Udupi District Congress Observes Black Day against Demonetization
Udupi: The Udupi district youth congress on November 8, submitted a memorandum to the President of India through the Deputy Commissioner as a protest against the anniversary of demonetization by the NDA government.
The memorandum stated that it has been a year since the unmitigated disaster that was the demonetisation that took place and irreparably crippled the country. We, the people’s representatives from the state of Karnataka present this memorandum to bring to your notice our views as well as request your much-needed intervention on behalf of the people of India.
On November 8th, 2016, the Prime Minister of India, Narendra Modi made a “surprise” announcement that the high denomination notes of ₹500 and ₹1,000 would cease to be legal tender (demonetised). That one announcement, in a cash driven and dependent economy like ours, invalidated 86% of all of the country’s currency. It was clearly noticed that this disastrous move led to absolute chaos and anarchy across the country, the effects of which are still felt across the nation today.
While the nation was baffled at the need for such a move, especially since the economy was showing steady growth and no other nation (not even those on the brink of economic ruin) had demonetised the currency so suddenly, Prime Minister Modi proclaimed that demonetisation was a “surgical strike” which would eradicate black money, stop counterfeit currency and end terror financing.
The objectives, as noble as they were, have failed to be achieved one year on and several economists stated that there was a “problem-solution mismatch” between demonetisation and the ends it sought to achieve. Demonetisation, is and was never the solution to curb terror funding, which is a complex and covert network which primarily functions on Oil, Gold and the US Dollar as a source. Further, with the massive networks that terror outfits have, access to a currency is never a problem, we saw evidence of this when extremists were found with bundles of new 2000 rupee notes, a mere week after demonetisation. Also, invalidating 15.44 lakh crore of the nation’s currency to curb counterfeiting was as wise as cutting off your nose to smite your face. Several economists and financial experts had opined that invalidating series of notes, which counterfeiters frequently used would have been more prudent. The new notes, which were hastily printed to meet the nations demand, had several problems with security features and colour which made it easier for counterfeiters to mimic. The lack of public awareness about how the new notes were supposed to be also led to several instances of people being cheated and given counterfeits by unscrupulous touts. Within 10 days of demonetisation, widespread reports of fake 2000 notes surfaced. The most important objective of demonetisation, however, was that it would eradicate black money and this was probably the largest failure of all the objectives sought to be achieved. Money (currency notes) constitutes only a miniscule percentage of the total black economy. According to estimates, money constitutes just 6% of unaccounted wealth. A mere 6% for which 86% of all currency was invalidated while other forms of unaccounted wealth (black wealth) such as investment in real estate, bullions, foreign currencies, hundis, foreign accounts went unchecked. The amount of all demonetised currency that has come back to the system, shows that the parallel economy was successful in whitewashing their black money.
The fourth and ‘secret’ objective, which was ironically declared after the other aims seemed to be lagging, was that demonetisation was to help create a digital/cashless economy. As of November 8th, we had only 46% banking penetration, 22% internet connectivity, 19% of the population without electricity connection (and others with unreliable ones), 1.2 of out 14 million merchants with point of sale devices, and low digital literacy, which meant, India simply did and in a lot of cases still does not have the infrastructure for a cashless economy.
It is not for us to adjudicate on the objectives or aims of the exercise, but highlight the havoc it created upon the nation. Even if it is forgivable to have surprised a nation with a decision which had such far reaching economic ramifications, what is unforgiveable is the way the implementation was handled. People were initially given 50 days to exchange all demonetised currency. Erratic limits on withdrawals, unavailability of currency, long lines at banks and ATM’s, and abundance of government circulars were a common occurrence. Also, over 115 circulars, clarifications and notifications were issued in just a span of 45 days. The new 2000 rupee note started losing and bleeding colour within days of it being released and the Economic Affairs Secretary justified the bleeding of new notes as proof that they are in fact original. Around 2 to 5% of the new ₹500 rupee notes in circulation were already defective because of faulty security threads. There were several rackets where RBI and Bank employees were helping people convert their undeclared income which were unearthed, such actions by the people expected to overlook implementation which jeopardised the entire exercise.
