Couple of helpless notes on demonetisation in India

Midnight of 9th August, 2016, The Indian government decided to devalue Rs 500 and Rs 1000 notes, the reason given — a step to weed out counterfeiting and black money.

You can read more on the news here . These are a few thoughts on the rather dramatic, unprecedented move:

  1. This probably will not stop black money hoarders (The % of black money holders who have not invested it in an asset like land, gold). Capitalism always finds a way and people will find a way through this as well, be it businesses that solely exist for making back dated invoices or spikes in temple and church donations or people with white money who would not mind helping a friend in need
  2. I have lost trust in money. The only thing that gave value to this piece of paper was the trust that me and the people I transacted with had in its value. Imagine someone who does not have an idea of ‘plastic money’ or ‘wallets’ and thats quite a large number (conservatively 300 million), her life earnings lost its entire value in a span of 3 hours on a random day in November. “I promise to pay the bearer the sum of one x Rupees” does not hold much value does it?
  3. India is one of the most unequal economies in the world. 15 billionaires own a greater share of wealth than 50% of the Indian population (about 650 million) . In an economy such as this it is safe to assume that the distribution of black money would also be as skewed — the top 5% holding more than 50% of the black money in the country (rough, very conservative estimate). Does demonetisation affect these people who would have converted their money to an asset or hoarded it in offshore islands? There are lot of leads such as the panama papers that the government could have followed to make an example of or It could have set an upper limit on the transactions that can be done with cash (lets say 25,000–50,000). This would have helped curb black money as well as help get more people signed up for bank accounts, assisting a smooth transition to a cashless economy. is demonetisation that affects the bottom 95% the most effective way to tackle this issue?does this really affect the big guns?
  4. The complete lack of skepticism among friends and family has been appalling. While it is okay to have certain inevitable dogmas , such as ones imposed by religion, political parties and charismatic leaders. Such blind devotion to the ideas that have been given to you can be dangerous. It leads to us not having opinions and ideas of our own and just echoing things from some guy who eats, shits and will eventually die and rote just like us. Come to think of it, we all love belonging to “tribes” — people who think similar to us and love the things we love. The more dogmatic your tribe is, the more dangerous it is.

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