BJP chief, Amit Shah, was an angry man on Thursday, when he reportedly lost his temper to his party office-bearers after they told him that the demonetisation move had backfired.
Shah was so angry on the negative feedback that he reportedly shouted at his party colleagues.
“He shouted at us and directed us to make Modiji’s historic decision a success,” said one BJP general secretary.
A report by Scroll said, “Amit Shah lost his cool as the majority of national office-bearers of the party reported that the demonetisation had backfired,” said a BJP general secretary who was present in the meeting. “What in particular made him [Shah] very upset was the view of some of the participants that party might not have faced such a serious crisis had Modiji gone for wider consultations before taking the decision.”
This came even as the saffron party leaders continued to make desperate attempts to convince general public about the positive impact of note ban.
One BJP vice president, present in the meeting, said, “One of the participants went to the extent of saying that the party’s image has started getting tarnished along with the image of Modiji because of the government’s demonetisation decision and that the government would have to do rapid course correction in order to win back the confidence of the people.”
When some office-bearers said that the note ban could make a significant dent in the goodwill that the party enjoyed, angry Shah shot back, “This is not the government of Manmohan Singh or Narasimha Rao that people sit from 7 am morning till 7 pm in the evening to make small changes or bring in minor reforms. This government is about making fundamental changes.”
According to NDTV, Shah said, “To change the country, sometimes tough decisions are taken. There are senior people in the government who have taken the decision after careful consideration. Now, it is the job of every person sitting here to convey the benefits of this decision to the people.”
The development took place on a day, veteran party leader, LK Advani, expressed his anguish over the continuous disruptions in parliamentary proceedings.
नई दिल्ली।नोटबंदी के बाद प्रधानमंत्री नरेंद्र मोदी द्वारा मांगा गया समय बहुत ही नजदीक आ रहा है। इस बीच लोगों को उम्मीद है कि नया साल उनके लिए बिल्कुल स्वर्ग की माफिक होगा। सारा करप्शन और कालाधन खत्म हो चुका होगा।
देश में गरीबी का नामोनिशान नहीं होगा। तमाम तरह के नियम कानून बदलने के बाद अब सरकार को लगता है कि नोटबंदी के बाद बैंकों के पास जो पैसा आया है, शायद उनकी गिनती ठीक से नहीं हुई है। बैंकों के पास बैन हो चुके 13 लाख करोड़ रुपये के नोट आ चुके हैं। इस तरह से जितनी करेंसी को कैंसल किया गया था, वह पूरी रकम उन्हें मिल चुकी है, जबकि पुराने नोटों को जमा कराने की डेडलाइन 30 दिसंबर है। सरकार ने रिजर्व बैंक और बैंकों से जमा कराए गए नोटों को फिर से चेक करने को कहा है।
केंद्र को उम्मीद है कि करेंसी की सप्लाई में जल्द सुधार होगा। 9 नवंबर के बाद से सिस्टम में 5 लाख करोड़ रुपये डाले जा चुके हैं। अब 500 रुपये के नए नोटों की सप्लाई बढ़ाने पर ध्यान दिया जा रहा है। इकनॉमिक अफेयर्स सेक्रेटरी शक्तिकांत दास ने बताया, ‘आरबीआई ने बताया है कि 12.5 लाख करोड़ रुपये बैंकों के पास आ चुके हैं। हमें लगता है कि इसमें डबल काउंटिंग की गलती हुई है। इसलिए हमने आरबीआई और बैंकों से इसे चेक करने को कहा है।’ 500 और 1,000 रुपये के जिन पुराने नोटों को कैंसल किया गया था, उनकी वैल्यू 15.4 लाख करोड़ रुपये है।
