Skip to main content

Indian Rupee Demonetisation: Why It Cannot End Corruption Or Even Black Money

Rupee Demonetisation

It was November 8, when Prime Minister Narendra Modi, in a dramatic announcement, decided to scrap or demonetise two high-value Indian currency of the denomination of ₹500 and ₹1000. It means 85% of currency in circulation will no longer be a legal tender. All that precious notes have been converted into wastepaper overnight. It became the biggest talking point in every Indian household — from Kashmir to Kanyakumari and from Kutch to Arunachal Pradesh. After all, in a country where 98% of all transactions are conducted in cash, it was a big jolt.

Demonetisation is usually associated with degrading economies and hyperinflation and often done by military dictatorships. It was surprising that a popular and democratically elected prime minister of a booming economy has resorted to demonetisation.

Black money is the money held by people that have evaded taxation. It is illegal hoarding of unaccounted money which tends to exacerbate inequality because the biggest evasions occur at the top of the income spectrum. It deprives the government of money to spend on infrastructure and public services like healthcare and education.

India has a huge amount of black money— the "kala dhan". But, the bulk of this kala dhan is not in cash form but kept in gold, real estate and overseas bank accounts. Thus, demonetisation is not going to impact the major share of Indian black wealth.

There is no doubt that the government's dragnet will catch some illicit cash. Some people will surrender their black money and pay a penalty; others will destroy part of their hoarded cash in order not to draw attention to their businesses.

The collateral damage from this move has been huge. It has caused massive unrest in the country. Though people have accepted this inconvenience without a single complaint, in hope of a better corruption-free India, their plight cannot be ignored. While the impact of demonetisation can be seen among people from almost every field, in one form or another. But, the daily bread-earners and those without easy access to banks or post offices are the biggest sufferers. From Agriculture to Industry, the damage has been caused to every business which runs only on cash. Demonetisation is mostly hurting people that aren't its intended targets.

Corruption has nothing to do with currency, cash or banking. It requires changing institutions and, most importantly, mindsets. To weed out black money, more comprehensive reform is needed. Without tackling the reasons for black wealth, just demonetisation cannot make India successful to get rid of corruption and black money.

Demonetisation, as it appears, is one of India's biggest economic blunders, but it could have been a great achievement had it been implemented with planning.

Also Read: Cashless Economy: The Key To A Reform

Labels:

Comments

Post a Comment

Popular posts from this blog

The Triple Talaq Bill: A Final Step To Settle Gender Justice Debate Among Muslims

  Pixabay I’ve written a post earlier on the issue of triple talaq in June last year when the government opposed that in the Supreme Court. The SC held that talaq-e-biddat or instant triple talaq is unconstitutional, arbitrary and thus declared it void. Now, the legislation is being done with the continuation of the judicial declaration, with a triple talaq bill already been passed in the Lok Sabha and waiting to be passed in the Rajya Sabha. The bill shall provide a legal right to the Muslim women against this practice and make it a "criminal and non-bailable offence". But, some Islamic scholars and ‘secular’ politicians are questioning the authority of the Parliament. Isn’t it the Legislature that is formally authorised to initiate and bring reform in the society? Triple talaq is an unjust practice that has been carried out in independent India which is shameful. This practice has been even discontinued in many sharia abiding countries. The parliament has only ini...
Post a Comment
Read more

The Padmavaat Circus — A Brief Summary

OVER THE LAST FEW MONTHS, the nation has witnessed a bizarre issue. We have been battling with the question of whether a film should be allowed to screen or not. It is definitely a matter of concern if a movie is not allowed to be showcased, and even more if the makers and artists receive threats. But, don't you think we gave it more importance than what it really deserved? It certainly was not worthy of the space for prime time debates every single day as if it is the “only” thing India is concerned about. From the beginning, I was appalled by the duration of time Padmavati remain in the news. After the news, they do a stupid TV debate about the same. We then also saw TV anchors giving a "no-objection certificate" to the movie happily. It was at a time when the film had not been even sent to the CBFC.  But, there was a journalist/anchor who was showing the educational crisis in the country instead of a frivolous debate of whether Padmavati to be allowed to rel...
Post a Comment
Read more

Why India Cannot Sign Non-Proliferation Treaty

Non-Proliferation Treaty or NPT is an international treaty whose objective is to prevent the spread of nuclear weapons or its technology, to promote cooperation in the peaceful uses of nuclear energy, and to further the goal of achieving nuclear disarmament. The biggest incentive of NPT, due to which a large number of countries have signed it, is the agreement that the nuclear countries would share "peaceful nuclear technology" with the non-nuclear countries so that they can be able to produce nuclear energy domestically and use nuclear material for other peaceful purposes. This treaty was formalised in 1968 and those states that have detonated nuclear weapon before that were recognised as nuclear weapon state. As only five countries at that time have formally detonated their nuclear weapon successfully, this treaty recognizes these five countries - United States, Soviet Union (Russia), France, United Kingdom and China - as nuclear power. India conducted its first...
Post a Comment
Read more