Push for cashless economy post demonetization – Excuse or Necessity?

Not all banks are dispensing cash as per government guidelines and not all ATMs are in service these days. This is not because there is not enough cash but because thousands of crores of Rupess of new currency notes are stashed away illegally.

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Fighting black money with digital economy is both good and risky

Cashless economy has become a new mantra for Prime Minister Modi these days. While it is not new for him to implement new ideas, the prevailing cash crunch due to demonetization of Rs 500 and Rs 1000 has turned out to be the biggest challenge for him since he took the Prime Minister’s office.

The recent statement by Mr Modi that cash situation will improve after 30th December has attracted criticism from various lobbies. Some have understood it as part of the process and others have interpreted it to be an excuse for further delay. Majority of people are still trying to cope with the difficulties for a better future but some are losing patience. This gets worse when political parties not happy with demonetization use their influence on media to provoke people’s sentiments against demonetization.

It’s a no-brainer for any expert economist to understand why and how demonetization will help India’s economy in long run. This includes Dr Manmohan Singh, who has been the worst critic of demonetization among responsible political leaders. No doubt, the day he spoke on demonetization in the parliament, he made an impact using his credibility as a renowned economist and India’s Ex Prime Minister, but looking at the history, his statements made it clear who he was speaking for. While the number of people he was speaking for remains unknown, one thing is clear that he wasn’t speaking for India. If he spoke 10% truth in favor of people, he remained silent on 90% truth that would go against his party’s interest.

Some have raised concern over India’s GDP growth post demonetization. While they may happen initially such loss will be short-lived and soon after the initial jitters India’s GDP will rise steadily. Looking at the bigger picture, it becomes clear that by implementing demonetization India has taken a giant leap in the future of country’s emerging robust economy.

However, the current scenario is challenging. There is a group of politicians whose stand on demonetization is outright selfish and narrow-minded. Fortunately, hardly anyone takes them seriously at national level but they do influence people’s opinion. There are agents who provoke public sentiments against demonetization by using social media. There also are paid media reports, selected news stories and promoted write-ups by economists to criticize the move. It is an organized attack on PM Modi by opposition parties and black money holders. Similarly, we also hear reputed individuals speaking against demonetization. But looking at the history of all this people’s relations with Congress, their opinions fetch little value. They are obliged to overlook the long-term benefits of demonetization and highlight only short-term loss and difficulties.

Alleged attempts by black money holders, including political leaders, to hinder cash flow by influencing bank officers and ATM vendors is another factor. The idea behind such attempts is to create a negative sentiment towards demonetization, and towards PM Modi in particular. Lack of willingness on part of concerned officers to do the right thing is one more factor adding to increasing dissatisfaction. Not all banks are dispensing cash as per government guidelines and not all ATMs are in service these days. This is not because there is not enough cash but because thousands of crores of Rupees of new currency notes are stashed away illegally.

The CBI is on a marathon raiding locations to seize illegal cash and the IT department is busy using intelligence received from black money hunting agencies under center’s direct control. These bodies together have so far been successful in unearthing huge amount of new currency notes and the search is on. A good number of bank officers have been sacked or suspended. Corrupt politicians are shaken to the core and working around the clock to save themselves from being exposed of their tainted past.

Taking note of all this, the Supreme Court of India, after chastising center for the difficulties faced by common people, has finally expressed its faith in the ability of the government to deal with the current situation and any eventuality. This, indeed, is an encouraging move.

The cleansing process has just begun. Prime Minister Narendra Modi is in no mood to look back. He says he has more plans in mind. The question is, why is he pushing for cashless economy? Is he afraid there won’t be enough cash in the coming days? Is the push part of his digital India mission? Or is it something else that forces him to push for cashless economy? The government has announced awards and incentives for encouraging digital economy. This is unprecedented.

Recently the Finance Minister has stated that all demonetized money will not be remonetized. The ministry is not keen to reprint all scrapped currencies for obvious reasons. Their decision is common sense if the inflation rate has to be controlled.

Black money is not the only monster; excess of currency notes is equally responsible for India’s weak economy. By writing off unaccounted money India has tangibly increased the value of white money held by clean and common people. The effect will be felt in the coming years.

While the Prime Minister may have multiple reasons to promote cashless economy and while there certainly are pros and cons of such a move, one thing that has played a significant role in his passionate promotion of cashless economy is public response.

The reason is two-fold. 1) Cashless economy is in line with Nareandra Modi’s concept of digital India; 2) shortage of cash in public hands coupled with provocation by opposition parties has affected their enthusiasm to stand in full support of demonetization. Mr Modi has taken note of this and by pushing cashless economy he is trying to pierce two targets with one arrow.

It is not an impossible task but certainly difficult. Government announced rewards for cashless transactions is a smart move and will surely help. At the same time, digital transactions are highly risky unless people are taught to safeguard themselves against frauds, including those by bank employees and unscrupulous merchants.

The need of the day is to stand united against corruption. The need of the day is to destablize the destablizers. India has been cheated and looted over decades, first by foreign invaders and then by those who ruled it. Remember, the people who are now crying wolf over public inconvenience and stalling parliament proceedings are the same people who have made a mess of India’s economy and its culture since decades. These are the same people who made Indians poor, culturally and economically, and kept them so for decades. These are the same people who caused Indians to lose their self-esteem of  being an Indian for decades.

If India is safe the world will be safe. If India is peaceful the world will be peaceful. If India is prosperous the world will be prosperous. The current world economy is artificially inflated and is vulnerable to burst at any time. India’s historical prosperity was due to its cow protection and agriculture. This needs to be revived. Indians need to support any government move in that direction.

India, historically known as Bharat, once led the world and has the potential to do it again. We cannot afford to lose the momentum. Supporting a political party even when they engage in wrongdoings and opposing a political party even when they do the right thing will make India weaker. Our glorious freedom fighters and forefathers fought for India for centuries. They underwent extreme hardship; even laid down their lives. Compared to that standing in a queue for cash or spending less of it is insignificant. Little more austerity can change the face of India. Helping India grow stronger and lead the world with its cultural wealth and spiritual wisdom is a service to the entire world. It is your choice and opportunity to be part of the history in the making.