The Drawbacks of Curency Denomination
What seemed to be a daring move on the part of the Prime Minister of India at 8 PM on 8th November, has claimed about fifteen lives since. Even though removing the higher denomination notes has always been accepted as a method of curbing black money, the manner in which this policy was implemented was hasty and half baked. This is to say the least.
Let’s start with the initial announcement made on 8th November. Herein all notes of Rs 1000 and 500 were swiftly devalued for exchange, within a span of three hours. With the exception of exchange at petrol pumps, government hospitals and airports and railway stations kept open. All the notes with denomination higher than Rs. 100 were either to be exchanged at banks, or to be deposited into your accounts by 30th of December. The catch? You can only exchange Rs. 4000 (recently increased to 4500) in a week, essentially limiting your total exchange limit to Rs. 28000, taking into account the 50 day period.
Hence, you can either deposit your currency into your bank accounts and explain its source to the Income Tax department, or simply watch it turn into scraps of useless paper. Fair enough! but how about answering one, basic question. Since when does the Prime Minister have the authority to decide and introduce the monetary policies of the country? The Reserve Bank of India, which is India’s central bank, since 1934, is the only organization has the authority to decide the monetary policies of the country. This includes the denomination of legal tender in the country. What is the law backing this executive decision? Were there any amendments made to the RBI Act or the Income Tax Act? Was even an ordinance passed, as was the case in 1978? For a country which calls its parliament the sovereign, this move reeks of a one man show.
When daily wage earners stand in queues throughout the day, they lose out on the Rs. 400 they could have earned that day. Once again, this is the population which is fortunate enough to have bank accounts. For those rural poor who do not have bank accounts, getting their currency exchanged is the only way out. And we have already discussed the ease of that process.
Another brilliant stroke by our PM is the Rs. 2000 note. Shining bright just like the country’s future. However, if the very purpose of removing the higher denominations was to combat hoarding of money, how does a note for Rs. 2000 solve this problem? Will those, who hoarded notes of Rs. 1000 earlier, not hoard the Rs. 2000 notes? (There is no chip, people. Calm down!) Thus, even if you were somehow successful in besting the rest of the population and getting your money exchanged, your problems have only begun my friend. For now you must beg people for change for that shiny bright pink note.
Meanwhile Yatendar Rao, a leader for BJP from Haryana posed with a stack of Rs. 2000 notes even before the policy was announced. On the other side Bellary Reddy, an ex BJP leader builds “a palace” for his daughter’s Rs. 500 crore wedding. Was Arvind Kejriwal, Delhi Chief minister correct then? One is forced to wonder. Were a few near and dear ones of the PM privy to this knowledge?
And so, even though the common man wants to whole heartedly support this apparently well- meaning step of the PM, he falls into the chasm between intention and implementation.
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