who don't learn from history are condemned to repeat it. When Morarji Desai was PM he indulged in similar demonetization to curb black money and it brought in nothing.

 

Satchi the introduction of the Rs 2,000 note makes me smell a rat. The higher the denomination, the easier it is to store black money at home.True why only hospitals? any shopkeeper can accept the demonetized notes and deposit them in their bank accounts and withdraw the new currency from there. .

 

Forget riots lot of purblind people are euphoric about the measure as if it would bring out oodles of black bucks. As for swachch Bharat it remains Shauch Bharat. Garbage collected are not even treated before being dumped in landfills.