Demonetisation - Much about nothing - RBI report

The Hindu Businessline | August 30, 2018

The RBI, its annual report released on Wed Aug 28, 2018, has revealed that only  ₹16,050 crore out of the  ₹15,44,000 lakh crore (1.04%) of the scrapped higher denomination notes have not returned back into the banking system and therefore remain missing or unaccounted for. This data has raised questions about the overall gains and the impact on the economy, especially the informal sector, because of the disruption 'Demonetization' has caused. 

• The Modi government had framed the dramatic announcement as a move to clamp down on corruption and black money, cut off terrorist financing and tackle fake notes. But with almost all the demonetised notes coming back, everyone wonders whether the stated purpose of demonetisation has been served.
• Modi's hidden objectives of demonetisation were (i) its perceived windfall in terms of an enhanced dividend for the government from the RBI as government expected at least 30% (~₹5,00,000 crores) of cash, black money stacked will not get back into banking system and (ii) disarming opposition parties with all their stacked cash becoming worthless and thus paving his way to win UP elections effortlessly.  
• The initial narrative by the government was that a large amount of demonetised currency will not find its way back into the system. This purported benefit did not materialise in any significant way. It cannot be said that significant losses have been inflicted upon those holding black money.  
• The claim that it would lead to an increase in tax collection, nothing can be anything with confidence.
• During the reporting financial year, 522,783 pieces of counterfeit notes were detected in the banking system, which was 31.4% lower than in the previous year.
• The cash-based terror and criminal activities may have been disrupted for some time, as did cash-based legitimate activity, it is not clear that there has been any significant disruption.
• The liquidity surge in the banking system that came about in the aftermath of demonetisation complicated the RBI's conduct of monetary policy.
• RBI had to introduce many instruments to absorb demonetisation induced liquidity from banks.
• The increase in CRR dented bank's earnings.
• The mopping up of liquidity eroded the RBI’s earnings. 
• RBI's expenditure on printing of currency doubled from the previous year. 
• RBI's income for the year decreased by 23.56% and its expenditure increased by 107.8% resulting in a sharp decline in the RBI’s surplus.
• Demonetisation served as a negative shock to the economy. GDP growth in the Jan-Mar 2017 quarter slowed to 6.1%, and to 5.7% in the next quarter (April-June 2017). 
• A number of small-scale businesses were adversely affected. The unorganised sector especially bore the brunt of the sudden shock. Economic activity shrinkage is over ₹300,000 crores & loss of jobs at over 2 million, this is the worst any PM could do to any nation. 
• The value of banknotes in circulation increased by 37.7% over the year to ₹18,03,700 crore as at end-March 2018. The volume of banknotes, however, increased by 2.1%.
• While there no benefits at all (all pain & no gain), the clear lesson is that tax reforms and effective monitoring of suspicious transactions are a better alternative for addressing the stated objectives. 

What India has done to its money is sickening and immoral - Steve Forbes ... In November 2016, India's government perpetrated an unprecedented act that is not only damaging its economy and threatening destitution to countless millions of its already poor citizens but also breathtaking in its immorality. Without any warning India abruptly scrapped 85% of its currency. It claims the move will fight corruption and tax evasion by allegedly flushing out illegal cash, crippling criminal enterprises and terrorists and force-marching India into a digitized credit system. Human nature hasn't changed since we began roaming this planet. People will always find ways to engage in wrongdoing. Terrorists aren't about to quit their evil acts because of a currency change. There's no misunderstanding what this is truly about: attacking your privacy and inflicting more government control over your life. What India has done is commit a massive theft of people's property without even the pretense of due process--a shocking move for a democratically elected government. (One expects such things in places like Venezuela.) Not surprisingly, the government is downplaying the fact that this move will give India a onetime windfall of perhaps tens of billions of dollars. By stealing property, further impoverishing the least fortunate among its population and undermining social trust, thereby poisoning politics and hurting future investment, India has immorally and unnecessarily harmed its people, while setting a dreadful example for the rest of the world. 

Bhakts makes leaders infallible

The dividing line between the use and abuse of power is very thin. It is not adulation, but criticism that keep people in power from crossing the line. Bhakti makes political leaders believe in their own infallibility, inflates their self-opinion and, inevitably, leads them to take missteps. History has shown that every authoritarian regime has ended up doing harm than good to their countries. 

• In the history about the rise of authoritarian regimes in 20th-century, two questions confound us. First, how did entire nations and populations allow themselves to be so hypnotised by a person or a political party? Second, how did they permit leaders or regimes to take absolute control and then chip away their liberties and then they could hold sway with an iron grip for decades thereafter?
• The process is even more inexplicable and intriguing in countries that were once democracies and democratic takeovers of power, which eventually degenerated into authoritarian reigns.
• The demonetisation has been aggressively touted as a master stroke against everything from black money to terrorist funding to counterfeit money to corruption, while also being hailed as a major reform towards a cashless economy. 
• Any criticism is almost considered blasphemous and anti-national. This sentiment was not only stoked by the government or party in power but also ordinary middle-class citizens have started behaving like accomplices of the regime by shouting down, mocking and denouncing any contrary views, branding these as unpatriotic. 
• The shoddy and inept planning and execution of the demonetisation exercise is being defended as inevitable. We are being exhorted to treat it as our patriotic duty to suffer long queues, inconveniences, disruptions to our lives caused by this man-made crisis, without complaining or criticism.
• We became so much mesmerised by the larger-than-life aura of a leader that we refuse to believe that he and his government can do any wrong? 
• Popularity has never ever chastened any politician, except very rare exceptions — a Nehru, a Mandela. Most of those who have relied on personal appeal over everything else, have eventually led their nations to grief, when their self-belief descends into megalomania. Megalomania is always fed by popularity and fawning bhakts. The bhakts create an echo chamber, which resounds only with what the leader wants to hear and believe, totally shutting out different viewpoints and realities. 
• Modi and his party won a majority single-party mandate for the first time in 30 years in 2014 and his personal popularity has remained high, despite many questions that still remain unanswered. The authoritarian and majoritarian streak cannot be denied. 
• In the case of the surgical strikes, Modi and his party exploited nationalistic and strong-man sentiments to the hilt. In the case of demonetisation, we have seen him play the brave, lone-crusader card, the selfless, sacrificing leader rhetoric and the emotional appeal. In case of GST, introducing in Lok Sabha as 'money bill' undermining the rights of Rajya Sabha and avoiding constitution amendment speaks volumes about Modi's crookedness in defeating the spirit of constitution, laws and institutions. All these points to his tendency to personalise all his government's decisions to make his regime seem almost presidential in nature and help to build his image as a towering, decisive leader.
• What kind of leader Modi is for time to tell. Many people have bought his spiel hook, line and sinker, while others are sceptical. Whether his regime turns into a democratically elected one with autocratic tendencies, especially if he gets a second term, depends on his bhakts. \
• People are free to support and adore the Prime Minister but they must realise that love for one's country is completely different from love for a particular leader, party or a government. 
• These bhakts have no right to attack, browbeat and brand as unpatriotic those questioning the policies of their beloved leader. If India turns less-than-democratic once again, the bhakts are to be blamed squarely. Every leader derives his delusions from the reflections seen in the distorted mirrors put up by his fanatic supporters.

The theory that leaders are infallible is trash. That is why in our parliamentary democracy, constitution provides checks and balances in the form of independent judiciary, parliament to account for government's actions and independent institutions. How ever a simple parliamentary majority makes all these checks & balances vulnerable and two-thirds majority makes constitution ineffective. Financial interests exposed weakness of media houses and they tow line with authoritarian rulers. For democracy to survive and deliver what is expected these things must be incorporated in constitution or statutes: (1) Truly federal structure with near total autonomy for states and local bodies. (2) Prime Minister's and Minister's executive powers must be severely restricted except during war like situations. (3) All discretionary powers must be replaced with robust processes. (4) No expenditure should be allowed without prior legislative approval. (5) All projects must undergo tendering process and all allotments either by merit or auction. (6) All appointments must be through open & transparent process providing chance to all eligible candidates. (7) Lok Pal and investigative agencies must be granted total autonomy with their scope covering every one and excludes no one. (8) Finally thrift should be the guiding policy in government spending with no extravaganza of any kind.

Jan Dhan Yojana fails to deliver!

