Posted in Banks, Black Money, Common Man, Corruption, Democracy, Financial Institutions, Financial Risk, Frauds, Government, Hindustan, India, Investigation Agencies, Management Lessons, Politics, RBI, Slogging, System, Terrorism, Terrorist, Victim

Demonetisation of High Indian Currency Note – Was it really a masterstroke? – Part 2

It seems as if post-midnight of 8th November 2016; all of a sudden, Indian streets have become the most favourite place to hang out. Long queues could be witnessed at places where the old high denomination currency notes of Rs. 500 and Rs. 1000 are either being accepted, changed or deposited. So much of chaos could be seen at most of the bank branches and ATM machines. The poor and middle-class people, patients, farmers, senior citizens, foreign tourists, all are standing for days, in long queues, for their hard-earned money. Further to this, every other day, a new announcement or a roll back of any previous announcement comes from either the government or the regulatory agency, in the name of easing up the problems faced by the common ‘honest’ citizens of India.

Although, the Government of India (GOI) along with the Reserve Bank of India (RBI) are trying their level best to bring the situation under control, however, the reality is that in rural and interior areas the condition hasn’t changed much. The problem, especially in the rural and interior areas, has aggravated to such a large extent that none of the measures seems to be sufficient enough to bring a significant relief on the hardships that the common men are facing. Due to non-availability of cash in the market, the business is also getting impacted to a large extent. The biggest worry is that it is substantially affecting the agriculture sector, as well. Since we know that India’s economy is agriculture dependent, so if corrective measures are not taken immediately, then it is ultimately going to hit our economy, as a whole. This demonetisation step which was meant to hit the backbone of the corrupt people, black money holders, and terrorists, has actually brought a lot of hardship in the life of honest people. If things continue to be like this and don’t change soon, then the possibility of this resulting in first of its kind “economic riots” happening in the country could not be discarded altogether.

There is no argument on the point that some problems are likely to occur when such radical steps are taken in any economy. But still, a question arise that does hardship to such a large extent is a part and parcel of this demonetisation scheme or was it possible to smoothly execute it, causing least possible trouble to the honest citizens of the nation? Was it so difficult for the learned thinking caps to foresee even the basic problems that will occur on account of banning 86% of the currency from the market? Somehow it reflects that lot many of important things got skipped at the planning stage. Similarly, it forces us to think that whether this entire chaotic situation happened because the regulatory agency could not foresee the consequences of undertaking such a big task of demonetisation in world’s second largest populated country. Or is it that the regulatory agency chooses to surrender in front of the government and hence this step of demonetisation was taken in a hurry with half-hearted preparedness? Now, every responsible authority should evaluate that whether this demonetisation scheme is being implemented in the correct manner or could it have been implemented in a more appropriate manner?

Is it not a big lapse on our part if before executing any scheme we are unable to think of the bare minimum problems that will be faced by the citizens and come up with a solution in advance? If we do a root cause analysis of all the current chaos in the market, we will know that the reason of all these hardships is non-availability of sufficient currency. Why was the adequate availability of new currency notes not been ensured before taking up this drastic step? Although, GOI and RBI are assuring the citizens that there is enough availability of currency in the country, however, the hard-core reality is that within a couple of hours bank branches and post offices run out of cash and those standing for hours, in long queues, have to return empty-handed.

Post implementation of demonetisation also it seems they are not able to come up with precise measures to ease the pain. Why else they will have to roll back the announcements, every now and then? Quite surprisingly, District Central Co-operative Banks (DCCB) and Primary Agriculture Credit Societies (PACS), which constitutes a strong pillar of our financial system especially in the rural areas, are restricted from accepting deposits in demonetised old currency notes. I fail to understand that when as a corrective measure cash withdrawal facility is made available at petrol pumps, what is the logic behind keeping Co-operative banks aloof in this situation which is on the verge of going out of control with each passing day? Is it on account of trust issues with the functioning of DCCB and PACS because of which this action has been taken? This is the question that needs to be answered by RBI and if the answer to that is in affirmative then RBI should take timely corrective actions.

