Letter from the Editor-in-Chief

8th November 2016 will go in the history as a red letter day, as on that day Prime Minister Shri Narendra Modi addressed the nation and declared that henceforth Rs 500 and Rs 1000 notes will no more be valid. He even cautioned the people of India that his announcement will bring a lot of inconvenience to the people, but appealed on them to bear with him against his fight on corruption, black money and terrorism. His move has been widely appreciated, though the manner, in which it has been implemented, has been questioned by common man and politicians.

 

The move has not come as a surprise. The BJP Government (read Modi Government) has set the stage by announcing Jan Dhan Yojana for individuals particularly the urban and rural poors, the Gold Monetization scheme which provides an alternate to physical gold, the Income Declaration Scheme, both for foreign assets and Indian assets were indicative about the seriousness of the Government to curb black money.

It is no doubt that everybody in the system is affected by black money and corruption. The paradox is that everybody is suffering and everybody is involved. As such, there was no soft option available before the nation.

This attempt has virtually made 86% of our currencies invalid, forcing common man and others to stand in the queue for long period to exchange their old notes. The pain of the common man has proved to be many times more than anticipated. Shortage of currency notes and non-workability of ATM machines have added ooze to sufferings. The Government instead of changing the size of the notes could have retained the old size of Rs 1000 notes, so that need for rectification or calibration on ATM would not have aroused.

The Government is also pushing too hard to change the focus of the economy from cash to plastic card. This is a welcome move, but it must be done gradually. Presently, only 2% transactions are being done by plastic cards, whereas 98% of our economy is based on cash transaction, wherein informal sector plays a very important role. Overnight we cannot ask a roadside hawker, vegetable vendors, and construction workers etc., to change to plastic cards. We also need to assess the availability of the bank branches in the rural areas. Recently the Government of Assam asked all tea labourers to get their

salary through accounts, most of them who not even having any bank accounts, thus created a need to open the new accounts.

The good intention must be implemented with good planning. It is yet to be seen whether the measures announced by the Government will curb the black money which was its target. Many fear that the excessive control on the economy and too much instant push to cashless economy will reduce the GDP on one hand and give excessive powers in the hands of tax officials who are likely to be abused. Our cover story this month on de-monetization written by CA Arihant Kumar Baid will give you an extensive details on the situation.