• Pradhan Mantri Jan-Dhan Yojana (PMJDY), launched by the Prime Minister of India Narendra Modi on Aug 28, 2014, is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner. Account can be opened in any bank branch.
• The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of र 1 lakh.
• PMJDY accounts also allow an overdraft facility of up to Rs 5,000 in one account per household, preferably held by a woman member. 
• The Prime Minister personally mailed to Chairmen of all PSU banks to gear up for the gigantic task of enrolling over 7.5 crore (75 million) households and to open their accounts. He categorically declared that a bank account for each household was a "national priority". 
• Total of 7 Crore (70 million) bank accounts have been opened with deposits totaling more than ₹5,000 crores as of Nov 6, 2014. As the government met the target, Govt revised the target for opening of bank accounts under the PMJDY, 7.5 crore to 10 crore by Jan 26, 2015. Almost 75% of the accounts or 5.66 crore, have no money.
• In the name of financial inclusion, the government has created more problems for the poor. The project is well intentioned and perhaps necessary for a country in which 40% of the population is unbanked. But, in the hurry to roll out the project, proper communication, especially to the undereducated and the poor, could not happen. Significant percentage of people haven't returned to the branches to do serious transactions.
• The scheme has been criticized as an effort to please voters that has created unnecessary work-burden on the public-sector banks. It has been claimed that the poor deserves food more than bank accounts and financial security. Further, these accounts have not yet added considerable profits to PSU banks. Offers like zero balance, free insurance and overdraft facility would result in duplication. Very few people are eligible to get the life insurance worth ₹30,000 with a validity of just five years. The claimed overdraft facility has been completely left upon the banks and only those people would get the overdraft facility with satisfactory transaction record.
• While JDY has inflated the number of account holders, it has done nothing to boost the volume of transactions. As on March 24, 2017, public banks, regional rural banks and 13 private lenders reported that 92,52,609 accounts were frozen under JDY due to lack of transactions.
• In the first two weeks of demonetisation, the total balance in no-frills accounts under the JDY increased to Rs 72,834.72 crore, a jump of Rs 27,198 crore in 14 days, of which most money was deposited in an effort to convert black money into white money by black money holders. The scheme, took 16 months until Dec 2015 to accumulate a balance of Rs 27,283 crore, 
• The total cost of operation of Jan Dhan accounts by State Bank of India is Rs 774.86 crore, Parliament was informed on Mar 28, 2017. Banks had to incur a cost of at least Rs 200 on opening each account apart from the manpower cost and this totals roughly Rs 1,500 crore for just opening the accounts.
• The profligacy of Modi on his hurried, ill conceived schemes without adequate preparation and then projecting failed schemes as successes impoverishing nation is highly despicable. The quantum of money spend for campaign & publicity by all related agencies is too much for developing economy like India. India needs a statesman as Prime Minister, not a rogue politician.
• Public Expenditure Wastage Control Commission must scrutinize all waste expenses of public money by any one and every one for compliance of procedure and economies of expenditure observed including PM & CM. And if not followed, it must levy immediate financial penalties on such person and also recommend to competent higher authorities to consider and take punitive steps against such persons. All within a time frame of three months. Only disaster management expenses, certain defense expenditures and nuclear related expenses could be exempted.

Thrift is my guiding principle ... Indira Gandhi 
What ever is worth doing, is worth doing slowly.

My View:

Banks are ill equipped to handle this huge number of new account holders leading to deteriorating of services. The costs of managing these accounts are huge for already NPA stressed banks. Most of the Rs.5,000 over drafts per account will turnout to be irrecoverable and unless centre absorbs and writes off these amounts bank's margins will again come under severe stress. Poor banking connectivity is another constraint. Significant number of people had opened multiple accounts under the scheme, adding to the existing problem of dormant accounts. When Indira Gandhi got elected from Medak (Telangana) in 1980 she compelled PSU banks to open branches in Medak district. After few years almost all branches were wound up would due to lack of business and viability, booking significant losses. Needless to say any scheme prior to implemented should be researched, tailored to suit local needs and planned to implement over a time frame for producing lasting results. But unfortunately almost all Modi's schemes are announced hurried and launched without any preparation with massive national & international publicity costing hundreds of crores of rupees to nation and then they just fail. This is no way a democratic government should function. Hence, every government expenditure must have prior legislature approval and budget provision voted so that sufficient discussion of priorities takes place before announcement and implementation. The only exception could be defense, disaster management and nuclear related matters.

Demonetization 2016 and its effetcs

• There were no immediate gains to be seen from the Demonetisation 2016. The benefits, if any, they are to be had only in the long term. 
• There was one immediate outcome and this was the colossal amount of hardship experienced by the citizens of India. That most of the affected people did not openly express their unhappiness at having to bear this hardship does not reduce its severity.
• Indian economy had experienced significant damage from which recovery would be slow. As of mid-February, there was no evidence of any bounce back, but even if that happened, why cause a dislocation in the first place?
• All the disruption and distress, to what purpose? When assessed in terms of the objectives of Demonetisation 2016, the outcome was unclear.
• Dealing with counterfeit currency did not require the suddenness and consequent harshness of a design and implementation as contained in Demonetisation 2016.
• Demonetisation has not, as promised, turned ‘worthless’ the black money held in high denomination notes. By December 2016 most of the currency had already entered the banking system. Very little seemed to have been held back by holders of black money scared to enter the banking system. It can have no effect on the future flow of black money in the form of new currency notes. No strategy can succeed without proper systems in place.
• The new amnesty scheme, PMGKY, did not yield declarations running into lakhs of crores (trillions) of rupees. Now we are entering an era of tax harassment as government agencies set about trying to prove that Demonetisation 2016 was a major success in unearthing black money and improving tax compliance.
• An argument is that Demonetisation 2016 was not a good idea.
  (1) Very little of black money is held in the form of cash.
  (2) Even if the government did want to track down unaccounted cash, the best way would have been to collect, analyse and follow up on information on large cash withdrawals from banks and thereby identify possible flows of unaccounted cash.
  (3) In spite of all the risks and limited chances of success, if the government still wanted to go ahead with demonetisation, then the manner in which Demonetisation 2016 was designed and implemented was neither the only option nor the best one. There were other less destructive options available.
• ‘Formalisation of the informal’ emerged as a new rationale for Demonetisation 2016. Demonetisation and digitalisation might have dragged real estate, retail and wholesale trade, and professional services & economic agents into the formal sector leading to greater tax compliance. But much larger informal sector that ekes out its livelihood on the margins does not avoid paying taxes, it just earns too little to fall into the tax bracket. Formalisation of tiny enterprises in industry, road-side service establishments, and by small- and medium-sized farmers would not lead to any gain to society. It would, in fact, put an additional burden on these producers who are already struggling by earning low incomes.
• It was said that Demonetisation 2016 was war on wealthy & criminals hoarding black money. But wealthy & criminals did not experience any pain. It was those who had least capacity to cope who bore the entire burden. The colossal distress that Demonetisation 2016 caused will make it impossible for any future government to embark on a more serious war on black money. No society will be able to go through this suffering once again. The black money will remain in place.
• Some weeks after demonetisation was announced, its failure was confirmed and goal posts shited to digitalisation and cashless transactions. The focus now is on how to accelerate the adoption of electronic payments at all levels, from households upwards despite infrastructural and economic constraints. The main issue is, did the economy have to be put through the demonetisation wringer in order to drive it towards digitalisation?
• Digitalisation of payments is not a new invention by Modi boys. It has been underway in India for more than a decade and made considerable progress in transactions in the organised sector and among those comfortable with electronic/on-line forms of payment. The larger population is, however, right now outside the scope of digital payments. Major constraints in infrastructure and also issues relating to a lack of familiarity and unaffordability tell us that digitalisation cannot be hurried without running the risk of exclusion. Yet, the one major agenda that the government has been driving since Demonetisation 2016 has been digitalisation.
• The holders of black money will have experienced such a major shock but almost the entire stock of demonetised currency had entered the banking system showed the ease with which such individuals and organisations could get the better of the system. It also reflects the confidence they have of subsequently managing the system, in case there are to be investigations in the future.
• The psychological shock was a harmful one. The upheaval caused by the removal of 86% of the currency in circulation had unnerved ordinary people, the honest citizens. The trust they had reposed in the currency issued by the central bank and the government had been shaken. This is an unhealthy development in a modern economy.
• Soon after demonetisation had been announced, it was pointed out by many that this action by itself would do little to destroy black money and do even less to end the future generation of black money. The government in response said that demonetisation was neither the first nor the last measure to be taken to destroy black money. More steps were to follow in what was promised would be a larger war. 
• With out removing systemic pain that causes creation of black money by hiding legitimate transactions to avoid high taxes, attempts to eliminate black money by harassment of people would be futile.
• There was little of that kind to be seen in the next three months, save the limited measures on political party finance announced in the Union Budget for 2017–18. It appeared as if the promised action was not to follow. 
• The government is left with no option but to ensure an increasing supply of cash to quell the retail corruption while keeping a check on the discretionary power of tax and banks bureaucracy to avoid further damage to its credibility.

The government solution to a problem 
is usually as bad as the problem ... Milton Friedman

My View:
Even though everyone knows demonetization doesn't solve any problems and its results are unpredictable, Modi, advised by some quacks, resorted wildest gamble only to win forthcoming elections in UP, Punjab etc, followed by Rajya Sabha, President & Vice President elections. Giving undue importance to secrecy and without any preparation for this gargantuan task, he announced demonetization like a dictator keeping aside all democratic processes, he shot in his foot and instantly landed in a ditch. What Modi has done is commit a massive theft of people's property without even the pretense of due process of law, a shocking move for a democratically elected government. One man is trying to deliver on something that is undeliverable, against the advice of everybody else. This demonetization will go down as one of the most naïve, least thought through policy decisions ever, a massive man-made disaster. It is time to withdraw massive executive powers with one man replace them with robust processes, except during situation of war & emergencies. Executive should not be allowed to incur expenses or impose taxes without prior legislature approval.

Modi unveiling cash restrictions and police raj

Cash is one form of wealth like gold, house, land, bank deposits, stocks, bonds etc. It is citizen's right to hold his wealth in what ever form he wishes. In fact no sane person will hoard cash or in bank deposits with inflation corrected bank deposits yielding negative returns. Prudent person will either invest cash or rotate it to earn more returns. In the recent hearing of Jayalalitha's disproportionate assets case, the Supreme Court Bench observed that merely possessing assets disproportionate to known income does not amount to corruption unless the source of that income is illegal.

Our Indian banks has of late became precariously unsafe with NPA's increasing manifold leading to downgrading of ratings to a notch above junk status. No prudent person will keep his wealth in bank deposits. However India has many weak, old and vulnerable persons who hold their wealth in the form of bank deposits. RBI's deposit guarantee is limited to just Rs. One lakh per person. In the absence of returns & safety, government coercing its citizens to maintain their wealth in bank deposits with negative yields is nothing but cruelty.