ईटी के अनुसार, दास ने बताया कि नोटबंदी के बाद 5 लाख करोड़ रुपये की करंसी सिस्टम में डाली जा चुकी है। उन्होंने बताया, ‘करंसी सप्लाई में काफी सुधार हुआ है। आने वाले 2-3 हफ्तों में हालात और बेहतर होंगे क्योंकि 500 के नए नोटों की सप्लाई बढ़ेगी।’ उन्होंने यह भी दावा किया कि 30 दिसंबर के बाद इस मामले में हालात खराब होने की आशंका नहीं है।
अभी बैंकों और एटीएम से पैसा निकालने की पाबंदी 30 दिसंबर तक लगाई गई है। अभी बैंकों से एक हफ्ते में 24,000 रुपये और एटीएम से प्रति दिन 2,500 रुपये निकालने की लिमिट है। ऐसे संकेत मिले हैं कि इनमें आगे जाकर ढील दी जाएगी, लेकिन पाबंदी को पूरी तरह खत्म नहीं किया जाएगा। रिजर्व बैंक का ध्यान अब 500 रुपये के नए नोटों की प्रिंटिंग पर है। इसलिए अगले 2-3 हफ्तों में करंसी की सप्लाई बढ़ने का अनुमान लगाया जा रहा है।
दास ने कहा, ‘500 के नए नोटों की प्रिंटिंग पर फोकस से मुझे 14-21 दिनों में हालात सुधरने की उम्मीद दिख रही है।’ उन्होंने कहा कि नोटबंदी के तुरंत बाद फोकस 2,000 रुपये के नोटों की सप्लाई बढ़ाने पर था, जिससे लोगों की परेशानी कम की जा सके। उन्होंने बताया, ‘आज 2,000 रुपये के नोट का काफी स्टॉक है। इसलिए 500 रुपये के नोट की प्रिंटिंग बढ़ाने पर जोर दिया जा रहा है। इनकी छपाई काफी बढ़ी है क्योंकि सिस्टम में 2,000 रुपये के नोट का इस्तेमाल हो रहा है।’
उन्होंने बताया कि छापों में जो नई करंसी पकड़ी जा रही है, उसे भी तुरंत सिस्टम में डाला जा रहा है ताकि नोटों की सप्लाई बढ़े। उन्होंने बताया कि 100, 50, 20 और 10 रुपये के नोटों की जितनी सालभर में सप्लाई की जाती है, उसका तीन गुना पिछले पांच हफ्तों में डाला गया है। 8 नवंबर से पहले 1.60 लाख करोड़ रुपये के 100 रुपये के नोट सिस्टम में थे। उसके बाद से 80,000 करोड़ रुपये के 100 रुपये के नोट सिस्टम में डाले गए हैं।
CBI has registered an FIR against some customers of digital wallet PayTm on the company’s complaint that it has allegedly been cheated to the tune of Rs 6.15 lakh by customers based in New Delhi.
It is rare for the agency to take up such cases unless they have been referred by the central government or there are directions by the Supreme Court or a high court.
CBI has registered FIR against 15 customers who are residents of Kalkaji, Govindpuri and Saket besides unknown officials of One97 Communications–parent company of Paytm.
The complaint from the Manager Legal, M Sivakumar, claimed that the company makes payment for defective products received by a customer and also arranges a reverse pickup of the damaged product which is sent to the merchant.
The process is done by a team of customer care executives who have been assigned specific IDs and passwords to handle such complaints from the customers and arrange refund and pickup.
It is alleged that the company found that in 48 cases customers had received refunds even though the delivery of orders was made successfully to them.
“As a matter of facts wherein delivery of orders were successful and satisfactory to the customer, refund should not happen. However, in all these 48 cases refund of order amount happened to the respective customers to the tune of Rs 6.15 lakh,” the complaint, which is now part of the FIR, alleged.
It alleged that customers “illegally” appropriated money refunded in their bank accounts and wallets.
It claimed that the acts reflects “serious” fraudulent act and foul play with common intention to wrongfully gain along with such involved customers.
बीजेपी प्रवक्ता अश्विनी उपाध्याय को सुप्रीम कोर्ट की तरफ से फटकार लगी। यह फटकार सुप्रीम कोर्ट में बहुत सारी जनहित याचिकाएं डालने के लिए लगाई गई है।सुप्रीम कोर्ट ने बीजेपी प्रवक्ता से पूछा, ‘क्या बीजेपी ने आपको यही काम दिया हुआ है? पार्टियों के खिलाफ कैंपेन चलाकर उन्हें कोर्ट में घसीटने के लिए क्या बीजेपी आपको पैसा देती है?
