Lets debate on topic :demonetization in India-- good and bad sides?

The regular viewers of news channels were in for a shock on the night of the 8th of November, 2016. Indian Prime Minister Narendra Modi made the  stunning and hugely radical announcement that all INR 500 and 1000 notes were to cease to become legal tender from the following day onwards, with a few exceptions(hospitals, petrol pumps and toll booths). | Soon the news had spread like wildfire, and within the next few days, huge queues had piled up outside banks,ATM outlets and post offices. Everywhere, people were desperate to exchange their outdated notes for their replacements-a new INR 500 and a 2000 note.

This radical step was touted by Mr. Modi as part of the never-ending fight against black money. Over the years, India’s parallel economy has grown, in spite of numerous attempts to suppress it. Currently, it is almost 25% as large as its “white” counterpart. The recently banned notes formed a large proportion of such transactions. Overall, $123 billion has gone untaxed over the past decade- an immense loss in a developing country such as India.

Black money also forms the backbone of crime. They are used for smuggling all kinds of illegal contraband, from drugs and weapons to illegal wildlife products such as tiger skin and rhino horn. It is also used to finance terrorism; the 1993 serial bombings in Mumbai, which claimed 257 lives, were financed almost exclusively by untraceable “hawala” transactions which make use of black money. The cash-heavy nature of electoral campaigning has also generated concerns regarding the role of the parallel economy in influencing politics.

The announcement’s  sudden nature was intended to catch those dealing in black money off-guard. And it seems to have served its purpose; hoards of outdated notes were found discarded at various locations by suspected criminals. Among other benefits include the extensive deposits, which  have greatly eased the chronic credit crisis faced by Indian banks. Moreover, it has brought the various channels of financial transaction under greater scrutiny. It also shows that the establishment has the political will to crack down on endemic corruption.

That’s one side of the story.

The other belongs to those who are queuing up. Daily wage labourers, small traders and shopkeepers, eatery owners, and the beneficiaries of social welfare programmes such as the gigantic NREGA (National Rural Employment Guarantee Act) are heavily reliant upon INR 500 and 1000 notes on a daily basis. These segments form a very large part of the population-over 90% of all economic transactions in India were being carried out via the outmoded notes. Suddenly, many millions are struggling to find enough to meet even their most basic of daily needs. And we are already a country where 58% of the population goes without 3 full meals a day.

But they can always head to the banks, post offices and ATMs for replacement, i can hear you say.Well here’s the thing-up to 47 percent of all Indians lack a bank account. This figure is a whooping 80% for women. Financial inclusion is still a far-fetched dream for many. In remote areas, some people are getting to know of the decision up to a week after it was originally taken.  

Even in places where banks already exist, nightmarish logistical and infrastructural conditions prevail. The new 500 rupee note is yet to achieve widespread circulation, and banks are quickly running out of INR 2000 notes as well. Even for the relatively wealthy businessmen, demonetization spells doom in the short term, because of its possible adverse impact upon customer demand and resultant growth.

“Short term pain will lead to long term gain”, is the Government’s reply to its critics. According to many, protesting civilians should take lessons in endurance and resilience from India’s soldiers, who soldier on daily under the harshest of conditions. These critics have also been accused of not thinking about not putting the nation’s economic and security-related concerns first. The heated debate continues. Are short-term sacrifices a worthy trade-off for long-term gain? Or is the Government displaying apathy for the many millions who require instant cash on a daily basis to suit their most basic of needs? Will “Swach Bharat Abiyan” extend to the corrupt as well, or will demonetization hurt both the common man and the Indian economy? Let us know at #eclipseindia or Eclipsetech12. Last but not the least, Eclipse Technoconsulting Global Pvt Ltd, Information technology service provider company , Kolkata,India, never shows any special favor to any political party but it salutes ( whoever takes it) if anything is done for the betterment of nation. However, we are open to get reader’s view on the same, either in favor or in against. Logical contradiction and argument will be great to read though.