Cashless transactions is another fraud. In a country with 40% illiteracy and 80% internet banking illiteracy compelling electronic payments without reliable infrastructure, robust privacy laws, unbearable transaction charges and high level of frauds is nothing but enabling corporate's flourish at the expense of poor & needy and in violation of fundamental rights.

No one in the world pays taxes willingly and smilingly. Tax evasion in India is primarily due to unreasonable high tax regime, uncourteous and blatantly corrupt tax administration with umpteen loopholes deliberately meant for corrupt activities. Make taxes reasonable and taxmen citizen friendly, infrastructure reliable,  robust privacy laws protecting citizen rights, and cashless transactions affordable and people will use them as they see benefits. Without these in place, pressurizing citizens compromising their freedom & rights will prove counter productive.

Most of the cash wealth is getting rotated in informal economy which contributed 45% of GDP and employs 90% of people who are mostly less educated, less skilled and under qualified who are otherwise not employable in formal sector. Migrating them into tax compliant formal sector is slow process and government must promote the same with incentives and creating awareness rather than sudden changes of laws and unleashing taxmen & policemen with long sticks.

Almost all black money hoarders are from cities & towns and none from rural areas. Enacting laws which make all these men criminals and taxmen chasing them doesn't produce any positive results except for publicizing the government's efforts to fight corruption which any way doesn't yield desired results.

The recent demonetization has diverted large portion of working capital of informal economy into banking channels. Deprivation of working capital has crippled informal economy, which hitherto was booming since a decade, with millions losing livelihood and returning to their villages, and those who survived are making earnings at half level. No announcement was made by government to provide them with working capital infusing arrangements. Informal economy and formal economy are so much interdependent on each other, formal economy is likely get affected with a time lag of two quarters. The devastating effects and unintended consequences will surface incessantly for next two years and nothing can be done except dazing at them.

Modi's restrictions on cash at Rs. 3 lakh level will do no good to economy except it seems to increase tax compliance. Govt might get higher income tax collections but overall reduced economic activity will result in indirect taxes crumbling, offsetting gains and overall tax collections looking southward. On other hand increasing government will have disastrous effects like citizen harassment, legal entanglements, increase in corruption, ease of doing business looking southward, FDI's reduction and ratings remaining at junk level will do no good to any one. Authoritarian type of decisions will yield quick results in dictator ruled small countries but while doing no good, will run into legal tangles in large democracy like India.

Modi has ignited 'spiraling down' of economy with his senseless, authoritarian, illegal actions destroying institutions like RBI, without even pretense of process of law and now he has no 'magic wand' to control it or stop it and normalization is two years away and in the mean time common man is the casualty.

All dirty politics!!


My View:
Modi badly managed Indian economy during past 30 months, despite favorable crude oil prices and retaining 85% in the form of increased duties, and growth of over 7.5% highest in the world, inflation fairly in limits of below 8% mainly due to his industrialist friends defaulting on bank loans with NPA's rising alarmingly manifold and crippling banks with no funds even for their normal operations and not taking any solid action against willful defaulters despite warnings. Even in 4th budget revenue deficit is at unacceptably more than 3% of GDP. He is under pressure from World Bank and rating agencies to set house in order and unleashed quack advised senseless demonetization for quick benefits of Rs. 4-5 lakh crores as disclosed in affidavit filed in Supreme Court. With deposits exceeding 97.5% of cash in circulation his scheme failed miserably and is dramatizing with cashless transactions and as lone crusader against corruption, which requires focused efforts continuously for few decades.  In a hurry to make quick financial and political gains Modi is resorting to half baked actions with loop holes which will end up in fiascoes and citizen harassment. He is not bothered about long term national gains but focusing on the immediate political mileage needed to win UP, Punjab elections in the aftermath of demonetization pain inflicted on rural masses and urban poor. Attempting to manage country's finances in this botched fashion will only end up horribly both for people and for himself, with no gains whatsoever.

Modi in war with common man

Not withstanding the stated demonetization objectives by Modi such as black money, fake currency, corruption and terrorism financing, Modi's eyes were only on expected unreturned black money estimated at 21% of demonetized currency i.e. Rs.3.19 lakh crores, as detailed below. After demonetization expenses, the clear profit was expected to be Rs. 3 lakh crores. In his affidavit Attorney General informed Supreme Court that they expect about Rs.5 lakh crores of black money which would not be deposited by black money hoarders during the period Nov 8 - Dec 30, 2016.

Cash in circulation Rs.17.65 lakh crores
Demonetized currency 86% i.e. Rs.15.18 lakh crores
Extinguished currency 21% i.e. Rs.3.19 lakh crores

Modi needed this much money to induce funds into cash strapped public sector banks whose NPAs doubled in the previous one year and their day to day operations are under jeopardy and also to reduce budget deficit since their lobbying for ratings upgrade by agencies from near junk status was rejected and declined to budge citing concerns over the country's debt levels and fragile banks and stated that ratings upgrade for India was some years away, depending on the progress on reforms.

After ascending to power in 2014, riding the 'anti congress' wave, Modi with charismatic and dramatic speeches had engulfed 'middle class segment', who generally live in total disconnect with the realities of rural and lower strata's of society, made them believe that he is Messiah to save save the nation of all its ills and steer it in the direction of development. But in the past 30 months he didn't do anything except hammering past blunders of Congress and enjoying foreign jaunts. Now saddled with all round political & economic failures and, midway he is under pressure to unleash some daring action to win forthcoming five state elections and President & Vice President elections. He was impressed with a 'quack economist' presentation of demonetization and tax reforms, with out getting it evaluated by experts for its veracity and impact on the common man, he saw an opportunity to resolve all his problems in one go and unleashed secretly hatched, unprepared, high risk & wild gamble of demonetization within two months bypassing and destroying institutions like RBI, Ministries and Departments, without even pretense of process of law. Ironically, demonetization was not an economic tool to achieve any of these objectives which would seemingly do good but inflicts unbearable direct and collateral damages.

These were the main reasons and all other things told rhetorically by Modi was 'bakwas'.

After dramatized high pitch announcement by Modi on Nov 8, 2016 that with demonetization he would save the country from the menaces of black money, fake currency, corruption and terrorism financing, but with in days it was clear that it was a monumental debacle with inept cash replacement arrangements resulted in crores of poorer section people loosing their livelihoods and ending up in serpentine bank queues. Stunned with this Modi invoked 'patriotism' like a scoundrel and demanded that people bear the brunt for 50 days. Some days later he shifted goalpost from 'black money, fake currency, corruption and terrorism financing' to 'cashless economy' which would expand 'formal economy' and shrink 'informal economy' and higher tax realization would accelerate development.

• What he has not told is that informal sector will stand to lose at least one third of its working capital (from black sources) and how that informal economy (with 45% GDP share and 90% employment share) would survive and get funded by banking sector.
• What he has not told is that 'cashless economy' which is at least 10-20 years away, due to 'infrastructure defects & constraints' and will involve holding and usage costs unaffordable by lower class people of India.
• What Modi has not done is that the moment he realized demonetization landed in fiasco subjecting crores of poor people to hardships he should have initiated mitigation measures and instead went ahead with resolution at least six months away. All that he has done is demanding suffering for 50 days, in the name of patriotism. Except some hollow speeches, nothing else.
• He was remorseless for people sufferings, 100+ deaths of aged and women in bank queues and 10+ bank employee deaths consequent to abnormal work stress.
• Over 60 circulars from RBI, often contradicting, indicates thoughtlessness, unpreparedness, panicky management by concerned authorities. Fortunately riots haven't erupted and that is no credit to government.
• Modi instead of participating in the mandatory & obligatory parliamentary debate and explain the nation, abstained from parliament and chose to address public meetings, where he need not have to answer any questions, flabbergasted the nation that after short term pain (to poor), long term gains (to rich) will start pouring in, is nothing but audacity of an arrogant tyrant.
• Dramatized speeches blaming opposition parties is OK for a political leader to win elections, but as Prime Minster addressing nation must desist from dramas or blame gaming and harping on blunders of previous regimes, but must be truthful to people of the country exhibiting honesty & sincerity of purpose, upholding principles of democracy and defending constitution and laws of the land.
• This demonetization which is under the purview of RBI and Parliament, was done with a mere televised announcement by Prime Minister, himself and followed by a notification of Ministry of Finance and without undergoing even pretense of process of law. Purposeless secrecy was taken as a shelter for violation of all constitutional processes.

As PM and leader of parliament, he was responsible for proper conduct of both the houses more than any body else. He took no step for resolving the parliament logjam on demonetization issue except blaming Congress etc. He neither intervened with any statement nor replied to opposition leader Manmohan Singh criticizing the demonetizing process as 'monumental mismanagement, organized loot and legalized plunder'.

Now after passing Dec 30, 2016, it was clear that 97% i.e Rs.14.82 lakh crores of cash has gotten deposited with Banks & RBI leaving just 3% i,e Rs. 46,000 crores, unreturned black money. With NRI's having time upto June 30, 2017, the final figure would be much less.

The expenses for the 50 day period, direct & indirect, are estimated as below:

1. Direct expenses to RBI & GOI Rs.16,800 crores.
2. Banks to bear an estimated cost of Rs.35,100 crores.
3. Cost of queues to exchange currency is estimated at Rs.15,000 crores
4. Enterprise* losses are estimated at about Rs.61,500 crores.
   * includes all businesses, farmers, input suppliers, transporters, wholesalers, retailers, manufacturers, stockists and distributors, malls and other retail outlets, restaurants, entertainment and other enterprises.
5. Total cost of demonetization, during 50 days period, is estimated at Rs.128,400 crores
6. Total amount confiscated during raids is Rs. 4,000 crores.