टाइम्स ऑफ इंडिया की खबर के मुताबिक, बीजेपी प्रवक्ता ने सुप्रीम कोर्ट में चार पीआईएल डाली हुई थीं। सुप्रीम कोर्ट ने उनमें से एक की सुनवाई करते हुए उसे खारिज भी कर दिया था।
कोर्ट ने कहा कि बीजेपी पावर में है और आप मंत्री के पास जाकर जो भी दिक्कतें हैं, उन्हें दूर कर सकते हैं. ऐसा कोई दिन नहीं गया जब हमने आपको कोर्ट में न देखा हो, आपके पास दूसरा काम नहीं है।
सुप्रीम कोर्ट ने बीजेपी प्रवक्ता से आगे कहा, ‘आप रोज कोई ना कोई पीआईएल डाल देते हैं। आप पेशेवर पीआईएल डालने वाले बन गए हैं। आपकी पार्टी ही केंद्र की सत्ता में है। आप केंद्र से भी अपनी बातों को लेकर शिकायत कर सकते हैं।
सुप्रीम कोर्ट ने कहा कि कोर्ट में राजनीति को बढ़ावा नहीं दिया जाएगा। कोर्ट ने बीजेपी प्रवक्ता की याचिका को खारिज करते हुए कहा, ‘हम लोग राजनीतिक फायदे के लिए कोर्ट में यह सब बर्दाश्त नहीं कर सकते।’
The Supreme Court said that it may pass some orders on Friday on a plea seeking that demonetised Rs 500 currency notes be allowed to be used for some more time at places like hospitals and petrol pumps.
“We will see whether we can pass some orders today,” a bench comprising Chief Justice T S Thakur and Justice D Y Chandrachud said when senior advocate Kapil Sibal sought an interim order on the issue.
Sibal said that the use of demonetised Rs 500 notes has come to an end and some order needed to be passed.
Yesterday, the court had said that the Centre should adhere to its notification that allowed withdrawal of Rs 24,000 per week from bank accounts after demonetisation of high-value currency notes.
'Migrants are here, they are living, and we have to guarantee their human rights'
Laia Ortiz discusses how Barcelona is trying to forge its own progressive integration policy for refugees, despite the constraints put on it by the Spanish government and the European Union.
Laia Ortiz is the Deputy Mayor for Social Rights at the City of Barcelona, and a close ally of Mayor Ada Colau. She discusses how Barcelona is trying to forge its own progressive integration policy for refugees, despite the constraints put on it by the Spanish government and the European Union.
Laia Ortiz is the Deputy Mayor for Social Rights at the City of Barcelona.
Sixty kilometres from Ahmedabad in Gujarat, in a village called Hebatpur in Dholera, 78-year-old Gaguben Zala made five unsuccessful attempts to enrol in Aadhaar, the biometrics-based database that assigns a unique 12-digit number to every resident of India. “Each time I tried, the machine would fail to capture my fingerprints and the staff sent me back home,” recalled the gaunt and feisty Dalit woman, with deep wrinkles running through the dry skin of her hands that had hardened from years of farm work.
The sixth time, one of the boys working at the enrolment camp came to her help.
“He rubbed my dry fingertips against the hair-oil on his scalp for a few minutes,” she said. “After this, the scanner captured my fingerprints.”
India is introducing Aadhaar in ration shops. The fingerprints of people like Zala will be matched against their biometric data stored in the Aadhaar database before they are given subsidised foodgrains. This process is called ‘authentication’.
The public distribution system, which provides subsidised wheat and rice to 67% of India’s population, is one of the first social welfare delivery systems to use Aadhaar-based authentication. The Centre has asked states to move to the new system by March 2017. In the government’s view, this will ensure only real beneficiaries are able to access the foodgrains, bringing an end to theft and pilferage in the system.
But evidence from an earlier experiment in Gujarat shows fingerprint authentication does not work for lakhs of people, particularly manual workers and the elderly like Zala.
Gaguben Zala enrolled in Aadhaar with difficulty because of fingerprint problems. Image credit: Anumeha Yadav
One in three transactions fails
Well before the Aadhaar database was created, in 2010, Gujarat introduced fingerprint authentication in the public distribution system. For this, the demographic details and biometrics of existing ration card-holders were collected and each was allotted a unique number.