It is to be noted here that in spite of all the hardships, the common men stands with the government in the fight against black money and has wholeheartedly extended their support in favour of this decision. The major reason of masses backing up demonetisation is because they are suffering since long from the disease of corruption, black money and terrorism and they seriously want to eradicate it from the nation, once for all. They are ready to face short-term pain, in anticipation of a better future. They have placed their hope in the present leadership and are positive that after 30th December 2016, the nation will see a new beginning of a corruption free India. Although, how much of that is actually achievable is a question that only the future will be able to answer correctly. I do hope that the wishes of common citizens come true this time and they are not left disappointed as usual.

I wish that the Almighty give good sense to each one of us.

God bless you all!


Peyush Jain

Posted in Banks, Black Money, Common Man, Corruption, Democracy, Financial Institutions, Financial Risk, Frauds, Government, Hindustan, India, Investigation Agencies, Management Lessons, Politics, RBI, Slogging, System, Terrorism, Terrorist, Victim

Demonetisation of High Indian Currency Note – Was it really a masterstroke?

As per the notification issued by the present Indian Government, with effect from midnight of 8th November 2016, existing High Indian Currency Notes having the denomination of Rs. 500 and Rs. 1000 (which accounts for almost 86% of the currency) ceases to hold its status as legal tender. In simple terms, existing Indian Currency Notes of Rs. 500 and Rs. 1000 are banned from the said date, and hence, these notes are not valid for any kind of monetary transactions like receipts and payments i.e. the transaction value of these currency notes is henceforth Nil. However, keeping in mind the convenience of the citizens, the central government has notified certain services/products/organisations like hospitals, petrol pumps/gas stations, etcetera, wherein for specified transactions, Rs. 500 and Rs. 1000 currency notes shall be accepted, until the date specified by the government.

It’s indeed a historic step taken by the present government and majority of the citizens, irrespective of the temporary inconvenience encountered at their end, are happy and stand with the government in this move. The common men, the experts, the economists, as well as, a lot many of the learned and respected persons across the globe have opined their views in favour of this move and expressed it as a drastic step taken by the present Indian Government in the fight against black money.

However, in this “viral addictive” world, it’s highly important to analyse, with an open mindset, that all the information circulated around us is absolutely correct or not. Likewise, we need to analyse whether this step of demonetisation is really going to have a larger and futuristic impact, “as claimed from every direction”? Was it really a masterstroke or did the government somewhere missed the opportunity to hit a home run? So guys, keep your thinking caps on, while we try to find out the answers to all such questions and rest be assured that this blog is surely going to serve you with a healthy food of thought and will indeed be an eye opener.

First of all, let us find out that why the Indian Government has taken this step of demonetisation of High Indian Currency Notes? – On the eve of 8th November 2016, the Pradhan Sevak, Mr. Narendra Damodar Modi, in his historic and crystal clear speech, conveyed all the information with regard to demonetisation of Rs. 500 and Rs. 1000 currency notes and explained every minute detail. At the outset, he deserves a big applause for such a good speech. Further, addressing the nation, Mr. Pradhan Sevak, informed the three major reasons behind opting for demonetisation of the high currency notes i.e. 1) Corruption, 2) Black Money, and 3) Terrorism.

Hence, in the subsequent paragraphs of this blog, we will analyze demonetisation of high currency notes in light of the above mentioned three reasons and try to understand that how effective the demonetisation step will be in addressing those three issues:-

1) Corruption – In order to understand the impact of demonetisation of high currency notes on corruption, let’s first divide corruption into pre and post demonetisation period i.e. corruption that has already taken place before demonetisation and corruption that is going to take place after demonetisation of High Indian Currency Notes.

a) Corruption before demonetisation – All the cases of corruption that has occurred on or before the midnight of 8th November 2016 falls in this list. I am sure every sane mind will agree that we can’t undo anything that has already been done in the past (unless and until there is a secret time machine existing on planet earth). So, the corruption that has already been done in the past can’t be undone by merely demonetisation of currency notes, because of the simple reason that the money has already travelled from the hands of the sufferer into the hands of the corrupt individual.

Now, a valid question might pop up in your mind that although the past corruption cases could not be undone, as well as, the sufferers could not gain any benefit from this step, but, wouldn’t just by demonetisation of high currency notes the money that is lying in the hands of the corrupt people will automatically turn into scrap, and, in this way, help in fighting corruption? Herewith, I would urge you to park this question in your mind for some time, because the answer to this question is available in the point number 2 on Black Money.

b) Corruption after demonetisation – All the cases of corruption that are going to take place post-midnight of 8th November 2016 falls under this list. Now, please don’t accuse me of being so optimistic about corruption. On the contrary, don’t we all know that “occurrence of corruption” is a hard-core reality and it is bound to occur even after demonetisation of high currency notes? So, the big question is that what will be the impact of demonetisation on the future corruption cases?