With gain of Rs.40,000 crore or less and 50 days expenditure at Rs.128,000 crores, inestimable collateral damages to economy, and crores of workers thrown out of livelihood, bringing informal economy to standstill and impact stories surfacing incessantly for next 1-2 years, leaving all stated problems intact & unsolved with some respite, demonetization is a senseless, politically motivated, one man made, economic disaster.

Insanity is defined as doubling the speed in wrong direction

My View:
Modi's ascending to power in 2014, with a massive campaign expenditure of about Rs.10,000 crores funded by his industrialist friends is not without having made massive and horrendous economic & moral compromises. He is neither a saint nor a statesman but a low class politician with deep roots of RSS ideology. Therefore his secret decision of demonetization even though seems to be in national interest is primarily aimed at deriving political benefits. Ironically, it has become a war with gullible common man.

RBI Governor Urjit Patel's perplexing silence sacrificing his & institution's reputation for probity, competence and independence is in tatters indicating that he was not consulted but just asked to implement. Any institution can be independent in its functioning to the extent elected executive desires. In this case Modi & co just bulldozed them.

A 'good policy badly implemented' is worse than a 'bad policy well implemented'. In short, we are in a massive mess. Demonetization move would not have any lasting benefits. No politician or upper class person was seen in any of the bank queues and for them life and business were as usual. They just exchanged old notes with new notes through paid agents and several other ways & means. Middle classes armed with with plastic cards and habituating living in total disconnect of realities of rural & poor of India, were not much effected and it is the poor which suffered most losing livelihood and ending up in serpentine bank queues for exchanging paltry sums after several hours of indignity. Even the raids, mostly with political underpinnings, conspicuously excluded politicians and officers. 

Modi suffers from worst possible type of corruption: an insatiable desire for personal glory at any cost, an extremely deep moral and spiritual corruption. He also represents the worst aspect of democracy: a demagogue who caters to an irrational populace’s cravings for self-identity and release from self-responsibility. Any difference of opinion is tarred quickly as unpatriotic and anti-national by the troll brigade.

It is not that easy to flush out the black money. Projecting that demonetization will resolve issues of black money and corruption is misleading the gullible masses of the country. Reforming the tax administration and tracking data would have given good and lasting results. Modi's inaction during the past 30 months in this matters speaks volumes about his real intentions.

Modi's unprecedented act of demonetization, is not only damaging country's economy and threatening destitution to countless millions of its already poor citizens but is also breathtaking in its immorality. What Modi has done is committing a massive theft of people's property without even the pretense of due process; a shocking move for a democratically elected government.

The scale and speed of Modi’s scheme has more in common with the failed experiments of dictatorships which led to runaway inflation, currency collapse and mass protests. Demonetization was supposed to be a fight against black money but now it seems like a war against the people. Instead of making surgical strikes against corrupt & black money hoarders, Modi has carpet bombed the whole economy destroying informal economy resulting in crores of poor people losing their livelihoods. Shifting the goal post to 'cashless society' indicates Modi's acceptance of failed operation and it is also suspected at creating economic devastation and usurping of an individual's economic liberty.

Modi would have truly walked the talk if he had attacked the nexus between the big business and politics which truly nurtures the black money ecosystem. BJP is the most cash funded party these days. So far the pain has been largely borne by the ordinary people. Modi burned down country's economic house in the disguise of eradicating the pest of corruption? Modi has shot himself in his foot and India fell.

Black Money - Crime, Corruption & Commerce in India

If money breaks laws in its origin, movement or use, and is not reported for tax purposes, then it would fall within the meaning of black money. The broader meaning would encompass and include money derived from corruption and other illegal ways – to include drug trafficking, counterfeiting currency, smuggling, arms trafficking, etc. It would also include all market based legal production of goods and services that are concealed from public authorities for the following reasons:

• to evade payment of taxes
• to evade payment of other statutory contributions
• to evade minimum wages, working hours and safety standards, etc.
• to evade complying with laws and administrative procedures.

There are three sources of black money – crime, corruption and commerce (business). 

• The ‘criminal’ component of black money include proceeds from activities viz. racketeering, trafficking in counterfeit and contraband goods, forgery, securities fraud, embezzlement, sexual exploitation and prostitution, drug money, bank frauds and illegal trade in arms. 
• The ‘corrupt’ component of such money would stem from bribery and theft by those holding public office – such as by grant of business, bribes to alter land use or to regularize unauthorized construction, leakages from government social spending programmes, speed money to circumvent or fast-track procedures, black marketing of price controlled services, etc.
• The ‘commercial’ limb of black money usually results from tax evasion by hiding transactions leading to evasion of one or more taxes. The main reason for such black economy is under reporting revenues / receipts / production, inflating expenses, not correctly reporting workers employed and avoiding statutory obligations for their welfare. Opening of the economy permits contracts of all kinds, particularly for allocation of scarce resources such as mineral and spectrum, which in the absence of transparent rules and procedures for licenses and non compliance of contractual obligations of the persons concerned, leads to increased generation of black money. 

In all the three forms of black money – ‘criminal’, ‘corrupt’ and ‘commercial’ – subterfuges are created which include false documentation, sham transactions, benami entities, mispricing and collusion. This is often done by layering transactions to hide their origin.

In high income countries, the official sector with transparency & well defined procedures, provides good governance and proper enforcement of contracts restricting size of the shadow economy. In the developing countries, on the other hand, enterprises could engage in entirely unreported activity such as restaurants, bars, doctors, lawyers and even bigger manufacturing entities may indulge in under reporting. Big companies, though easier to monitor but to escape rigours of taxation takes recourse to inducements. Under such socio-economic conditions, the underground economy and corruption reinforces each other.

Developing countries have large parts of their economy in the informal sector, which is difficult to regulate. Further, cash component of the economy is usually higher and leads to problems of monitoring. Lack of regulation and monitoring reinforces the black economy and also helps its expansion. Low level of literacy reduces penetration of the banking sector resulting in a large cash economy.

Inflation of expenses takes money out of the system and, therefore, turns ‘black’. Wrong claims of deductions or incentives provided in the law reduce the tax liability and thereby keep more funds with the concerned person than with the State. However, money in this case remains within the system and cannot be said to be unaccounted or ‘black’. Similarly, shifting of profit for taxation outside the country through transfer pricing by related concerns results in organizing a reverse capital flow from poor to rich countries. This also cannot be said to be ‘black’ in that money does not go ‘underground’. However, these aspects reduce the availability of resources for economic development of the country.

One of the most important sources of black money within the country is leakages from public expenditure warranting improvement of the public procurement system and allocation of natural resources is needed. One of the main contributors to black money in the country is its out-dated laws and their lax administration by the state governments, such as stamp duty values being completely out of line with the prevailing market rates, and state governments to tackle the menace of black money as important stakeholder in controlling it. Although FICN (Fake Indian Currency Notes) forms only a small part of black money, more effective measures were required to counter its debilitating consequences. Since most of the black money going out of the country through banking channels there is a need for a central repository of such data. Black money holders may be allowed to come forward with disclosure of unaccounted income and assets both in India and abroad, but without any harassment or threat of prosecution.

Some of the methods for reducing the menace of black money are:

1. Electoral reforms, including state funding of elections.
2. Tightening of laws, increasing the severity of punishments, and trial of cases relating to illicit money generated and stashed abroad through fast track courts.
3. Confiscation of undeclared assets or money kept abroad.
4. Monitoring of persons travelling frequently to tax havens and persons indulging in frequent transactions overseas.
5. Existing laws were enough to deal with economic offences but there was a need to strengthen the administrative mechanism to enforce the existing laws.
6. Existing information exchange mechanism should be improved and additional manpower and financial resources provided to the investigating agencies to tackle the scourge of black money.
7. Better regulation of the real estate sector, the largest contributor to black money. 
8. Maintaining the security of currency by upgrading the existing security features.
9. The flow of information has improved but the information received can be used only for tax purposes.
10. The huge economic cost of de-monetizing higher denomination bank notes of  Rs.500 and ` Rs.1000 is not a feasible idea.
11. For deterrent effect, fast-tracking through summary trials. 
12. Maximum punishment for serious offences under the PC Act are  necessary to be enhanced from seven years to ten years. 
13. There should be limitation of carrying and holding of cash for personal use, for which either the existing laws may be amended or a new law enacted.

Rising burden of taxation, increasing burden of compliance are reasons to enter the black economy. Lack of tax morality, non-compliant attitude of the citizenry towards tax laws tends to increase the size of the black economy. In developed countries black money is generated primarily through illegal activities such as drug trade, illegal migration, etc. In the developing countries generation of black money is from all conceivable sources – corruption, siphoning of public resources, trade-based black money, inflation of expenses, and through criminal activities such as counterfeit goods, smuggling, extortion, cheating, financial frauds, narcotics trade, printing and circulation of fake currency, manufacturing & trade in arms, ammunition and explosives, etc.  Therefore fight against black money is far more complex in developing countries like India. This needs stronger legal framework, administrative measures, and stronger resolve to fight the menace.

Corruption in the private sector is an issue not much in public focus or debate. Corruption flows from private motive or greed, fueled by discretionary powers vested in an office empowered to distribute resources, goods and services to public. Dishonesty in private sector, for private benefit or profit, is largely responsible for bribery, siphoning of public funds and leakages in public expenditure. It also results in conspicuous consumption, money laundering and sustenance of the black economy. The way to deal with private greed is to design well-laid down rules and regulations, and ensure their proper enforcement and transparency in decision-making without compromising trade interest.