Since then, anyone wanting to pick up monthly food rations must submit this unique number and provide her fingerprints at the village computer services centre called ‘e-gram’, which is connected through a statewide area network.
Once the fingerprints match, an “e-coupon” or a slip of paper bearing the person’s name and quantity of ration is issued. Beneficiaries can use the coupon to get their quota of foodgrains at the fair price shop.
In places with sufficient network connectivity, the beneficiary can provide their fingerprints directly at the ration shop, receive a coupon with details of their entitlements, and collect the foodgrains.
But Gujarat government data shows the system is not functioning smoothly.
Of the 1.2 crore ration cards linked with the state biometrics database, only 83.7 lakh cards recorded transactions in October 2016. Of these 83.7 lakh cards, fingerprint authentication failed for 24.6 lakh cards – nearly one in three families.
In the villages of Koli Adivasis in Panchmahal district, 125 kms east from Ahmedabad, such failures are common. Nearly 85% of the district’s population is rural. Infrastructure is weak in the area.
“On Tuesdays, there is a full-day power cut, and electricity is irregular on other days as well,” said Gangaben Fatesi, a Koli Adivasi. “When the power goes, the computer too stops working.” The residents had to make repeated trips to get their rations, she said. Data shows that fingerprint authentication in Panchmahal did not work for 74,131 of the 234,702 ration beneficiaries who attempted it – a failure rate of nearly 32%.
In the state capital of Gandhinagar, officials gave two reasons for the failures. “One, there are network connectivity issues,” said Ronak Mehta, deputy secretary in the state department of food, civil supplies and consumer affairs. “Two, fingerprint authentication often does not work for those who do hard work with their hands, like farm workers, construction workers.”
Sumi Kapadia, an official in the project management unit of the department, said nearly 15%- 20% of all transactions failed solely because fingerprints did not match on account of skin abrasions, and in the case of the elderly, because of unclear fingerprints. “The fingerprint problems magnify in winter months as the skin becomes rough and dry,” she said. “But the villagers are impatient. They are not willing to wait even an hour to get their fingerprints authenticated.”
For those whose fingerprints do not match, the state has asked ration shop owners to dispense foodgrains by noting down their details in a register. Called “open” transactions, such cases amount to more than 40% in some districts, showing the new biometrics-based system is not working.
District-wise data for October 2016.
Mehta, deputy secretary in the food and civil supplies department said they provide an additional check through a one-time password sent on mobile phones of beneficiaries, so that they know if their transaction went through or not, and do not depend on this for the ration dealer’s whims. He said the department has tried to reduce the fingerprint failures to “5 to 10%.” But as shown above, government data show in October, more than 29% of the fingerprint transactions failed. No transactions were recorded under the “with mobile” category in October.
An old experiment
Despite its problems with the use of fingerprints, Gujarat’s food department is introducing Aadhaar-based authentication in all ration shops, with just a few exceptions. “At 200 spots in Dangs, Panchmahal and forest villages where there is no connectivity at all at the ration shops, we will use an alternative method of authenticating,” said Kapadia.
Reetika Khera, a professor of economics at IIT-Delhi who has researched social schemes such as the public distribution system, questioned the use of fingerprint authentication despite such high rates of failure.
“There has been no rigorous study of Aadhaar’s feasibility and suitability before its use in welfare systems,” she said. “The Gujarat biometrics schemes in food rations could have shown crucial evidence on the use of biometrics authentication in welfare schemes. Then why did the government not study this or take it into account?”
After the introduction of Aadhaar in the public distribution system, similar figures of failure in fingerprint authentication have been recorded in states such as Rajasthan and Jharkhand, she pointed out.
In Rajasthan, which is the second state to adopt Aadhaar in ration shops, only about 63.5 lakh of 99.7 lakh people were able to get their foodgrains in August through the use of biometrics.
The state food department records show Aadhaar authentication does not work for 20%-30% beneficiaries in most districts, even 11 months after Rajasthan government introduced the new system.
Said Nikhil Dey of Mazdoor Kisan Shakti Sangathan, a grassroots campaign in Rajasthan, “Despite such a high failure rate, the Government of Rajasthan continues to deny the extraordinary rates of exclusion by stating that this was “weeding out” of bogus beneficiaries from the system.”
