Millennium Post

Missed opportunity?

The Supreme Court on Friday refused to stop high courts from entertaining petitions challenging the Centre's demonetisation notification saying that people are severely affected, and doors of courts cannot be shut in a situation which "may lead to riots". 

“How can we close our doors to people when there is a problem of such magnitude," it asked. Earlier this week, this editorial had urged members of opposition parties to debate the merits and demerits of the government’s latest ‘demonetisation’ drive. Except for the odd speech, the discussion on this debilitating move of the government has turned into an exchange of useless rhetoric. Clearly, our parliamentarians have not paid heed to the court's warnings. 

On the one hand, the ruling BJP continues to repeat its position about “waging war” on black money and insists that the move was well-planned. The prime minister is nowhere to be seen in these debates.

Meanwhile, on the other hand, certain sections of the opposition seek a complete rollback of demonetisation, while senior Congress leader Ghulam Nabi Azad compared the deaths that occurred in a week of this policy move to events in Uri. 

What the opposition needed to do was corner the government in a sober debate on a policy measure that has caused untold misery to millions as currency circulation dries up, leaving livelihoods at serious risk. Apart from the odd MP, many among the opposition have failed to ask pointed questions of the government. Based on what tangible evidence and calculations did the government seek to pursue such a measure? What did the government hope to achieve? What are the costs incurred? 

After sucking out 86 percent of the currency, the government has failed to ensure adequate circulation of cash. The move has curbed consumption, hurt the agriculture and real estate sectors, and triggered long lines at banks and ATMs as people wait to deposit cash, withdraw money and exchange old note. What steps will the government take to ensure that stable monetary conditions are restored with the shortest possible delay? Was the government prepared to handle the demand for new notes? The past week has been utterly chaotic for ordinary folk, especially in rural areas. 

India’s financial infrastructure seems ill-equipped to deal with such a measure, even in metro cities. There is a shortage of banking facilities in the countryside, leaving farmers in the lurch during the sowing season for Rabi crops. Farmers are unable to pay for seeds, fertilisers and labour. 

They can’t even sell their harvest produce at various markets. The government’s proposal for injecting cash back into the system relies on the formal banking system, leaving out millions. Could the government have done more to equip our banking system for such a measure? Blaming the need for secrecy for such gross oversights is hard. 

Reports indicate that there are not enough notes to replace the currency sucked out, as shown by the government’s need to change the rules for exchange and withdrawals on a daily basis. Despite the Centre’s repeated assurances, reports indicate that it may take six-seven months to make up for the shortfall in currency. Does the government have a plan to mitigate the suffering that may arise out of this chaos? Have the major hoarders of black money been affected by this decision? 

Why does the implementation process reek of insensitivity to the plight of the common man? Evidently, the process has been haphazard. Was there a less disruptive way to extract black money from hoarders without inconveniencing the entire populace? Based on the idea of cooperative federalism, opposition parliamentarians must ask how such a decision was taken without consulting the states. How will the government’s plan stop the generation of fresh black money?

How will the government’s aims be met if higher denomination series of notes (Rs 2,000) are introduced? It seems that the new batch of currency will be hoarded and counterfeited in the same way. If an individual can withdraw cash once a week, what will happen to the indelible ink mark on their finger next week which will not fade by then?

Since local elections are taking place around the country, why is the indelible ink not being marked on some other finger than the forefinger, so people are later allowed to cast their votes without suspicion? Such ink has reached only a few banks.

How will the government assuage public anger that while some may take advantage of the system by rushing to banks where the indelible ink is not being used, armed with foreknowledge, why will others be punished for standing trustingly in line at banks where they can only withdraw money once?

The government should have been cornered on these questions. Instead, one piece of useless rhetoric by a senior Congress leader has allowed the BJP to hide behind its chest-thumping rhetoric, while millions languish.  

The people of this country are well aware of the nexus that exists between political parties and large corporate houses. In the Centre’s recent SIT report on black money, corporate giants were found to have laundered billions of dollars by over-invoicing imports. 

The Directorate of Revenue Intelligence (DRI) is investigating six firms belonging to the Adani Group for over-invoicing coal imports from Indonesia. Besides a few notices, no real punishment has been forthcoming. Does the Centre have the courage to go after this corporate big-wig?

If the government comes down on the cosy relationship between corporate houses and political parties and introduces wholesale electoral finance reforms, only then will Prime Minister Modi have fulfilled his promise to tackle black money. 

The prime minister would do well to introduce reforms that would clean up political funding. Data examined by the Association for Democratic Reforms (ADR) brings up some startling revelations. “We compared the income of political parties submitted to the Income Tax department and the contributory reports submitted by them to the Election Commission of India in which they declare donations above Rs 20,000,” said ADR founder Jagdeep Chhokar. 

“The sources of the remaining 80 percent of the income are shrouded in mystery.” These revelations indeed raise difficult questions about the damaging influence of unaccounted money on the democratic process.  The current regulatory framework under which political system functions also encourages the use of black money.  Political funding is one of the primary conduits for unaccounted wealth.
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