Cash as an asset has its own demand. In large cash economies such as India, counterfeit currency poses a major threat to its economy, as it disrupts smooth commercial transactions and has a multiplier effect on mainstream economy. India faces this problem, as immigrants become carriers for small amounts. The Bangladesh, Pakistan and Nepal borders are targeted for this purpose by agencies inimical to the interests of India.

Demonetization of high denomination currency notes is believed to be one of the methods to ‘kill’ the extant black economy, and to curb the generation of black money. In India, demonetization was implemented in 1946 and 1978. Experts have criticized that demonetization did not achieve the objective it was aimed at. Further, inflation over the years and a large cash economy requires higher denomination currency notes to keep the cost of monetary management of the economy low.

There is no uniformity of methodology or approach, or certainty of estimation relating to ‘black’ money. The ‘shadow’ economy is not distinct, and the ‘parallel’ economy enmeshes the white economy. Thus, ‘black’ money exists to a substantial extent in our economy, its quantum cannot be determined exactly.

Generation of black money from legitimate activities, such as businesses or professions, non reporting of income, overstated expenses, etc., undermines the economy, its tax-base and the rule of law, and creates inequalities. The way to fight this menace is through comprehensive and better reporting mechanism, data-mining and analysis.

However, fact remains that although several anti corruption agencies have been functioning for several decades, leakages in public expenditure has continued unabated. Both oversight and enforcement mechanisms against corruption need to be strengthened.

There are two dimensions of the issue of black money – first, its generation and, second, its consumption and use, including laundering of black money back to mainstream economy. Dealing with this menace has to cover both these aspects. So far as generation of black money from crime or corruption is concerned, its remedy does not lie merely in legislative or enforcement domains but also in finding much deeper socio-economic solutions. There may not be any need to have new law to especially deal with black money and black economy, various existing laws need to be comprehensively reviewed and strengthened accordingly.

Aadhaar UID and direct transfer of subsidies will stop leakages in some sectors. Institutions of the Lok Pal and Lokayukta may be put in place at the earliest, in the centre and states, respectively, to expedite investigations into cases of corruption and bring the guilty to justice.

My View:

The latest methods of corruption by politicians and officers is that they would do no favors but who ever wins the contract have to pay them fixed percentage. Modi was known as 4% Chief Minister in Gujarat but has not violated any law/rule/procedure. This results in inflated estimates. Today the menace has reached 30% of estimate is work and remaining 70% is bribes and profits. If you happen to visit customs clearing at any airport or seaport you will have go with bundles of notes to pay each and every person you may encounter whose prices are fixed (C&F Agent will be helpful) to clear your consignment otherwise you will end up with delays leading to demurrage charges and re-establishing logistics. En-route at border check-posts, your truck will be kept aside and allowed to proceed only after bribe payment is arranged and made in a far away town by way of bank transfer into that benami account. Without socio-economic changes, awareness and campaigns, any amount of tightening of procedures, the corrupt will discover a way around it. 

As long as taxes are high and tax compliance procedures are expensive and burdensome, cash will rule informal economy and black economy will flourish. Uneducated self employed people will prefer to remain in cash sector no matter what ever is said and done simply because they see security in cash. Education is the key to growth and prosperity of the nation. The people at large should feel the effect of good governance in comforting them rather than harassing and squeezing a portion of their hard earnings and that alone would result in voluntary tax compliance. 

Modi, lacking sincerity of purpose, attempting 'quack economist advised demonetization' for pecuniary and political benefits and risking the entire national economy for his high decibel publicity is not only disastrous for him and BJP but also the nation with its economic pillars crumbling. He simply destroyed country's economy and shot himself in the foot and landed in ditch and is further digging with denial. In the coming month's stories of economic disaster will surface incessantly for next two years. He lacked sense that any weapon unleashed to destroy 'black economy' will also destroy 'white economy' simply because they are so much intertwined and enmeshed.

Demonitization 2016: Arrogance, Audacious & Atrocious

DEMOCRACY

Democracy in its true sense is rule by people. Principles of Democracy are: (1) a political system for choosing governments through free and fair elections; (2) involves the active participation of citizens in politics and public life; (3) protection of the human rights of all citizens; (4) rule of laws and procedures apply equally to all citizens.

The fundamental characteristic of a democratic state is accountability and transparency. Political and official classes finds ways to undermine this principle for personal benefits and are destroying the society. Without accountability and transparency, democracy will die and autocracy erupts.


WHY DEMONETIZATION

In the history, only unstable economies mostly ruled by dictators resorted to this kind of desperate step and never could really make intended gains. Our own 1978 experience of demonetization of higher value notes amounting to just 2% cash in circulation was disastrous since it produced zero gains, and resulted in spurt in gold demand forcing RBI release its gold reserves. In a stable democracy like India when all economic parameters are positive there is absolutely no justification for demonetization of very large amounts of currency i.e. 86% cash in circulation with complex and undesirable effects. The solutions to problems highlighted by Modi has roots and solutions lieing else where but not in demonetization. No economist would recommend this kind of suicidal step.


IG PATEL's REMARKS IN 1978

I.G Patel was governor of RBI 1978. He was not happy about the government's move. Patel observed that “such an exercise seldom produces striking results. Most people who accept illegal gratification or are otherwise the recipients of black money do not keep their ill-gotten earnings in the form of currency for long. The idea that black money or wealth is held in the form of notes tucked away in suit cases or pillow cases is naive. And in any case, even those who are caught napping or waiting will have the chance to convert the notes through paid agents as some provision has to be made to convert at par notes tendered in small amounts for which explanations cannot be reasonably sought. But the gesture had to be made, and produced much work and little gain.”


RAGHU RAM RAJAN THOUGHTS

In the past demonetization has been thought off as a way of getting black money out of circulation. It is often cited as a solution. My sense is the clever find ways around it. They find ways to divide up their hoard in to many smaller pieces. You do find that people who haven't thought of a way to convert black to white, throw it into the hundi in some temples. I think there are ways around demonetization. It is not that easy to flush out the black money. Of course, a fair amount may be in the form of gold, therefore even harder to catch. I would focus more on the incentives not to generate and retain black money. My sense is the current tax rate in this country is for the most part reasonable. I would focus more on tracking data and better tax administration to get at where money is not being declared. It is very hard in this modern economy to hide your money that easily. (Raghu Ram Rajan was RBI governor till Sept 2016 and it is rumored that he didn't like this Modi's demonetization and silently exited declining second term).


KAUSHIK BASU's COMMENTS

World Bank Chief Economist and India’s former chief economic advisor Kaushik Basu said that the Narendra Modi government’s demonetization drive was not ‘good economics’ and that the damage it causes will be greater than its benefits. “GST was good economics; the demonetization is not. Its economics is complex & the collateral damage is likely to far outstrip the benefits,” Basu tweeted on Friday Nov 11, 2016. Basu was the CEA in the Finance Ministry from December 2009 to July 2012.


MANMOHAN SINGH BLASTS MODI

On Thu Nov 24, 2016, former Prime Minister Manmohan Singh criticised, in Rajya Sabha, the Narendra Modi government over its surprise move to demonetize Rs.500 and Rs.1,000 currency notes. In uncharacteristically strong words, the mild-mannered Singh called demonetization "organised loot and legalized plunder," adding that it was a "monumental management failure." Dismissing the government's defense that in the long run demonetization would be good for the country, Singh said, "For those saying this is good in the long run, it reminds me of John Keynes' words, 'In the long run we are all dead'."


UNDEMOCRATIC

The Section 26 of the RBI Act, empowers the Union Government on the recommendation of Central Board to declare that “any notes issued by the Reserve Bank will no longer be legal tender.”

Union government on November 8, 2016 in exercise of this power passed the order demonetizing Rs. 500 and Rs.1000 currency notes which constituted 86% of total currency in circulation of Rs.17.65 crores amounting to Rs.14 lakh crores.

Demonetization by law was done in 1978 by an ordinance followed by Act, which demonetized 2% of the then existing currency.  The move was directed at freezing the secret funds of politicians, especially Indira Gandhi’s Congress. This provided an opportunity for parliament to debate before passing the Act. Modi's executive order even though legal has deprived Parliament, its right to discuss and vote the Act. Ironically Modi Govt doesn't have majority in Rajya Sabha and this executive route is undermining principles of democracy on such a major issue with devastating impact on all classes of people of India. Hence it is undemocratic even though legal. The move even though stated to eliminate black money, fake money, corruption and terrorists money has underpinnings of UP & Punjab elections in the coming few months.


RIGHT OF CITIZENS VIOLATED

Article 21 reads as: “No person shall be deprived of his life or personal liberty except according to a procedure established by law.”

The Supreme Court reiterated that the “right to life” included the right to lead a healthy life so as to enjoy all faculties of the human body in their prime conditions. It would even include the right to protection of a person’s tradition, culture, heritage and all that gives meaning to a man’s life. It includes the right to live in peace, to sleep in peace and the right to repose and health.


FAKE OBJECTIVES

In a major step to check black money, Prime Minister Narendra Modi on Tue Nov 8, 2016 announced demonetization of Rs 500 and 1000 currency notes with effect from midnight, making these notes invalid in a major assault on black money, fake currency, terrorist money and corruption.

