The new black money in the winter of discontent

Madhusudhana Rao S

More than a month passed since Prime Minister Narendra Modi demonetized Rs 1000 and Rs 500 notes with three specific objectives: To suck out thousands of crores of unaccounted cash from the monetary system and pockets of some people; cut off terror financing through black money; and make fake currency notes worthless whose volume was said to have reached an unacceptable level.

In a way, Modi’s announcement on November 8th night listing the steps being taken to remove the three socio-economic scourges that have been plaguing the country for years is a three-pronged war. When he declared it, Modi instantly became a gutsy prime minister who took the bull by the horns which no other leader could do in India. Hailed as a ‘surgical strike’ on black money, Modi’s innumerable admirers saw a new beginning in his initiative to root out black money from the system. But a month later, as the euphoria started waning and acute cash crunch beginning to bite every person, the winter of discontent is palpable.

Long queues at bank counters, cashless ATMs; little sales at retail stores; vendors and daily wage earners struggling to make both ends meet; housewives cutting corners to manage their homes as husbands can’t draw enough cash from the banks to meet even their essential necessities; small and medium industrialists and big manufacturers giving a break to their production schedules and targets as the consumer demand has nosedived; farmers sitting cross-fingered how to sell their produce, are the state of affairs now. What’s disconcerting is there is no end in sight to the people’s plight.

Equally disturbing is the attitude of political leaders of various parties who are hell bent upon fighting Modi in and outside Parliament on demonetization. It seems all the political parties are terribly confused over their response to Modi’s move that has caught them unawares. First, they unleashed a verbal war against Modi, then took it to parliament, held rallies, protests, demonstrations, burnt the Prime Minister’s effigies, participated in endless TV debates to hit out at demonetization, raised the issue on every available platform and continued to question the wisdom of Prime Minister in making available to the public only 15 per cent of the total pre- demonetization amount. Their efforts have not yielded any result simply because a majority of people still believe that the government measure would help weed out black money, if not in a few days, but over a period of time. But their patience is wearing thin with daily hassles they encounter in withdrawing their own money from the banks and post offices and getting lower denomination of notes.

More incensing than the daily money problem is the kind of money and yellow metal that is tumbling out of the cupboards of a handful of individuals even after demonetization. Nearly Rs 200 crores, including bundles of new Rs2000 currency notes, plus kilos of gold had been seized in the last few days from various individuals across the country.

Atop the seizures list sits industrialist Shekhar Reddy who is a contractor for Tamil Nadu state public works department (PWD), his associate Srinivasa Reddy and their agents. Sleuths of various departments had literally mined his illegal wealth over three days.  What came to light was Rs 96 crores in old notes and Rs 10 crores in the newly introduced Rs 2,000 notes and 127kg of gold bars! Later 24 crores kept in 12 boxes full of new Rs 2000 notes allegedly belonging to Shekhar Reddy were seized from a van roaming Vellore streets to avoid detection. Earlier, new currency seized from individual s included Rs 3.5 crores from two individuals in New Delhi within a few days of demonetization; Rs 4.7 crores from four people in Karnataka and Goa regions; Rs 33 lakh from former BJP leader Mahesh Sharma in West Bengal; Rs 1.5 crores from eight people in Goa; Rs 70 crores from a money exchange company in Chennai; Rs 1.57 crores in Surat. The seizures have been going on. 

In Hyderabad, K. Sudheer Babu, senior superintendent of a post office, allegedly supplied Rs 2,000 denomination notes worth Rs 2.95 crores to middlemen for a commission and Rs 70 lakhs in new cash from his relatives near Hyderabad. Such cases of officials in position indulging in illegal money trade are galore after the higher denomination currency ban.

What does the confiscation of huge amounts of new currency notes indicate? Some officials, businessmen and a lot of others are making a quick buck through hoarding small denomination currency notes and new Rs2000 notes and in the process generating black money. In other words, in one month, most of the old black money might have gone into the vaults of thousands of banks spread across the country, generating new black money in the process. In a few years, such unaccounted cash in the hands of people could be staggering.

It’s an irony, but a fact of life. That also explains why the Central government is eager to make all transactions as cashless as possible. But in its hurry to create a cashless society without sufficient inputs and educating the people on the ills of having too much cash in pockets and how liquid cash fuels rampant corruption, the Modi government has brought upon itself the nemesis and unleashed the ghost of demonetization, causing innumerable hardships to common people.

Now, the lingering question on everybody’s mind is, does Modi’s three-card

game plan yield the promised results or prove it to be a blunder as Indira Gandhi’s Emergency?

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