Friday, November 11, 2016

Narendra Modi’s currency googly: 5 reasons why the timing was perfect

The withdrawal of Rs 500 and Rs 1000 currency notes from current circulation and the attempt to introduce new bills into the Indian economy could not have come at a better time.
First proposed by Aurangabad based chartered accountant Anil Bokil, it seems Prime Minister Narendra Modi was toying with the idea for some time now. This is indicative from the fact that the Jan Dhan Yojana was introduced in August 2014, when the PM declared from Red Fort that he wanted every Indian citizen to have a bank account.
While campaigning for the Lok Sabha polls, Modi had promised that he would flush out black money from the Indian economy and book those who had amassed cash illegally.
Fed up with the string of scams that had been exposed during UPA II regime, the concept of booking the corrupt had been consumed by voters with enthusiastic approval.
For over two years now, the people of India were waiting for credible lists of illegal account holders abroad and some concrete action against black money hoarders.
So when the demonetisation announcement was made by the government, it was welcomed by almost all and sundry as a move to curb graft, though the first reaction was obviously of shock and confusion.
And though it will take a few days, possibly weeks, before the dust settles and we feel like we are in control of our cash flow, the attempt to withdraw high denomination currency seems to have been thought through, especially the timing.
  • The broadcast was made at 8 pm, when the entire banking process had come to a halt. There was no technique left for the fraudulent to attempt a colour change of their currency from black to white, though one hears gold got sold at a premium.
  • The move comes just after Diwali when shopkeepers, jewellers, traders, and anyone who sells anything had done brisk business and has the peak amount of black cash. At no other time in the year, than after Diwali, do merchants have more illegal pilings.
  • Post Diwali, the wedding season sets in. This is when the large amounts of cash stockpiled are spent on lavish parties and expensive gifts. The government has nipped the extravaganza in the bud.
  • The evening of the announcement was the one just before US election results. The satta market must have finished finalising its bets on who would be the next President. Huge amounts of illegal cash would have exchanged hands the next day, but with old currency no longer being a legal tender, the entire bookmaking circuit would have gone into a tizzy.
  • Assembly elections particularly in the critical state of Uttar Pradesh are round the corner. Cash is freely distributed to buy voters or purchase lures for potential voters. Demonetisation will thwart this entire gamut of black money based business of criminal and underhand political dealings.
With demonetisation, Prime Minister Narendra Modi will suck out Rs 14 lakh crores of high denomination money floating around in the Indian system.
He also hopes to trounce the nefarious designs of those whose interests are inimical to India. Some including elements in our neighbouring countries have been pumping in fake currency to derail the Indian economy. This masterstroke is likely to upturn all such deleterious motives and also cleanse our own system to some extent.
However, this a one-time move, an attempt similar to that made by Morarji Desai in January 1978 and before that in January 1946. This will have benefit but only till a limited degree and duration.
A longer and more protracted policy to check corruption as well as an efficient tax administration is needed to dissuade people from evasion.
One very good way would be to cut taxes to a level when people feel paying is easier than nursing a headache. The other would be to find and nail those who have stashed bundles abroad and are sitting and smiling at Modi’s clean-up inside India.
(Source- Zeenews)


  1. It is -a master stroke and timing is perfect.
    Now it's succeses depends on execution and enforcement duly supplemented with all provisions with enforcement wing ,revenue intelligence ,reserve bank ,banks ,IT dept ,police .....,finally govt represented by netas.
    Wait and see.
    It is amazing and strange are indian ways - the way currency is accumulated and stacked in godowns in hundreds /thousands of crores , as seen in media videos.

  2. There is a high chances that the situation in border may result in full blown war. Naturally when a war breaks out the off products will be black marketing and economic chaos.sleeper cells also will be activated. In one master stroke our PM has neutralised this threats.

  3. no words fine action.

  4. This is mainly meant to counter the money power in coming elections. The BJP cashed it already their party funds. Rest will be history after the UP and Punjab elections.

  5. Indeed it is a masterstroke. Timing was perfect, it had the element of surprise which has sent shock waves to people dealing in black money, fake currency within and outside our Nation. Of course there was some difficulties faced by honest citizens which they are taking in an optimistic way expecting the country will benefit in the long run.A few more measures if taken by the Govt would have improved the situation:-
    1. RBI should have tasked the banks to fill all ATMs with Rs. 100/= notes in advance under the pretext that high denomination notes are scarce due to hoarding by vested interests, and printing and supplying more 100 Rupee notes to tide over the present situation.
    2. The announcement could have been more effective if made on a Friday prior to second saturday/sunday when Banks used to be closed, so that people would have taken it in the normal course.
    The above is the suggestion of a layman; govt would have got some intelligence inputs to choose the timing which can not be questioned.
    3. This was the best opportunity to stop printing and circulating high denomination notes to check the vested interests from future acts. Then high value business would have been automatically turned to plastic currency or net transfer.
    4. A small cautionary word from the PM that the new high denomination notes now to be circulated will be subject to de-monetisation within another 5 to 10 yrs would have given another jolt to the dealers in black/ fake money.
    The Nation will be grateful to the PM if he conducts another surgical strike on the black money in foreign accounts. Of course politicians across the board and businessmen will revolt, but people will support the Govt to the hilt.