Economists opined that demonetization at best empties some of the stocked black cash and black money generation, corrupt practices and terrorist operation which uses regular banking channels for receiving money will remain unabated. Black cash is just 6% and fake currency is less than 0.03% of cash in circulation and doesn't justify huge expenditure of over Rs.12,000 crores for printing replacement expenditure alone and its complex impact on economy is unpredictable. Black cash hoarders will find numerous ways to convert sacrificing a portion of it. Demonetization is resorted to in countries which are in financial imbroglio, as a desperate attempt by autocracies but never in stable democracies. And results are usually different. Demonetization of 86% cash in circulation is likely have major impact on all sectors of economy with unknown dimensions.

The new currency with no additional security features, fake currency printers will be back into business in no time, with in maximum of 5-6 months.

The stated objectives has nothing to do with demonetization are fake and unstated objectives are political i.e. UP & Punjab elections in coming few months followed by Rajya Sabha and President & Vice President elections.


BLACK MONEY IS NOT THAT BAD

Black money from business transactions by concealing income from legitimate activities and corruption bribes, foreign exchange violations is one thing and black money earned by criminal activities such as extortion, smuggling, mafia, hawala, crimes, terrorism, etc is a different thing. In case of second, it is a crime on society and must be handled with iron fist eliminating them at sight. In case of first thing, from where most black money comes from, corruption bribes and income concealing and evasion of income tax and such black money is not that bad, as much as dramatized by Modi, as long as that is in circulation with in India. The only bad about black money is that government loses income tax revenue and apart from that loss it is as good as white money for the economy. Black money going into real estate and bullion becomes dead. Black money sent out of the country in hawala foreign currency and hoarded in foreign banks impacts our economy. Black money hoarded in foreign countries by manipulating imports & exports also impacts our economy. Therefore Modi should have focused on Swiss & foreign bank accounts, foreign exchange transactions for fairness rather than carpet bombing the whole nation where any gains could be less and complications disastrous.


WHY Rs.2,000 DENOMINATION NOTES

Even though this exercise started about 6 months ago with full secrecy, RBI Governor Raghu Ram Rajan was skeptical about this exercise which defied economists perceptions. Not to confront with Government on this matter he declined 2nd term and silently exited in Sept 2016. Since UP & Punjab elections are fast approaching Modi wanted demonetization to be completed before start of EC's model code of conduct and take political advantage of its perceived success. Hence urgency to print replacement currency in two months. The only option was 2,000 notes. Any other combination of notes required up to six months. However this strategy got bombed on 1st day of cash exchanging in the absence of supporting lower denomination notes. Thus monetary system got destroyed. Adamant in neither revoking nor suspension of demonetization, Modi opted for immediate printing of Rs.500 & Rs.100 notes which would take 6 months for completion. Thus his hidden objective is very clear. His eyes are on UP & Punjab elections and the fact that November is overlap month for agriculture --kharif produce marketing & rabi season's seeding at its brisk, safeguarding farmer's interests was was given a go by for his perceived political gains. Farmers and informal sector are unorganized and supports 90% of employment and contributes 65% of GDP with no protection and financially very weak and compromising their interests is an unpardonable offence on society and is impeachable.


FAKE CURRENCY

Terrorists fake money is quite dangerous but its quantity never exceeded Rs.500 crores in any year as per RBI data which amounts to 0.028 percent of cash in circulation of Rs.17.65 lakh crores and being a minuscule quantity doesn't justify demonetization with huge expenses and complex effects on economy. USD & EURO etc has all types of money in their monetary system but they never ever demonetized.


TOTALLY UNPREPARED & RESULTANT CHAOS

Except printing part requirement of Rs. 2000 currency notes as replacement for demonetized Rs.1000 & Rs.500 notes, no other preparations were under taken only to maintain utmost secrecy within two months time frame. Rs.2000 notes faced instant rejection in market due to shortage of lower denomination notes of Rs.100. Printing whole currency replacement in Rs.500 & Rs.100 was started immediately from Nov 10, 2016 and is likely to take 6 months for completion. Machinery problems compounded woes. ATMs dispensing capacity got limited to Rs.100 notes only with capability reduced to less than 10% by value since new notes are of different dimensions. Re-calibration ATMs is estimated to take 2-3 months. No other effort was made to assess voluminous activity of logistics, storage, methodology for exchanging, checks & balance, audit and vigilance were given a go by. India being predominantly cash market and with shortage of cash all sectors of economy came to a grinding halt. Cashless transactions were less than 2% overall and about 10% in urban and elite segments. The result is end less queues at ATMs & Bank branches for several hours only to exchange Rs.4000. This is the result of mindless compression of an demonetization activity from 12 months to just 2 months. There is no sector which is not abruptly hit. Agriculture & informal sector suffered most. Markets closed, trucks stranded on highways. By third day situation has gone out of control and government remained mute spectator except issuing procedure amendments 14 times in 10 days indicating panicky situation. Printing Rs.500 & Rs.100 notes of required quantities which started on Nov 10, 2016 and its distribution is likely to get completed in next six months.


OUT OF CONTROL & PANICKY MANAGEMENT

By end of first day of cash exchanging it was very clear about the holes in implementation and gross underestimation of its wide ranging impact made Delhi bosses realize that situation is out of control and they have no remedies on hand and can't suspend the scheme nor revoke it. In both cases it would be a bigger mistake. An empathetic people's leader would do anything even sacrifice his life for mitigating poor people's hardships. But expecting such things from Modi and his gang is too much to expect. Modi quickly ordered 6 months time frame printing of Rs.500 & Rs.100 notes. While Jaitley stated the situation would ease in about 20 days, Modi announced in a public meeting that it would take 50 more days. Panicky management started at MoF, and demonetization managers amended the procedure  14 times in 10 days exposing themselves that they didn't have any pre-decided plans to face eventualities. RBI Governor appeared on TV after Modi's TV announcement on first day and thereafter disappeared making it clear that he is not in-charge of these operations which is his legitimate duty.


DEATHS

By  end of 3 weeks, 75 people died while standing long hours in queues. About 13 bank employees died while on duty due to stress and heart attacks so far. Modi hasn't uttered any consolation to their families.


RURAL INDIA & INFORMAL SECTOR SEVERELY JOLTED

Rural India & agriculture supports 65% of nations population and together with informal sector provides livelihood for 90% people of the country and rest 10% is organised sector. Cash is the dominant medium exchange in rural, agriculture & informal sector with over 95% transactions. Demonetization has brought this segment to a grinding halt with little exchange availability and meager exchange arrangements especially during kharif & rabi overlap busy time. Govt started focusing exchange facilities to this segment only after 15 days by which time damage is done. Banning co-operative banks and restricts on exchange & withdrawals compounded  the problem.


CASHLESS TRANSACTIONS

While urban elite were saved of these troubles due to cash less transactions using debit/credit cards, on line payment & shopping systems. Urban people depending on cash were hard hit & were helpless except patiently waiting their in ATM/Bank queues for exchanging cash. Modi & others talking of promoting cashless payment systems for tracking transactions in future is seen as diversionary tactics knowing fully well that banks & internet reach is very limited in rural segment and also small traders cant set up PoS machines for reasons of economy & viability. Other important factors are education levels, unfamiliarity, low level of privacy, legal protection from cyber criminals etc which indicate cashless society is a distant dream. Even in developed countries like US & Europe cash exists in high denominations of USD 100 and EURO 100. The economy is very complex, and money is the medium of exchange that allows the economy to function. Doing without cash overnight is very costly. The highest cash less transactions in any country is 60% and in India it is just 2%. With very low level of connectivity and bank's reach in rural segment, low educational levels, low awareness, poor privacy & cyber laws, cashless society is only a matter of academics & publicity and is a distant dream. Cashless transactions cannot be imposed on society which will construed as favoring some equipment maker or service provider. Its costs should be brought down and promoted highlighting that these transactions are safe and guaranteed and overtime they would increase significantly. Once people see benefits, affordability & safety, they will have it and use it. Otherwise never.


RURAL CO-OP BANKS BANNED FOR EXCHANGE

Banks reach in villages is limited to just 17% while 83% were serviced by rural co-operative banks. For unjust reasons Central Govt has banned usage of these banks for currency exchanging operations. With scheduled banks and post offices only the progress of currency exchanging is going at snail's pace in villages. This has resulted in most rural population not provided with new currency for exchanging for first 15-20 days. After that priority was accorded in view of brisk agriculture operations. But damage was already done to them.


DESPITE FAILURE NO OPPOSITION FOR MODI

Now, two weeks later, the situation is getting much worse, and more desperate. It is obvious that Modi single handedly took the decision to ban the banknotes, with most people in his cabinet and virtually all in the central bank oblivious to his plan. There is virtually no visible opposition to the enforced ban, for any politician who opposes the ban risks having his own misdeeds and they are all corrupt brought to the public space by Modi. A true demagogue, Modi, has already convinced the gullible, salaried middle class that anyone who opposes the ban is hiding corrupt money and is anti-national. With every passing day, it has not only  become clearer that the ban was of no use to eradicate hidden cash, but has also inflicted deep, wide and irreparable damage to the society.  The economy is rapidly moving toward stagnation.  The lives of literally hundreds of millions are in deep chaos. But so far most people seem to still carry a favorable opinion of Modi, backed by cult-like “intellectual” climate created by the salaried middle class (who lack critical thinking and reasoning capability), and supported by the international media and institutions, people who are sitting in western cities have no clue about the realities on the ground. But all this will change as the stories of personal suffering should eventually start to dominate over the propaganda reality does have a way of catching up. Even if Modi eventually goes, a new demagogue will take his place.


