INDRA SHEKHAR SINGH | 5 DECEMBER, 2016
Demonetisation or Demonisation?
As it is payday time for many Indians, the temperatures are rising again. Banks all over India have requested additional security and villagers in some parts of the country have started blocking roads. Prime Minister Narendra Modi’s government has used this scenario to approve the loan waivers, new loans for corporations and even better, most of the cabinet ministers have become advertisers for electronic wallets. Only a brief look at the economy / business page will tell you the identity of Alibaba and the forty thieves, for the Indian public is not benefiting from this step.
Modiji, in his next rally, may say, “look I promised you lakhs of Black money in your accounts, and see now I have made the rich black money hoarders deposit the money in them! I have fulfilled my promise, now vote for me!” This is brilliant rhetoric, let us see whether people actually believe it.
My earlier article, talked about what the shadow economy is, and now it shall talk about the thieves that are profiting from this move. For starters, very recently we have seen a PR stunt for the C-130 and other American aircrafts; Twitter is declaring that 210 tons of currency is being flown by C-130 and other American planes to RBI centres. It is two birds and no stone situation. I saw no Russian aircrafts advertised in the past, and mind you they have been the backbone of our triad forces for over half a century. So why such preferential treatment? I wonder if BAE systems have something to do with it? Or maybe 126 aircraft purchase, that is still hanging mid air.
Measures to tackle Black Money, really?
As per the Black Money Committee Report, 2012 released by the Central Board of Direct Taxes(CBDT) Department “Measures to Tackle Black Money in India and Abroad”, the current step taken by the our visionary Prime Minister to overnight demonetise higher currency notes “may not be a solution” to tackle black money.
“9.1 One common demand from the public is that high denomination currency notes, particularly Rs 1,000 and Rs 500, should be demonetized. In this connection, it is observed that demonetization may not be a solution for tackling black money or economy, which is largely held in the form benami properties, bullion and jewellery, etc. Further, demonetization will only increase the cost, as more currency notes may have to be printed for disbursing the same amount. It may also have an adverse impact on the banking system, mainly logistic issues, i.e. handling and cash transportation may become difficult and may also cause inconvenience to the general public as the disbursal or payments of wages/salaries to the workers will become difficult. Besides, it may also adversely impact the environment as more natural resources would be depleted for printing more currency notes. Demonetization undertaken twice in the past (1946 and 1978) miserably failed, with less than 15% of high currency notes being exchanged while more than 85% of the currency notes never surfaced as the owners suspected penal action by the government agencies.2
Further Page 12, of the report says, “Demonetization of high denomination currency notes is believed to be one of the methods to ‘kill’ the extant black economy, and to curb the generation of black money. In India, demonetization was implemented in 1946 and 1978. Experts have criticized that demonetization did not achieve the objective it was aimed at. Further, inflation over the years and a large cash economy requires higher denomination currency notes to keep the cost of monetary management of the economy low.”
Let it also be known that the Chairman, CBDT was heading this committee. So I am a little confused now. On the one hand, we see corporations such as Mastercard, Visa, Walmart, KPMG, and even Bill Gates sing ballads about Modi and how this demonetisation step will kill the “parallel shadow economy” and transform India into a cashless corruption free society, and on the other we have reports from the India’s top level bureaucrats and economic experts that condemn the exact same move. Who is misguiding whom? In fact, to my surprise the very word ‘demonetization’ occurs only eight times in the whole report to tackle black money.
The fact is clear, there are huge contradictions within the government and this step is not in ‘Bharat’ or ‘Hindustan’s’ interest. As media reports have already shown -- PayTm, profits have high rocketed. But Paytm has a dirty little secret, which especially the Swadeshi anti-China factions would love to hear. Alibaba, a Chinese Company, (https://en.wikipedia.org/wiki/Paytm) made a $575 million investment in Paytm. But where did Alibaba get the money from? Shall I drop a hint? What do you think is the link between the front page Paytm ad with Modi on November 9 and his visit to Japan? It is the Japanese company, Softbank. As per June 2016 it had at least $7.9 billion of shares in Alibaba Group Holding Ltd and was the largest shareholder.
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In India, there are about 690 million debit/credit cards, over 400 million are MasterCard, Visa and American Express. Each time you use their services you are sending precious Indian rupees abroad. This step is unnecessary. We could all use money and stop sending our money abroad for no reason. Now PayTm has become another instrument of this economic drain of wealth to foreign nations. Like I have said, this is a slap on the face of the swadeshi voters, but I see no protests. I wonder why?
Let us know talk of the new notes, maybe the RBI governor, whose decision has 90 people dead, should tell India, which company has been contracted to make the new currency notes? I hope it is not a European Company, but maybe it is as reported in the media.
While this step has been called “organised loot and plunder”, there are many who believe this is still about black money. Let the report speak to them. So what has changed since 2012. That is the question. The laws have been installed to clear the cash to London. There has been a dilution of regulatory frameworks and finally the unholy trinity of IT players and all banking players and telecom monopoly are working in sync to create this “organised loot and plunder.” As the lines swell, we see plastic celebrities telling us “Jio beta, Jio!”
Instead of “Open Sesame”, our Prime Minister uttered “Demonetisation” and almost magically a cave with riches opened up. But we are still waiting to see the gold and pigeon blood rubies that are hidden in this black marketers’ caves, while the corporations are already trading with them and loading them in ships, carrying them back to the world’s richest pirate capital: London.
(This is an Opinion piece and as such, does not necessarily reflect the views of the publication)