Frequent data entry errors
In Dholera’s Hebatpura, for Gaguben Zala, the prospect of using her fingerprints to collect food rations remains a distant one. “The dealer said I do not have clear fingerprints, so my name cannot be linked for grains,” she said, as she sat in the courtyard examining her chapped thumbs.
The state food department needs to link people’s Aadhaar data to the ration database – a process called “seeding” – before fingerprint authentication can take place.
In Zala’s family of seven, only the Aadhaar data of her son, Gobarbhai Zala, has been linked or “seeded” to the ration database. The family gets 25 kg of wheat and 10 kg of rice every month under the Antodyaya category for the poorest of poor families. Earlier, anyone from the family could pick up the monthly rations. Now, only Gobarbhai can.
In Panchmahal, several families are worse off – their details were incorrectly entered in the ration database which has now been linked to the Aadhaar database.
Jayniben who lives in Sanyal village, Ghoghamba block, is wrongly recorded as a resident of “Ranipada, Ghoghamba village”. Madhu Bhopat, another resident, is wrongly recorded as Madhu “Dalphat.” Balliben, a local worker complained that her daughter in law’s name is recorded as “Labita”, when actually it is Lalita.
Fair price shop owner Ashwinbhai Patel said though he appreciated the computerisation of records, but in the biometrics-based ration system, there were frequent data errors. “Of over 800 ration cards, there is hardly one card which does not contain errors,” he said for the neighbouring villages of Shaniada and Vangarva, that are registered at his ration shop.
Ganpatbhai Narsi, whose wife Madhu Bhopat’s name had been entered incorrectly as Madhu “Dalphat”, travelled four times to the block office in Ghoghamba, 40 km away. Each trip costs Rs 100 and led to the loss of a day’s wages.
Officials in Ghoghamba said the block had just two data-entry operators and nearly 100 to 150 people came to the office for data entry corrections every day. “At first, we had designated Wednesday as the day for corrections,” said KP Parmar, a block official. “But the numbers were so high, we had to open it on all days of the week.”
A similar rush prevailed in Godhra district. At the office of the mamltadar, Navinbhai Marwari stood waiting to get the names of four of his family members corrected in the records. He was weighed down with anxiety and a thick application containing the photocopies of each family member’s Aadhaar card, the family’s new ration card, a copy of the bank account passbook of the head of the household, and an attested proof of their address from the patwari, a local revenue official.
After putting in all the effort – first to get an Aadhaar card made, then to link it with the ration card, and finally, to get the database errors corrected – a villager still had no guarantee of fingerprints matching at the ration shop.
But Gujarat officials emphasised that the system had benefits.
“Most people are able to get corrections done in two visits,” said a block official in Godhra. “But the main thing is that we are very strict on corruption in the ration system.”
Has fingerprint authentication in Gujarat reduced leakages in the public distribution system, as officials claim?
After a Month of De-Monetization: Looking at the Rest of the Country from North East India
A Strange Experience: I went to an SBI ATM a couple of days back, there was money in the ATM and there were only 5 people in the queue. Soon after that 3 people left the ATM without withdrawing any money because it was not giving out 50, 100 or 500 rupees notes. The remaining two people after failing to get notes of lower denominations reluctantly took out 2000 rupees notes and left. Then came my turn, fortunately I was not there to take money out but was there to just check the balance in my father’s account. But, unfortunately, the bank officials due to the huge rush caused by demonetization had not updated my dad’s pension papers so his account was empty.
This experience for me was symbolic of the utter chaos that demonetization has caused in our country.
Situation in North East India: Everyone living in India and every region in India have been affected by the demonetization process albeit in different ways. To understand how the North East has been affected we have to first look at the macro-economic picture.
I live in the biggest city in North East India- Guwahati. But this does not mean we escape the harsh realities that afflict the entire region.
The size of the economy of North East is very small. In fact the size of the economy of the entire North East is smaller than the economy of the cities of Mumbai and Delhi individually.
Moreover, Assam which constitutes around 60% of the economy of North East India and around 70% of its population, has per capita income far below the national average.