ECONOMIC IMPACT

• The biggest beneficiaries of this move are going to be Indian Banks. The increased liquidity will lead to increased credit lending and most of this won't necessarily go to to the common man but to big corporate's who are starved for cash. 
• The black money hoarders from hereon will start converting their Indian currency into USD’s and Euro’s (via hawala) thereby, causing fiscal implications and making 'hawala' market flourish.
• Agriulture and informal sector, hitherto being funded by cash with public will now be starved of cash and with little access to bank funding will shrink its operations.
• Any gains to central government will to for banks capitalization, which are saddled with huge NPAs. 
• Losses to centre & states due to lower revenues due to consumption shrinkage are permanent and will adversely effect development & welfare activities. Consumption based industries and services will have big impact on their revenues and survival.
• The Rs.2,000 new notes will make future black money operations easier and aid corruption easy to manage.
• All bank mortgages are mostly real estate which are value inflated as well. Now with fall in real estate prices to 50-60% levels, NPAs will rise and banks will see under recoveries and mortgage liquidation will entail huge losses to be written off.
• This move will definitely increase funds into banking system but will drain available funds from informal sector and will adversely effect its operations.
• By end of two weeks, GDP loss projected at 3 lakh crores, GDP growth -3%, 5 lakhs jobs gone, State govt revenue losses of Rs.2,000 crores per state  per month and many more.
• Turbulence in economy could impact imports & exports and result in diminishing foreign exchange reserves.

MODI CULT

Most people particularly the salaried middle class still seem to have a favorable opinion of Mr. Modi. They have been indoctrinated in India’s extremely irrational and superstitious society to believe that this demonetization will somehow alleviate corruption and that anything but support of Modi’s actions is anti-national and unpatriotic. Public education and the mass-media have become instruments of propaganda. Complexity and the diversity of options that technology brings make an irrational thinker extremely confused, forcing him to seek sanity in ritualistic religion. This has happened despite the explosion in information technology. The cult-like status Modi enjoys in India is the result of a lack of self-responsibility among Indians, their hope that despite massive inherent contradictions, the pain that corruption imposes on Indians can be got rid of through a magic wand without self-reflection, or without them giving up corruption themselves. Modi’s biggest support comes from the salaried middle class, whose members are mostly unaffected by the ban and who can't see anything beyond self comfort, self glory and self enrichment. Hence the middle class can claim to occupy the moral high-ground, albeit on the back of other people’s suffering.

MODI's CORRUPTION

Modi suffers from worst possible type of corruption; an insatiable desire for personal glory at any cost; an extremely deep moral and spiritual corruption. Modi belongs to the line of autocratic ideologues rather than the western tradition of revolutionary neo liberalism, or marxist rationalism. He also represents the worst aspect of democracy: a demagogue who caters to an irrational populace’s cravings for self-identity and release from self-responsibility. He might not have taken any bribes in recent years but there is no way he could have risen to his position without having made massive and horrendous economic & moral compromises. No account has been disclosed for his 2014 election expenses which are believed to be over Rs.5,000 crores. Most of the people Modi hobnobs are Gujarati businessmen who are notorious for corruption and black money. Common man is unseen in his proximity, never.


IMPORTANCE OF CASH UNDERMINED

Cash is the thread that weaves relationships, transactions and commitments. For the proper functioning of society, it is absolutely crucial that people have a liquid medium of exchange, the essential lubricant to effect trade in today’s complex economy. All transactions except for barter, which has emerged in many parts of India, can no longer take place, for the monopolistic money instrument, India’s fiat currency, has been paralyzed by Modi. Should a single person have the authority to flip a switch and bring all trade, transactions, indeed the entire economy to a halt? As it stands, money is now dead in India. The death of money amid a lack of respect for property rights has been sudden and will very likely be catastrophic. Both at home and abroad the only topic of conversation for Indians is the currency ban. Should this be all people are communicating about? Human beings were destined for higher things in life, not merely for the task of protecting themselves against the State.


CORRUPTION IN INDIA

Corruption in the Indian society has prevailed from time immemorial in one form or the other. Earlier, bribes were paid for getting wrong things done, but now bribe is paid for getting right things done at right time. Further, corruption has become something respectable in India. Social corruption like less weighing of products, adulteration in edible items, and bribery of various kind have incessantly prevailed in the society. Corruption started with our opportunistic leaders who have already done great damage to our nation. Today there is no body in India who hasn't done corruption or dealt with black money in some form or other.


RELUCTANCE TO PAY TAXES

In India there is extreme fundamental reluctance to pay taxes and avoid at any cost is practiced by all classes, wealthy & poor, educated & illiterate, irrespective of individual ethics, culture and morality. This tax avoidance is a habit & culture and is a result of past kings and rulers unjustly taxing public, ruthlessly collecting levies & taxes and spending nothing for their well being and even today the same feelings prevail with rural people and urban poor grossly neglected. Now a days, the wide spread corruption in politics, administration & businesses justifies their thinking and continuing habits. The unfair taxing by government especially on petrol/diesel and liquor is another aberration. With complexity of problem it is long way to go for voluntary compliance of tax obligations by its citizens in India. Tax reforms, toning up tax administration and awareness creation even though time consuming are the keys. Any other way will be futile. With corruption and black money in all walks of life like cancer in the entire spectrum of economic activities, is it possible for (1) changing the people's outlook, (2) elimination of corruption and black money and (3) make people pay up all taxes, over night, is the question to ponder? Today's exercise aimed at tax compliance alone might get boomeranged.


REVENGE ON SOCIETY

Modi instead of accepting mistakes and regretting wrong decision with gross mismanagement of implementation, he should have retracted and restored status quo ante Nov 8th to save crores of people from facing disaster. Instead he exhibited helplessness and asked people for bearing the pain for 50 more days but failed to say why they should bear pain for no fault of theirs. He did not see reason when Manmohan Singh pointed out that 50 days is a small period for strong people but for deprived and suffering masses 50 days could mean disaster. He tried evoke patriotism which makes sense only during war times and postwar reconstruction periods. Apart from these, threatening public that many more stringent actions will be taken for black property owners, benami holders and bullion hoarders etc doesn't auger well with his stature as PM. He forgot the fundamental rule of any democracy is that any policy should never hurt honest man at all. Instead he declared all Indians as suspected crooks and to prove that they are not. While almost all Indians are involved in tax evasion and black money but real hoarders of black money & wealth may not exceed a million worth catching and troubling. Unable to go behind them he had carpet bombed whole nation troubling 130 crore people. He conveniently forgot about his election promise and commitment to bring back entire black money from Swiss and other foreign banks with in 100 days, which is estimated at Rs. 28 lakh crores. His revengeful attitude is not in nation's interest or public interest but only indicates his anger for failure of IDS scheme few months ago. This kind of revengeful attitude leads him to nowhere. He shamefully says that in long run this demonetization would be beneficial but none bought his argument. This was countered by Manmohan Singh "in long run we are all dead". Lacking humility and empathy for suffering masses, he is unfit to be PM.


MEDIA MANIPULATED

Despite colossal failure of Modi's demonetization media was soft on Modi rather afraid of Modi and used toned down story lines. There are no Ramnath Goenka's and Arun Shourie's left in media. Media barons are primarily businessmen with profits first anything next. The direct feed back through an App which gave him 93% marks was manipulated by framing questions which has only one answer. Also salaried middle class wielding credit cards, smart phones and cars etc which are blindfolded by Modinomics and responded to most for this feedback failed to reflect either factual situation or pulse of the people. Western media initially rallied behind Modi's surprise decision but as public miseries become prominent started criticizing Modi & Co for inept planning, implementing and causing avoidable miseries to public.


SHYING AWAY FROM PARLIAMENT

The essence of democracy is its transparency and accountability. Had it been by an ordinance followed by a bill, there would have been debate & voting in parliament. Modi avoided this by an executive order. Consequent debates on adjournment motions in parliament, PM is under no compulsion to reply. His ministers replied without substance. Modi is not attending parliament this session at all. Under pressure, he attended Rajya Sabha on one day just for 2 hours and without uttering a word he went away. But he went on addressing public meetings highlighting black money & fake money are demons about to swallow the nation and he averted the disaster.


CABINET & RBI IRRELEVANT

Excepting few, none were aware of brewing of this demonetization move. Some days before pictures of Rs.2,000 notes bundles were seen in social media but demonetization was not expected at all. On Nov 8, 2016 cabinet meeting was summoned an hour before Modi's announcement, all were asked to deposit mobiles at security and Modi informed them about the decision and proceeded to make announcement on TV. After an hour after TV broadcast was completed, the cabinet meeting was concluded. Same thing at RBI HQ between RBI Governor and CEO's of all Banks. Thus demonetization has neither Parliament approval, nor ordinance promulgated nor cabinet's prior approval. It was singularly Modi's decision in violation of constitution, laws, usurping powers and spirits of democracy thrown to winds and indicates eruption of autocracy.  RBI Governor's brief appearance on TV only once and subsequently all PR was handled by MoF officials makes RBI irrelevant confirming fears of destruction of Indian institutions the cornerstones of Indian democracy. Modinomics replaces economics in India.


BJP BITES DUST IN UP

Within few days of announcement by Modi, BJP president Amit Shah asked BJP MPs from UP to initiate high pitch campaign in UP about benefits of demonetization and received shocking replies from MPs. Where is the money to erect hoardings? Public are suffering and if they go there they would be chased like mad dogs. How to reach public? Calling a public meeting will entail lots of expenditure? Who would bear that? He was told bluntly that at the moment BJP is zero in UP. In next few months if some good happens they can hope to deposits and nothing more. Only Lord Ram can save BJP in UP. When Amit Shah reported this to Modi, his arrogant reply was that I have lots of Astras with me. In 2014 did these MPs won on their own? I only made them win? Later BJP MPs in RS stopped attending house and BJP was compelled to issue whip to maintain quorum. See the pathetic condition of ruling party post demonetization.


