6 Ways to Reduce The Indian Demonetization Chaos [Opinion Piece]
While most of us Indians, who can read and write and who are sensible enough to think, seem to like the Demonetization initiative by the current Prime Minister, Mr. Narendra Modi, we all agree the execution could have been planned smoother, if nothing else.
Hopping onto the band wagon, I see it a great opportunity to present my two cents. Six, rather.
Without needing to discuss the nuances of what the Demonetization drive was all about, I would like to present simple steps that could have avoided the chaos.
1. Involve The Merchants
Being an evangelist of collaboration for over a decade now, I feel inclusion of the storekeepers, merchants and small retail business owners (including petrol bunks and malls) is the best way to avoid people quequing outside banks and spending their otherwise resourceful time in waiting for their turn.
All merchants could have collected the ₹500 and ₹1000 notes with a simple Aadhaar eKYC instrument with receipt printer, (provided and funded by banks) issued to them to authenticate the money depositor. The total amount thus collected could be handed over in bulk to the bank, twice everyday. As the depositors would get receipts for the money they gave, they would be assured their money is going into their accounts. The banks will need to have a special counter for the merchants to deposit the money and machines (where they could procure the copy of the receipts issued and they would need lesser employees to deal with this mess and less frustration all around.
2. Accept All The Cash
All the cash in the market should be accepted by the initiative (no questions asked) at a flat 5% fee on all deposits made by anyone. Ofcourse, bulk cash special counters in bank would need to be installed to deposit large sums of money and should employ fake currency detectors to keep everyone safe.
This would encourage people who had large sums of cash to deposit it in bank accounts and not panic and probably spend their money in investing it in devious ways to convert the black money to white.
This would have also helped the RBI realise how much money was floating in the market that is illegitimate, as all such fake money would be detained by the fake currency checker and enlisted for future investigation. It will fill the bank coffers and help convert the public at large to adopt banking in large numbers.
3. Fixed Deposits For Excess Money
Let’s simply say each person is allowed to have not more than 10 Lakh Rupees of liquid cash in their accounts. Any amount deposited in their accounts over and above that, could be compulsorily and automatically converted to fixed deposits that would not be encashable at any circumstance before the completion of 5 years of the term.
This would have a lot of money available as reserves for the nation’s developmental activities and also act as an assurance to the public who deposit their money, that their money is safe and being used for fair purposes.
At the end of year 5, to encash this fixed deposit money, the account holders would need to prove that the money is tax paid, or pay tax and penalties if not.
4. Allow Touts To Operate
The fact that the measure seems desperate to get black money out of the hiding, has also opened up new markets for those who see this as a opportunity to get make quick money — the touts.
Without their own realisation, these touts are helping the banks to get the money into the system. And that would mean faster, though less official ways of getting the undisclosed money into the banking system. Beating them up for helping, listening to the media, is not only unfair, it’s also not in the favor of the cause.
5. Roll Out UPI With Immediate Effect
Start promoting heavily the UPI apps that have been released till now and compulsorily create UPI IDs for all merchants. Introducing discount offers to those who pay through or accept payments through UPI for the next 6 months, where the government and banks credit cashbacks into their accounts would only increase mobile based payments and accounted transactions.
Also, asking private payment wallets and banks to contribute their marketing money to this initiative would ease the load of execution and burden of excessive cashbanks from the government treasury.
6. Educate The Benefits Of Cashless Banking
This could have come first and would have been a great start, if and only if our population was full of more educated, more civilized and more rational individuals. However, we all are empathetic and caring and like to know more than many others, even if it was mostly to show of our new found learning.
Also, we Indians have been very used to conventional ways of trading and have always seen money as currency notes for a long time. This it would need training, coxing and incentivising to be able to adopt a new way of paying.
It is imperative for the government, banks and payment operators to institute/nominate knowledgeable staff or citizens to take the onus of educating. It is a consistent and rigorous training that will make lives simpler, not an adhoc announcement.
Inference
The way to ease people into a new way of life or a new mode of transaction is by taking their side, identifying the defaulters and then clamping them down. By taking this approach, the citizens of the country will no longer need to suffer blows.
Let’s wish the Prime Minister’s Office gets to read this and takes the necessary actions to curb inconveniences to the citizens of India who are wasting their valuable and productive time standing in cues.