Since demonetisation is a one-time cleansing activity which will make the existing high currency notes ineffective, so it won’t have a larger role to play in curbing future corruption cases, as well. At the most it can have a short-term impact on the mindset of corrupt people, but, as and when the new high currency notes are easily available in the market, the corruption will once again catch its pace.

On the contrary, the absence of High Currency Notes in an economy could have a larger impact on the “occurrence of corruption” in any country. The logic behind it is that transactions on account of illegitimate deals and corrupt demands mostly get materialize by transfer of funds in high currency notes. So, there is a fair chance that if there are no high denomination currencies notes available in a country then the graph of corruption might decline substantially. Thus, the absence of high currency notes could play a major role, in at least curbing the corruption, if not eradicating it completely. This is the very reason which has compelled most of the developed nations to ban high currency notes in their respective nations.

Now, the present government somewhere missed this golden opportunity to curb the future corruption cases because even though they focused on demonetising the existing high currency notes, but, at the same time, they went a step further and issued new higher denomination Indian Currency Note of Rs. 2000, along with the new currency note of Rs. 500 and further propose to issue the new currency note of Rs. 1000, as well, in near future. Now, this step of once again issuing the high denomination notes is contradicting the very purpose of curbing the corruption cases which materializes by means of high currency notes. This move of the government has once again left the doors open for future corruption to enter in our economy and this time on a much larger scale.

Solution to curb Corruption – Although, the high denomination currency notes help in ease of monetary transactions, however, at the same time, it comes with a very high risk of flourishing corruption in the economy. Thus, if at all, the government intends to curb the future corruption in the country then all the high denomination currency notes should be banned, until the time a technology is devised which either makes it impossible to replica the notes or else makes it possible to track each and every single currency notes issued in the country. Further, we should strive to move towards a paperless currency in near future.

2) Black Money – The second reason, as provided by the government, for opting the demonetisation step is black money. By this step, the government is projecting that the black money holder will either keep holding the black money or destroy it, which will eventually turn it into scrap, or else, the black money will come out in the economy. Indeed, there is no argument on the point that under the current circumstances, only these two outcomes are possible for the black money that is held in high currency notes and there is no third possibility available.

Now, if we analyse both the possible outcomes, we will realize that, as far as, the first outcome is concerned there is not much to worry about as the transaction value of Rs. 500 and Rs. 1000 note is already Nil, and, as such, holding or destroying the currency notes won’t affect the economy much. However, the real problem arises with the second outcome i.e. when black money starts coming out in the economy. The biggest concern with this outcome is the channel through which this black money will enter the economy. Needless to say that there is no problem when the black money is routed through legitimate means i.e. after paying taxes, penalties and complying with other legal formalities. But, it’s a known fact that those opting for the legitimate route (if at all) will be meagre in number, while the majority will resort to the illegitimate means of converting black money into white and, thereby, flushing the black money into the economy.

Hence, no one can discard the fact that the major chunk of black money is going to be routed through illegitimate routes only. Now, assuming that majority of the ‘liquid’ black money is held in high currency note, the real challenge that is posed in front of any economy is to keep a check on the means from where the black money could be pumped into our economy, especially in circumstances like demonetisation of high currency notes. At the same time, it should also be kept in mind that not much time should be made available for the black money holders to convert their black money into white. So, as and when, a country opts for drastic steps like demonetisation to curb black money, the importance of keeping a check and control ‘beforehand’ on all such means from where the black money could be converted into white money should be given extra weight-age, because any loop-hole on this front could ultimately hamper the very purpose of demonetisation. Herewith, I would like to clarify that beforehand check and control means stopping the activities to occur at the first stage, rather than taking corrective actions.