BJP's VOTE BANK ERODED

In the last week's bye polls in several states, while the results were not much different, what is significant is that BJP's loss of its its vote share of over 10%, especially in the backdrop of Modi's demonetization resulting in utter chaos in the entire nation. As things unfold in coming weeks BJP's losses could be much higher and game changing.


DEVASTATING CONSEQUENCES

The sucking out 86% of cash from the system and replacement going on at snail's pace, and normalization is about 6 months away, the consumption and luxury spending has shrunk and effecting informal sector badly. Rs.2,000 notes simply proved worthless without supporting Rs.500 and Rs.100 notes adequately. Millions of people are without work since 3 weeks, The fears are that not every body will be able to get back their jobs. At least a million jobs will vanish. Agriculture sector is stunned and deprived of cash all their operations standstill despite good monsoon. With no help forthcoming they are bound to suffer economically. Violent fluctuations in inflation, consumption and demand patterns will effect financial sector and government revenues badly. Restoration of supply chain systems, especially of perishable commodities is an uphill task. The initial gains by Banks and govt agencies will not last long. The only plus point noticeable is that Municipalities, Water Boards, Electricity companies etc could recover their most of their outstanding amounts from people effortlessly.


HUGE EXPENSES

Printing costs are: Rs.2,000 note Rs.5.00  | Rs 1,000 note Rs 3.00 | Rs 100 note Rs 1.20 apiece. Demonetization replacement currency printing costs are expected to be about Rs.12,000 crores for printing Rs.2,000 notes alone. Logistics, warehousing, handling, disposing old notes, incidental expenses extra. Such a huge expenditure requires prior parliament approval unless an emergency situation arises, executive doesn't have authority. PM at centre and CM at state levels are simply monarchs and doesn't care for the values or rules. Height of insanity to entail such a huge expenditure and massive work with huge risks with uncertain results, especially in a good going economic scenario.


TAXING UNACCOUNTED MONEY DEPOSITED IN BANK

Contrary to government expectations none of the black money hoarders turned up to surrender their black cash which would attract total tax of 90% at prevailing rates. Instead it is being broken into pieces and converted into future white money by loaning workers or poor people with up to 30% commissions apart from bullion and foreign currency. Alarmed with this government came out with income tax amendment bill with 50% tax and 25% 4 year interest free bank deposit leaving just 25% cash with the hoarder. None will be impressed with 25% cash on hand and another 25% cash back after 4 years. Instead govt should have made it flat 50% tax and 50% cash left for the hoarder for voluntary compliance. Extinguished cash may at best touch Rs.1 lakh crores while initial estimates stood at Rs.4 lakh crores.


LOOP HOLES UNCOVERED

1. Only insufficient Rs.2,000 notes were printed without supporting Rs.500 & Rs.100 notes.
2. No additional security features
3. ATMs recalibration for dispensing different size new notes was forgotten.
4. Co-operative banks banned and rural sector left with no cash for over 3 weeks.
5. No arrangements were made in rural side.
6. No additional arrangements at Banks and Post offices resulted in mile long queues.
7. No foolproof accounting mechanism for cash exchanges.
8. Lack of vigilance.
9. No arrangements for storage & disposal for old cash at banks.
10. Many more...

RISK NOT MITIGATED

Demonetization of 14 lakh crores of cash spread across entire nation and among 50-60 crore people is a gigantic task and required time frame is at least 12 months. Only secrecy and printing of insufficient Rs.2,000 notes, nothing else has been taken care of. Apart from the above mentioned loop holes, busy agriculture season was not given any thought and timing was worst and rural & informal sector took severe beating. Black money hoarders exchanging with the help of agents for a cut had heyday resulting in unabated illegal exchange of old notes with new notes for 30% cut. The result, financial benefit to government in the form of extinguished black cash is likely to get reduced to less than 25%, thus wiping out the entire benefit to nation and stunning Modi. These are the results of compressing 12 months schedule to 2 months by Modi. Absence of additional security features in new Rs.2,000 notes didn't make fake currency printing very difficult and fake currency is likely to resurface in next few months.


UNCERTAIN RESULT

Well thought over, well planned and well implemented demonetization itself is unlikely to get desired results simply because of its effects in complex economy is hard to understand. This demonetization with numerous defects in all fronts got bombed on the first day of exchanging cash and the hope of government to get financial benefit of Rs.4 lakh crores of extinguished cash by Dec 30, 2016 is is fast receding. At the end the maximum benefit may not exceed 25%, making it a worst exercise with huge expenses with minimum gains but impacting economy very hard.


MODI, FRIEND OF ROBBERS

“A man is known by the company he keeps” -- Aesop

Modi's best friend is the Great Indian Gas Robber, Mr. Mukesh Ambani, who robbed natural gas from adjacent ONGC gas fields to the tune of more than  of Rs.11,000 between 2009-2011 and liable to pay nearly Rs.30,000 crores. Reliance Industries Ltd maintains that all its operations had been undertaken in accordance with the development plan approved by the management committee which had government representatives holding veto powers. ONGC Chairman Dinesh K Sarraf under pressure from ONGC independent directors  moved the court against RIL as A1 and MoPNG (Ministry of Petroleum & Natural Gas) as A2. Curiously MoPNG is 70% shareholder in ONGC. Now our Modi passed orders recently asking RIL to pay up just Rs.10,000 crores with out mentioning compounding amount, penalties, interest etc., where as joint USA consultant appointed by RIL & ONGC earlier confirmed the robbery and advised ONGC to make a claim of at least Rs.30,000 crores, 3 years ago during UPA regime. Incidentally, Mukesh Ambani is the largest borrower from consortium of banks to the tune of Rs.187,000 crores out of which about Rs.150,000 crores invested in Reliance Jio and is threatening the viability of operations of BSNL, AIRTEL, IDEA, VODAFONE & AIRCEL which has together invested Rs.300,000 crores. While TRAI should have clipped wings of Jio & Ambani for violation of fair trade practices, remained a mute spectator. Another friend, Gautam Adani is the sponsorer of Modi's PM candidature expenses of over Rs.5,000 crores in 2014. Modi has many more friends like this.

CHIEF MINISTER's COMMITTEE FOR CASHLESS ECONOMY?

Manik Sarkar, Tripura CM has rejected to be part of a committee of Chief Ministers to examine the impact of demonetization and suggest transition to a cashless economy saying that he does not support the demonetization and accused the central government of having announced the notes ban "without making alternative arrangements" and putting "crores of people, especially the poor, in a serious awkward condition". Nitish Kumar, Bihar CM, despite his initial welcome for demonetization, is not among those chief ministers who are slated to be part of the on demonetization effects and cashless economy. Curiously, Sharad Yadav opposed demonetization. This is a game plan to fizzle out political opposition for demonetization, while people are suffering.

INTERESTING COMMENTS

• Demonetisation move declares all Indians as possible crooks, unless they can establish otherwise, says Amartya Sen. Both, the idea and the way it was implemented, was akin to a “despotic action” and betrayed the “authoritarian nature of the government”. Reacting to the government’s claim “Good policies sometimes cause pain, but whatever causes pain – no matter how intense – is not necessarily good policy.”
• Arun Shourie mocked the claim of demonetization of high-value currencies being a radical measure, stating that jumping into well or committing suicide is also radical. It was not a "thought-through" exercise. This is a strike not on black money but on legal tender of India, its currency. This is a strike on cash transactions, he told a news channel in an interview.

CONCLUSION

India faces a highly uncertain future. A vicious cycle has been set into motion by Modi and it may not end well. Unpredictable problems and unintended consequences are bound to surface incessantly. Modi, in his permanent search for personal glorification would do anything. His adventures might as well end up in a war with Pakistan and will be disastrous for our fragile economy. This demonetization will go down in the history as one of the most naive, least thought through policy decisions ever, a massive man-made disaster. Anything worth talking about our economy is at least two years away.

In a good democracy, any new policy or action by government has no right to trouble or harm even a single honest man. The larger good of the nation concept is always followed by compensatory payments usually severally times the inflicted loss but in this case it is one sided deprivation of individual rights, harassment and humiliation.


My View:
The beauty of democracy is its respect for individual privacy and property rights. The need of the hour is to strengthen our independent institutions and anti corruption agencies. Corruption and black money are thriving in India because of low risk and high profit. The systems should be modified to make corruption a high risk and low profit activity. Promoting system of incentives and disincentives for tax compliance and eliminating high value cash transactions and reforming tax administration even though a slow process, but over years produces lasting results. 

Inflicting harassment on crores of Indians to catch few lakhs of black money hoarders is not only insanity but also subverting the individual rights guaranteed by constitution.

In India or else where, the higher the social status the bigger crime one can commit with impunity. If a ordinary person resorts to even jaywalk on the street he would be caught and fined instantly. But Modi destroying economy just for whims and fancies no body will be able touch him, not to talk about criticizing & impeaching him. Modi with near zero democratic attitudes and visible dictator tendencies is dangerous to our society. The earlier the country gets rid of him, the better. Modi and Jaitley have know no knowledge of finance & economics and not taking guidance of experts prior to taking such a major decision is unpardonable and dumping India in chaos. My sense is that this could be the end of aggression by Modi and lose his grip on political India similar to that of Rajeev Gandhi's decline after Bofors scandal leading to his defeat in the next general election.