Hardship on money front!
Long queues in front of Banks and ATMs and after a shot while the ATMs going out of cash, are the common spectacles across the country. People queuing up very early in the morning before the Banks' shutters are opened. Interesting aspect is that despite facing lot of inconvenience, the people were not complaining much and openly supporting the Prime Minister's bold move. The sudden freeze on Rs 500 and Rs 1,000 currency notes through demonetization is in principle an exceptionally bold and worthy move, but the hardship that it is causing to people at large in the short run was at least partially avoidable.
The motives behind the demonetisation are indeed unexceptionable. But the government needed to have foreseen the problems in the short run. The net result is that at least for now, there is chaos on the money front — a lot of people are in a state of panic left high and dry by a system that did not think about how they would manage in the short run before things stabilise.
Long queues have been witnessed at banks and ATMs, which opened after two days yesterday (and is the case today, too), as people rushed to get new bank notes in lieu of their old defunct ones. Many ATMs ran out of cash in a couple of hours as there was heavy rush to withdraw lower denomination currency. Banks said they were trying to recalibrate their machines for higher denomination notes. Predictably, it will take some days before they start tendering new high security Rs 500 and Rs 2,000 notes to ease pressure.
Had the government printing presses printed huge volume of Rs 100 notes and had banks stocked these in ample measure, the kind of exasperation that was experienced would not have happened. For most people buying even simple daily essentials has become a nightmare.
With a whopping 84 per cent of India's currency notes now out of circulation, traders face severe hardship in the short run till such time the demand and supply gap in floating cash is bridged. According to Reserve Bank of India (RBI) data, the total value of currency in circulation in the country is Rs 17,54,000 crore. Out of this, Rs 500 notes account for 45 per cent and Rs 1,000 notes account for 39 per cent.
No tears need be shed for the privileged and for hoarders and purveyors of black money who have bled the system white and looted the country's economy with no concern for anything other than their self-interest. But it would be a tragedy if the common man is hit beyond the immediate short run.
The government has indeed proved its credentials by striking at the root of the parallel economy. But there still is a long way to go in making a glorious success of the demonetisation move. A tight watch would need to be kept on the sections that have been habitual offenders and there is no mistaking the fact that politicians have an awful record on black money. More and more people need to be brought under the tax net. While the Modi government legitimately wields the big stick, it is vital that the honest tax-payer be rewarded right and proper. At the same time, the war on black money and on counterfeiting currency must be unsparing and unrelenting.
