SUPPORT TO CASHLESS TRANSACTION SYSTEM

Good Politics can be done by those who belong to well cultured family and have faced all phases of their lives from Poverty to Richness. Shri Narendra Modi Ji, our Honourable Prime Minister of the Republic of India is the best example for this quote.

I, General Dr. Arvind Kumar Sharma, IPC India, and Commanding General of the IPC India Command would like to greet our honourable Prime Minister Shri Narendra Modi on the Demonetization issue as it is a very brave decision.

We all should appreciate the leadership of our Shri Narendra Modi. He motivates the general public as much as he can in his unique style.

Every decision has its own impact which can be measured both on the positive and negative sides.

At the stroke of the hour on midnight of 8th November 2016, India lost 86% of its monetary base. The print, electronic and social media has been praising Prime Minister’s masterstroke by which he has reportedly destroyed the base of corruption in India. In this single move, the Government has attempted to tackle all the three issues affecting the economy i.e. a parallel economy, counterfeit currency in circulation and terror financing. There is no doubt that Prime Minister has pulled out a major coop and substantially enhanced his reputation as a strong leader.

The idea of demonetization is good but it has to be taken into consideration that most of the black money is kept in the form of land, buildings or gold or kept abroad. What is in cash constitutes only 4% of the total amount of black money on which taxes are not being paid. Out of this, a lot of money is in circulation in everyday transaction like if someone is building a house; the bill is not paid through banks for sand, bricks etc. This money goes into the other systems though it has been drawn from bank. These things will come under control with this step.

Small farmers, sellers, merchants, daily wage labourers and traders are suffering because of lack of proper planning, intelligence and foresight such as recalibration of ATM machines. There was need to pile up enough 100 Rupee notes and other smaller denomination notes in the market before taking this step. It is being said by critics that this step was taken only to bolster the image of the Prime Minister as he has been unable to deliver on GDP growth, inflation and bringing the black money from abroad. But demonetisation will surely disappoint our honourable Prime Minister’s critics.

Demonetization is an established practice in monetary policy to tackle black money. The Prime Minister has explained why this is a financial surgical strike. It was meant to be suddenly implemented. In the past, demonetization has taken place twice but it fails because the idea is to tackle the black money existing in circulation. This is not tackle corruption per se or the Government is not saying that 100% corruption will be tackled. If announcement and time would have been given, this step might not have been successful in controlling black money and counterfeit currency in circulation coming from Pakistan, Nepal or other countries.

People are facing problems because the limit of withdrawal has not been kept at a higher level. If this would have been kept at a higher level, there were chances that the recycling of black money might begin. The ideal money in circulation has to come to the banking channels.

It is also being said that what is being attempted is replacement of currency and not demonetization itself which was unnecessary. This is a terrible setback for the international standing of the Indian economy. At this time, the economy is struggling with slowdown. There is demand sluggishness in the economy leading to practically no private sector investment and stagnant industrial growth. If we look at the farm sector, this is the harvest time. Farmers generally deal in cash and India is also largely a cash economy. The cash transactions in this economy are far more than the total number of electronic transactions done on a daily basis. In the tribal heartland of the country, the poor people through middlemen are getting their currencies exchanged for Rs.300 or Rs.400 because of lack of proper information which is hitting them.

The stock of the black economy constitutes a major part of the GDP is significant. Even if 50% of this amount is withdrawn, the kind of relief that RBI will get on its liabilities and the sort of deposits commercial banks will get will lead to a rise in the deposit and later on there will be decrease in lending rates plus fiscal deficit. The black money in circulation is like a steroid in the economy which keeps the demand going gives a feeling that everything is working well. The problem is that investment is not taking place in the economy and the rate of growth of capital formation is down. The only way to bring this up is to divert more funds into investments which will happen when the cost of capital comes down.

Positive Sides:

Resistance on Black Money: The people with black money have no option but to undisclosed money with them as now this immediate decision has not given them the time to think of any alternative so soon.

Deal with Counterfeit notes: All those who print counterfeit notes their printing machines now are at a halt now and the fake currency can be easily dealt now. So all those who print counterfeit notes their printing machines now are at a halt and the fake currency can be easily dealt now

Illegal Money: These activities which are associated and grow on this black money will get choked and they can now be easily perished due to lack of availability of funds.

More White in real Estate: The real estate sector where black money is generated at an accelerating rate will get curbed efficiently. This step will give this sector more credibility and transparency.

Abolition of illegal/ fake transactions: Illegal/fake transactions have already received a big blow as the new legislation has a provision for seven-year imprisonment and fine, replacing the three-year jail term, or fine, or both

Conclusion:

So far, it can be said that this is a historical step and should be supported by all. One should look at the bigger picture which will definitely fetch results in the long term. This is what the people have been asking for a long time which has finally happened.

We should not create chaos by standing in the queues outside the banks and ATMs. Be patient, things will be settled soon. It is the time to create awareness about the cashless transaction and it can easily be done by our youth as they are technically sound. All NGO’s, social workers & individuals should come forward & take a lead in supporting this cause & making this a huge success  

Hats off to our Honourable Prime Minister Shri Narendra Modi Ji for taking such bold decisions in the interest of our Nation!

Full support from the team of the International Organization for Educational Development – IOED and the International Police Commission – IPC is assured.

General Dr. Arvind Kumar Sharma, IPC India