Now, on this front, the present government has missed the bus. The holders of black money got enough time, as well as, mean to dispose of the black money in their possession. Just to throw some light on this, I would like to draw your attention towards the incidences that happened after the notification for demonetisation was issued from government’s end. As a matter of fact, the government notified the nation at around 8 P.M. about banning the high currency notes with effect from midnight of 8th November 2016. Thus, on an average, the time left was less than 4 hours for black money holders to materialize the deals. However, it is interesting to note that the jewellery shops did ‘record’ business post this notification and some of the jewellery shops are claimed to have remained open till 4 A.M. of 9th November 2016. This denotes that although the transaction value of Rs. 500 and Rs. 1000 currency notes post-midnight of 8th November 2016 is Nil, but still, monetary transactions are taking place in high currency notes, right in front of the eyes of the government. This simply means that even though all these transactions are illegal, yet the government made no attempt to stop them “at their source”.

Will the Income tax raids on selective business groups/shops, post happening of the transactions, in any way, going to help in catching all the black money holders?  If banks could be kept closed for one day for preparedness with respect to demonetisation, wasn’t it in nation’s interest to be extra vigilant and close all those businesses wherein the black money held in high currency notes was supposed to be expended like jewellery shops, etcetera? Why were they allowed to transact post-midnight of 8th November 2016? This is the biggest loophole, of which the black money holders took advantage and flushed the black money into the economy. And further to this, since the government has notified the time frame available to change/deposit the high currency notes of almost 50 days (as of now), so there is still enough time available for the black money to get pumped in our economy through ‘illegitimate’ channels. It’s not hidden from anyone that till date monetary transactions (other than those notified by the government) are taking place in our economy, with Rs. 500 and Rs. 1000 currency notes because of the simple reason that there is still time available for getting them changed/deposited in the bank accounts. The government should have warned the citizens that all the monetary transactions (other than those specifically notified by the government) that take place by exchange of Rs. 500 or Rs. 1000 currency notes are illegal and should be dealt with seriously.

Herewith, I would also like to draw your attention to one more point that, as far as, means to route black money into banking channels is concerned, other than the mostly used measures like purchase of precious commodities, real estate, jewellery, hawala transactions, etcetera, this time there is a high probability of black money channelizing through all those bank accounts which were opened under “Jan Dhan Yojana”. Although, the “Jan Dhan Yojana” is indeed a very good initiative by the present government for financial inclusion to ensure access to financial services for all those people who were earlier deprived of these channels, but still there is a high chance that now all these bank accounts might be used as a means of channelizing black money. The black money holders will surely be eyeing on all these accounts, for converting their black money into white money, especially in the light of the government’s clarification that amount deposited up to Rs. 2.5 Lacs in single accounts would not be questioned much. Similarly, a lot of black money could get pumped in the name of agriculture income, donations received by charitable institutions, NGO’s, etcetera. So, this is also a big challenge to monitor black money that gets routed into the economy through these channels. Above all, the current bandwidth of any investigation agency is not enough to scrutinize the details of all the bank accounts and post bank accounts.

Solution to curb Black Money – In order to curb black money, by way of demonetisation, two of the most important things to be focused on, are the time and means available with the black money holders for converting the black money into white money. The interesting thing to note here is that if there will be no time available to convert the black money into white money, all the means to channelize the black money into white money will automatically get ineffective and there is a high probability that the majority of the liquid black money held in high currency notes will get scrapped, on its own. Having said that, the real challenge that will pose in such situation is that how to tackle the conversion of high currency notes held in the hands of honest citizens, because these high currency notes will be required to be converted into small denomination notes and for that reasonable time needs to be given to the citizens of the nation.

So, as far as, time is concerned the government is left with not much option because they have to give reasonable time to the citizens for changing/depositing the cash-in-hand available with them in high denomination currency notes. Hence, the hard-core reality is that after demonetisation step, the black money can’t be stopped in totality from entering the banking channels. Thus, the only option left with the government now is to engage the entire machinery in monitoring and controlling the means from where the black money could be routed, so that at least the amount of black money that is entering into the economy could be restricted to the bare minimum.

3) TerrorismHawala transactions and counterfeit currency notes are two of the major sources of fund for terrorism in the country. Supposing that majority of the funding for terrorism takes place in high denomination currency notes, demonetisation of these notes will automatically break the nexus and, in turn, bring a ‘temporary’ reduction in the terrorism activities on our soil. Demonetisation is indeed a powerful stroke against terrorism because it will have the impact of ceasing the funding through counterfeit currency notes in a single blow, and, at the same time, it will also help in restricting the funds transferred through Hawala transactions for funding of terrorism. However, it is to be noted here that this is only a temporary solution to restrict terrorism activities, and, as and when people with malicious intentions are able to replicate and print the counterfeit notes of the new high denomination currency notes issued in our country, the supply of counterfeit notes for funding terrorism will start again.