As a primarily agrarian state, our farmers were hit by demonetisation right in the middle of the sowing season and the non-inclusion of cooperative banks (which primarily bank with rural masses) to disburse money left them without money or credit. There was a drop in demand and mandis had to be shut due to non-availability of cash. The unbanked marginal farmer, who was left with no avenue to money was affected the most. Crop loss, lack of demand and produce being sold at throwaway prices, was a death knell for farmers who were expecting a decent crop after drought in the past years. Daily wageworkers, who constitute a sizeable portion of the labour force, were struck a body blow as they had absolutely no means of exchanging their money and were forced to take old notes as payment. Those are a few prime examples, but individuals from all sectors and walks of life have been adversely effected.
Besides the micro economy, which was irrevocably damaged, the macro economy was struck a body blow. The economy which was seeing steady growth suddenly plummeted due to demonetisation. The IMF slashed India’s growth forecast from 7.6% to 6.6% for 2016-17 after the note ban. The GDP in the Jan-March period was 6.1%, as against the predicted 7.1% With the March quarter report, India lost its status as the world’s fastest growing major economy. In the Apr-June Quarter the economy saw an even lower than expected 5.7 percent (lowest in 3 years) as opposed to the predicted 6.1%.
The Centre for Monitoring Indian Economy (CMIE),stated that the estimated cost of demonetisation for the first 50 days was a whopping Rs 1.28 trillion with almost half of it (about Rs 615 billion) being borne by enterprises, which depend on cash transactions. Also, banks, whose employees will be devoting all their time for the additional work like opening accounts, collecting money, giving out cash and recalibrating ATMs were said to have borne an estimated loss of Rs 351 billion. An amount which could have written off farmers loans several times, paid for flood or drought relief that states needed for years to come and have been successfully used in poverty alleviation.
Further, your excellency, the greatest insult to the populace of this nation, which was forced to suffer crippling currency shortage and loss of business was when 98.96% of all demonetised currency returned to the system. The government state that roughly 2-3 lakh crore would not return but only 16,000 crores did not return, which indicates that black money has returned to the system. Further, the Taxation Law (Second Amendment) Bill which was passed in the Budget Session 2017 allows defaulters and hoarders to “whitewash” their Black Money with an adequate fine which would go to the newly created “PradanMantriGaribKalyan Cess”. This is ironic as it looks like the government invalidated 86% of the country’s currency only to allow the black money hoarders to pay a fine and get away with it.
We do not seek to ask an explanation for the governments rationale behind demonetisation and do not dare try to fathom why a government would dabble with such a dangerous economic experiment, but we write this to highlight a deeper plight. The loss of life in any circumstance is highly unfortunate and is worse when a life is lost as a consequence of someone else’s actions. The unfortunate series of events post November 8th has seen over 150 deaths. Several people have collapsed in lines, died of shock or even killed themselves because of demonetisation. It is our opinion that any state that wrecks such havoc on the people’s lives must be responsible for the fallout of its actions. But our honourable Central Government has neither apologised nor even publically acknowledged that such deaths have occurred.
While concluding it stated, that is not just a reminder of the day the economy irrevocably took a turn for the worse, but for a higher purpose. Your excellency, you have, since the beginning of your tenure proven to be unbiased, intelligent and a president of the people which is why we request you to advise the government to identify those that died as a consequence of demonetisation and ensure adequate compensation for their families. Your intervention in this will go a long way in ensuring that the nation knows that you are a President fighting for their cause.
District Youth Congress president Vishwas D Ameen, Youth congress leader Abdul Aziz, Habib Ali, Harish Kini, Prakyath Shetty, Yathish Karkera, Kiran Kumar, Melwin D’Souza, and others were present.
Meanwhile the district congress committee under the leadership of Oscar Fernandes observed the black day to mark the anniversary of demonetization by the NDA government in front of the Congress Bhavan Brahmagiri, Udupi.