Currency ban objections – too clever by half

So we are now coming down to the nub of the issue. A lot of political parties are trying to get together, no doubt supported by their patrons who have a huge vested interest in this. They have been coming out with a lot of ingenuous arguments as to why the move to ban the currency notes was a bad idea, even demanding for the roll back of the measure, as is their wont. In the last post, I received several comments and responded to a few. I think it will be easier to respond to the comments and other objections all in one place.

  • The fake currency being used for terror and other activities is “only” to the extent of 400 crores so it can be tackled through other means.
    • Are you not able to comprehend the damage that can be wrought to our country with that kind of cash?
    • The figure may or may not be right but, even if it is, what is there to stop people who have counterfeiting machines to simply print more?
    • Most people are unable to see the impact of the existing notes becoming inoperative. Think of all the terror operations being stymied as the system is suddenly dried up of the lubricant it thrives on.
    • It may not be a coincidence then that the news of terrorist operations from the Kashmir valley have really come down in the last week.
  • What is the point of banning 1000 Re note and introducing 2000 Re note?
    • You have not understood the purpose of the scheme at all if you are asking this.
    • The idea is to clean up the unaccounted money supply in the system. People who are having it will either have to use it ( no time to do that ) or deposit it in the bank, where it can now be tracked.
    • The 2000 Re note is a logical step as it is mighty inconvenient to deal with smaller denominations, given the inflation we have had in recent years.
    • Yes there is a possibility of new black money schemes ( people are crooked and clever after all ) but it will have to be from scratch now and in one fell swoop, years of accumulated black money has been dealt a body blow.
    • Similarly the 2000 Re note can also be subjected to counterfeiting but all that will take time and the authorities will be way more prepared now.
  • BJP has done it only because state assembly elections are coming up.
    • I am happy to see that political parties are at least accepting the link between elections and black money.
    • Is the argument that we allow black money to continue playing a role in the Indian elections?
    • Are the opposition parties scared that without the power of black money behind them, they have little or no chances in the upcoming assembly elections?
  • The scheme will not earn much taxes etc as people will not declare black money.
    • Once again this is not the purpose of the scheme. Whether the people declare it or not, the cash will be taken out of the system.
    • People were given a chance to come clean through IDS, those who have made a conscious choice not to do so deserve no more leniency.
    • After the deposits are done the IT authorities will definitely take up the suspicious cases. I foresee a lot of taxes being collected through this.
  • Common people are being harassed.
    • The implementation has had several bottlenecks and money supply through ATM and banks should have been handled better.
    • However, for most poor people an exchange of 4000 Rs is adequate as is the withdrawal limit of 2500 Rs per day now.
    • People getting inconvenienced in weddings and functions for lack of cash, can really start paying through checks and direct transfers.
    • The reason for using cash is not really that people only take cash – it is because people with black money want to keep their transactions out of the system by not having any recorded financial transactions.
  • There is very little black money in the system so this will have little impact.
    • Look at pictures of money in sacks and drains, 44 lacs being anonymously being donated to temples, 10 lacs of air tickets being bought etc.
    • Money laundering is the most searched term in Quora in the last week.
    • In a Bengal village an impoverished old lady has deposited more than a crore in her account which had no money earlier.
    • Make no mistake, the people who are intended to be hit by this are suffering greatly. They will do everything possible to thwart the move but the game has changed for them.
  • Many businesses and the stock markets will be affected adversely.
    • I think this may well be true in the short run but does it matter really? Are you going to support black money just so that your investments do not take a temporary hit?
    • Over time, businesses in India such as Real Estate which have for all skewed due to presence of black money will clean itself up and do well in a legitimate way.
    • Respect for India will increase due to this bold measure and that will ensure that our businesses and markets do well in the medium and long term.
  • India depends on cash, cashless transactions will not work here.
    • Again, in case you have not understood this scheme is not talking about cash less transactions at all. 
    • You may need to rethink – same was said about mobile phones a decade back and look at where we are.
    • Once smartphones are available with the right kind of pricing for data plans we will see a surge in cashless transactions. It will happen faster than we can imagine today.

I am sure there are many others but I suppose the point is made. This is a great step for India, many other mechanisms are needed to eradicate black money completely. Do not fall into the trap of wily politicians who are today really cornered about their ill gotten wealth as well as their situation in being unable to influence elections through cash and liquor as they have done in the past.

If we fall for their shenanigans then the fault is really with us.

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