Solution to curb Terrorism – For curbing terrorism breeding on account of high denomination currency notes, the permanent solution is to ban all the high denomination currency notes in the economy and strive to move towards an economy with paperless currency.

Finally, after analyzing the demonetisation of high currency notes, in line with issues like corruption, black money and terrorism, my view is that although the intentions behind opting for demonetisation step are good, however, somehow the government missed hitting the home run on account of the various reasons mentioned in the respective points above. Now, I leave the ball in your court to decide whether it was a masterstroke or not.

I would like to conclude this blog with the hope that may this demonetisation step bring positive changes in our economy and, once for all, remove the chronic diseases like corruption, black money and terrorism from our soil. At the same time, I do hope that the government takes remedial measures in time so that it is able to restrict the black money from flowing into our banking channels. Let us wait and watch to see what is hidden in the womb of future.

I wish that the Almighty give good sense to each one of us.

Be in touch.

God bless you all!


Peyush Jain

Posted in Armed Forces, Belief, Common Man, Democracy, Equality, Government, Hindustan, India, Injustice, Justice, Politics, Slogging, System, Victim

One Rank One Pension (OROP) – Why so much tension?

One Rank One Pension (OROP), in simple terms, means the same pension to all those who retired from the same rank and served for the same duration. I am sure that any sane mind wouldn’t argue with the logic of having an identical pension for the identical grade. It’s indeed a step towards equality. I totally agree with the point that there could be differences in opinion between the government and those affected by OROP, on various issues like how/when/what all to include in the OROP scheme. However, I fail to understand, that what could be the reason behind lingering on such important issue for that long? Is it so difficult to resolve sensitive issues peacefully, without any casualties?

OROP, at present, seems to be a reason for a lot of tension for the Indian Government, which came into power with majority seats. I hope the Central Government remembers that to implement OROP was one of their pre-election promises. Or, who knows, maybe OROP was one of their Jumlas, on which they won the election, and now, like all other Jumlas, this one is also getting stuck in their neck. What an irony, that on one hand, Mr. Pradhan Sevak urges the nation not to forget our soldiers, and, on the other hand, the Central Government applies such a casual approach towards the demands of our soldiers. If the Central Government was so thoughtful about our soldiers then wasn’t resolving this issue long back, one of their responsibilities? Now, would the government let us know that who is responsible for aggravating this issue to such an extent?

Do remember that when the soldiers, who protect us, themselves have to protest for their rights, then the nation, as a whole, needs to introspect whether we are heading in the right direction or not. The armed forces are always ready to give away their life, for the love of their nation and what they get in return, meager salary? Are they stupid to do so? Don’t they love their life? Don’t they love their family? Is anyone of us ready to sacrifice our life for a meager salary? Then what makes these soldiers live and fight in inhuman conditions? It’s nothing else than pure patriotism that ignites their soul. Their love towards the nation is way above the love for anything else. Salute to their attitude. I know that we can never be like them, but at least, we can show some respect by caring for their genuine demands, right? Or is it too much to ask for?

OROP is the “Mann ki Baat” of the entire nation. I do hope that in the same way, it’s the “Mann ki Baat” of our Pradhan Sevak too. I further hope that Mr. Pradhan Sevak, who is, fortunately, a good speaker too, at least makes an attempt to convince the “true heroes of our nation” that they will get what they deserve in “due time”. However, without any fail, this “due time” should be a reasonably short time because the soldiers are already waiting and protesting since a very long time for OROP to get implemented, in its true spirit.

Herewith, let me make it very clear, that I am not supporting any kind of suicide, but at least we should be sensible enough not to do politics on someone’s death. It sometimes makes me think that can we go to any extent to divert the minds of common citizens from the actual issue or what. Nevertheless, I do hope that all the issues with regard to OROP gets sorted out soon and may there be equality all around. Let us build the world where everyone gets what they deserve.

I wish that the Almighty give good sense to each one of us.

God bless you all!

Peyush Jain