Also, over 90% of the employment comes from the unorganised sector which is 10% more than the National average due to the over-emphasis on primary sector in the North East.[iv]
So, most people in North East earn their daily livelihood in small denominations of cash. But what happens when there is none of that available? Simple- the common experience that people across the country have had due to demonetization namely- people spending less, postponing work that needs to be done, not employing labour, people not get paid, consumption levels being low and businesses encountering massive losses, have also been felt in the North East but to a much larger extent.
What is worse is that government’s prescription to go cashless is almost completely non-applicable in North East India because digital and Mobile phone network access is very poor. Share of E-commerce in retail for everyday needs is 2% for the entire country which is even lower in North East due to both poor physical and electronic infrastructure.[v]
A Rural Perspective:
I have witnessed recently that people who are opposed to the demonetization program usually mentions the difficulties that the farmers might face in procuring seeds. But, the Indian farmer has more or less adapted to this challenge mostly because the concept of trust is far more prevalent in rural areas than in urban areas. Farmers have sold their produce to APMCs without getting paid, with the promise from the traders that they will pay them later. Similarly, farmers have purchased seeds from seed sellers without paying them with the same promise that they will pay them latter. So, we have the emergence of a true “cashless” economy one that is based on debt.
Unfortunately, many of the promises made above will have to be broken because of the basic laws of economics. Due to good rains last quarter the agricultural sector performed well and there was increase in agricultural produce. But now their consumers do not have sufficient cash at hand to purchase these primary goods which are sending their prices tumbling down in many urban centres. So, when the traders do not get sufficient cash by selling their goods how are they going to pay the farmer back?
But “seed” is just one of the problems facing rural India. The bigger problem is “labour”. The rabi cropping and harvesting season is going on. During this time the farms in India employ large amounts of extra labour.
The rabi season is a good season for the labourers in unorganised sector in both the urban and rural areas and the labourers have an option to choose amongst them. This is because coming fresh off from the monsoon season which causes huge disruption in construction in real estate sector (one of the largest employers of unorganised labour) the autumn and the winter periods are the time when they aim to do most of their work.
Similarly in rural areas the farmers having faced difficulties like floods and silts during the monsoon season pour everything they have into the rabi season to break even. So, this results in massive employment for low income households in both rural and urban areas. But now when there is no cash at hand and when most of the unorganised sector labourers are daily wage labourers how can the employers pay them?
This problem is far worse in the North East because our population levels are very low. The entire population of North East is just 45 million. So, North East comprises of 4.5% of India’s population while occupying 8% of India’s total land mass. This makes labour a scarce and precious commodity here.
Another important element for the rural economy of North East is the tea gardens. Prime Minister Narendra Modi’s Jan Dhan Yojana might have been a great success as far as opening bank accounts were concerned in the country as a whole but it was a massive failure in the tea gardens. This was realised by the Assam government only after demonetization program was launched and a haphazard attempt by the state government to make tea garden workers open up Jan Dhan accounts has as yet not been a success and why will it be? Tea Garden workers have been daily wage earners in Assam for the past 150 years- it cannot be reversed in just a few weeks’ time.
But this has helped in the rise of a new group of thekedars or labour contractors. Many of the farmers who own their own land have at least one bank account in the name of one of their family members. So, they contact these middle men and tell them how many labourers they need to farm their land. On the other side of the spectrum, the tea garden workers desperate to earn some money will contact these middle men and let them know of their willingness to do agricultural work for some income. So, the thekedars will make it possible for the demand and supply side to merge. After the work is done the farmers will transfer the money from their account to the contractors’ account.
It might look like a good deal, but it is actually not a very good deal for the agriculturalists. The sowing and harvesting of a farm which grows crops and vegetables are vastly different from the activities in a tea garden. So, tea garden workers are far slower in completing their work than the labourers usually employed by the farmers. This means extra income for the middle men but loss for the agriculturalists. The tea garden workers’ communities are also facing a lot of uncertainties due to this new ad hoc system coming into play.
The Security Angle
Just a few days after Demonetization was announced by the Indian Govt. it began to be also promoted as a step against terrorism and insurgency as much as it was a step against Black Money. But what has happened in the insurgency hit region of North East?
