Currency Ban in India

Shopkeeper displaying, "I ain't taking old cash."!!

Many

of my foreign friends asked me about the recent cash ban in India. So this is a small blogpost about that.

I will try to explain what's going on, to the best of my knowledge. I am not an economist, but what I understand as a common Indian man, I will tell you.

Nooooooooooo!

Indian government recently banned Indian currency of 500 and 1000 denominations, which are the most circulated currency denominations in India. These 2 notes can not be used for daily business now. Now, for those who have this currency, they can deposit it in their banks, till 31st December 2016, and it will be legitimate.  People can also exchange (up to 2000 INR/day) the old banned currency with the new currency. They will need to provide their national ID proofs like voter card, driver license etc. to exchange their old currency with the new currency. Smaller currency remains untouched. There were many reasons to ban the old currency. This project was a super secret project. Only a few politicians of the ruling party and some top bureaucrats knew about it. Not even the members of the opposition party knew about it! There were many reasons for this drastic step.

Nah, black money doesn't look like this!

1) Actually India is a very rich country, not poor as western people see it. But the thing is that the gap between poor and rich is very large. And the rich are so rich because they accumulate large amounts of black money, which is the earning without paying taxes. So because of this govt. gets less income and therefore less welfare programmes. The 500 and 1000 denomination notes were used by these tax evaders as it is much easier to transport or keep them at home (in comparison to smaller denomination notes). These big notes can be easily consumed at real estate and gold markets also. So by banning these notes, the black money becomes useless for those who accumulated it. Those who are honestly paying taxes don't have to fear, as they can deposit their money in bank accounts. But those who have large amounts of unaccounted cash in form of 500 and 1000 denominations, they will be charged 200% fine if they deposit their money in the banks. So basically that black money becomes waste for the tax evaders.

Fake currency is actually much more difficult to detect than this!

2) We have a big problem of fake currency in India. A neighboring country of ours supply fake currency here. Since 500 and 1000 notes are more cost effective to make and transport, therefore almost all the fake currency was made in 500 and 1000 style. Now that fake currency is also a waste.

Shit load of cash and shit load of weapons!

3) The fake currency and black money was also used to support terrorism, violent Marxism and many illegal trades like drugs etc. So the ban on old currency will also limit that.

Vote for ME, vote for ME!

4) A lot of this black money was used in elections also, for promotions and giving goodies to the poor to make them vote for a certain politician. That issue will also be solved to some extent.

Which phone is it? Any idea!

5) The ban also forces (not by government, but by situation) people to use more of digital methods of payments, so it will help govt. to keep a tab on tax evaders, plus in long term it will be convenient for the people.

Now there were so many advantages of this ban. But since every coin has 2 sides, this ban also has.

Not long ago, I was also one of them!

1) People are standing in long queues to deposit/exchange their old notes. Some old people have died by standing in such long queue for so many hours.

LOL, this is so true!

2) People are unable to buy medicines and pay for medical emergency, so some people (very unfortunates ones) are dying there as well. Although there is no such problem in govt. hospitals as the old currency is still valid there for some time.

I wonder why they are smiling at this time!

3) It is hard to buy daily necessities as people don't have smaller denomination notes. Although some local shopkeepers are selling goods on credit to their loyal customers.

No banks here for sure!

4) Since India has for centuries been a cash trading society, therefore this ban comes as a shock for people living in rural areas ( where banking facilities are not available as in cities).

Dummy boss!

5) Business depending on cash have suffered losses and many have fired their employees also. But the truth is that these cash dependent business were the biggest sources of black money.

Not the best time to visit India!

6) Foreigners are also facing problems as many of them have old currency with them. Although they can exchange their old currency at the airports, but the amount is very small. Plus, there is a shortage of lower denomination notes right now, so tourists may end up paying more for cash bought goods and services.

So basically people are facing a hard time because of this ban, but are also content that it is for a greater good. So there is not a widespread discontent, as could have been in any other scenario. Slowly the situation is becoming normal. As for me, I didn't face much difficulty as I live in a city, and I use e-banking where ever possible. I just had to stand in line from 5 A.M.- 4 P.M. for 2 days, and my problem was solved. Ya, this time may seem very long, but I am happy to sacrifice some of my comfort for the benefit of the nation! I have cashed out enough new currency to last for 1 month.

Girls will surely like the pink one!

As for the current govt. will win next election or not. I think it will be very very difficult for them to win the next elections, as people hate inconvenience, even if it is for their better tomorrow. Also, all the opposition parties have come together against this ban, and are asking the govt. to rollback this order. They are fully cashing on the discomfort caused to common people due to this ban.

My personal opinion is that there is no such plan as perfect plan. Instead of wasting decades and centuries to make that perfect, foolproof plan, it is much better to experiment with the good plans. So I fully welcome this currency ban. Whatever happens, my vote is for the current government, as they dared to take such a drastic step. Maybe, it caused widespread inconvenience to the people, but the intentions behind this plan were good. I hope my Indian brothers and sisters will happily adopt this new change. We all can't go to borders to secure our country, but by accepting these kind of changes, we can make our contribution.

Please don't forget to share yOUR opinions regarding this change. I would specially like to know what non-Indians think about it. Would they adopt such a change if it is implemented in their country? If no, then what would they do?

Siddartha Gupta


Image Courtesy:

http://www.business-standard.com

http://www.propertycasualty360.com

http://www.freakingnews.com

http://www.desispy.com

http://www.ibtimes.co.in

http://adrindia.org

http://time.com

http://www.toonpool.com

http://www.thehindubusinessline.com

http://theindianawaaz.com

http://www.tehelka.com

http://www.mysmartpaisa.net