The constitution calls for the Indian Government to safeguard the unique culture of the North Eastern region under its 5th and 6th schedule. So, various tribal areas in the North East are governed by independent local council bodies. Many tribes governed by these councils do not have to pay any income tax, hence the concept of “disproportionate assets” is non-applicable to them. Keep in mind the government can put tax penalties in bank deposits only if there is disparity between the source of income and the real income. But what can the government do if there is no requirement to show source of income? Nothing!
So, the insurgents and militant groups which are dominant in these areas have brought trunks of currency that they had accumulated over the years through various illegal and nefarious activities like extortion and kidnapping and made the people of these regions deposit it into their bank accounts.[vi]
But what happens to the insurgents and other militant groups which are more dominant in regions which are not governed by these local councils?
Well, immediately after demonetisation we began to hear that people were very afraid that now since the money collected from them by these violent groups have become useless- they will start using more aggressive methods to extort money from them. The government also knew this and decided to step up security measures, but to no avail. The insurgent groups showed this new aggressive stance when ULFA (I) ambushed and killed 3 Indian Army soldiers on the 19th of November 2016 and NSCN (K) killed 2 Assam Rifles soldiers and injured 7 others in another ambush on 3rd December 2016.[vii]
“But at least they are getting the Black Money back” I don’t think so. Till now around 75% or 12 lakh crore of the 16 lakh crore demonetised currency have come back to the government. Out of these only around 2000 crore rupees have been recognised and taxed as undisclosed asset which is just 0.16% of the total amount returned.[viii]
Also another place to look for the “missing” Black Money are the notoriously stagnant Jan Dhan accounts which from the date when demonetisation was announced till the 2nd of December 2016 has seen a sudden influx of funds amounting to nearly 50,000 crore rupees.[x]
“Only a Few days more and the situation will be back to normal”
Unfortunately the numbers in front of us belie this assumption. On the 8th of November the government had demonetised 16 lakh crore rupees. But by the 8th of December only 4 lakh crore rupees of the new currency notes have been injected into the system.[xi] So, by normal calculations it will take another 3 months more or till the 2nd week of March 2017 for the situation to normalise (optimistically).
But the situation Indian economy finds itself in due to demonetisation is actually much more severe than the government authorities are letting us know.
The 4 months that Indian economy will take to arrive at any semblance of normalisation due demonetization also constitute an entire quarter in an economic year. Now the Indian economy is growing at around 7% per annum (nominal GDP). As mentioned above the value of the demonetised currency notes is 12% of India’s economy or around 1/8th of India’s gross GDP. The destruction caused to such massive portion of the economy and the time required to recover from it, is why most experts are saying that India will lose at least 1 percentage point in the nominal GDP growth numbers.[xii] Thus demonetisation will result in India returning back the crown of “the fastest growing big economy in the world” back to China.
But what does the growth numbers have to do with the common people? Private institutions / investors be it foreign or domestic invest in various countries by looking at several things like infrastructure, human development index and growth rates. With regards to the first two factors everyone knows that India lags behind most of the world, but they were still eager to invest in India because the economy was growing rapidly. But now when the economy decelerates to 6% how eager will foreign/domestic companies and investors be to invest their precious resources in India? Not very, and at a time when the government is increasingly abdicating its role in the economic sector to the private players this could have disastrous effect on the employment numbers in our country.
Final Suggestion None of the top economists in the world believes that demonetisation will help end corruption, black money or the shadow economy; it is only quacks amongst economists who believe that. Fortunately the economists, even though they have diverging views in many topics do not have many varying views regarding how to fight the above mentioned ills of the economy. Their prescription is very simple, which is- improve institutions to reduce transaction costs. I can explain what they mean by this but that will be a subject for another article. For now know that their prescription refers to the scholarship in the New Institutional Economics (NIE) school of thought.
NIE is rapidly becoming the most important school of thought in economics and many of the last UPA government and present NDA2’s policies show traces of it. But demonetisation stands completely opposite to NIE principles.
To get a basic idea of what their prescription meant and what this school stands for you can read Doughlass C. North’s- “Institutions, Institutional Change and Economic Performance (Political Economy of Institutions and Decisions)”.
(This article is a follow up from this: http://monishborah.com/2016/11/14/1380/ ; the author may be contacted at monish.borah@gmail.com)
Disclaimer: The views expressed here are the author's personal views, and do not necessarily represent the views of Sabrangindia.
