Diabolical schemes

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To read some of the reactions of the opposition in India one would imagine that the current ruling BJP party has unleashed diabolical schemes, to crush the poor farmer and the common man. Financial tyranny has been unleashed and the suffering is unimaginable, and the GDP growth is soon going into a black hole. The preposterous idea that untaxed wealth somehow benefits the poor by reducing bust\boom cycles is ludicrous. The cashless society based on digital transactions is coming to India, at a whirlwind pace and green shoots, are coming up everywhere. Indian jugaad or the spirit of the people to manage all hardships, and still survive and prosper, is legendary. Some numbers below will show the massive changes going on currently, in the fastest growing economy.

800,000,000 credit and debit card are in circulation in India and 450 million have become active. There are 240 million e-wallets activated in India in just one and a half years. The numbers coming out of demonetization are mind boggling in their enormity. An estimated 84% of the total currency issued by the Reserve Bank of India has to be exchanged for new notes. In the fastest growing economy, it is like the job of changing the wheels, of a moving superfast train. Such a humongous social interaction between the populace for replacing the old notes in Banks, has had a social benefit, as people have suddenly emerged from the shadows. The Banks have increased transactions considerably and the ATMs and branches, will normalize eventually. It was an exercise in good governance, without the preparation and diligence, required for such an enormous event. The people have still come out largely favorable even though minor hardships were suffered by the common people to adjust to the new notes. The RBI and banks have to do a better job of implementation and not, make their incompetence, the reason for political unrest.

The arrangement for mass distribution of your largest replacement notes became a quick bottleneck. ATMs did not work as the new two thousand rupee notes, do not fit into current ATMs and need major efforts to recalibrate. As per RBI, about 8.45 thousand, billion worth of value, or notes, of the scrapped Rs 500 and 1,000 notes, were deposited with banks, by November 27. The huge bonanza of unturned in old demonetized notes, will be a net gain against the outstanding liabilities of the RBI, and a direct gain for the government. The Government can then turn around and deposit those funds, into newly opened Jan Dhan accounts, directly to the consumers. In a bonus of the digitization of currency the redistribution of wealth, can take place overnight. The corrupt will pay taxes and penalties on their holdings, and the money will come in as deposits for the Banks. These deposits and be turned into loans, and will be lent out in fresh loans to new entrepreneurs, emboldened, by the new digital money revolution.

The Finance Minister has made a poor execution of a huge event, dependent on the poor citizen’s patience. For centuries the Indian populace has been put through, much wanted, and unwanted change. New Delhi has had quirky rulers like Mohammad bin Tughlaq and others, who have tried their hands at currency reform. The use of demonetization as a political and social weapon, is clear, and surprised many patrons and foes alike, of the current ruling party. The inconvenience is enormous to the common farmer, worker, businessman and above all politician. The cash and barter economy of votes for cash favors, has taken a direct hit as the new currency is not yet available, and the old is useless, and has to be replaced.

I am sure the people have seen worst changes, and life will go on, and eventually things will fall, back into line. Corruption and the black economy is not going anywhere, in the Republic of India. It is ingrained into their properties and way of life of the urban masses. The FM is concentrating on rolling out the GST which will be another phenomenal change in direct taxation in South Asia. Only 45 million out of a total population of 1.2 billion pay taxes in India. The myriad tax collections integration into GST will help with the ease of doing business in India, if it is implemented well. Based on the current experience with demonetization, it appears to leave the feeling that the common man; is only waiting for the other shoe, to drop. Come hell or high-water their beloved Modi is taking them on a wild ride. 2017 will indeed prove a turning point in the Indian economy, as the government will soon have resources to carry out its bold agenda for growth. . The Helicopter economy is fast approaching and they will be dropping money directly into over two hundred million individual accounts of the Jan Dhan ( People’s wealth) .

Please fasten your seatbelt and get ready for the ride of your life. The stage is set as By 1 June 2016, over 22 crore (220 million) bank accounts were opened and ₹384.11 billion (US$5.7 billion) were deposited under the Jan Dhan scheme. Expect these to increase substantially in the near future, as the helicopter has been primed for takeoff! The poorest of the poor are about to become centre stage, in a new economic revolution. Will this finally lead to the decades of rapid growth, that is needed to feed, house and entertain the billions? The British are long gone, and now their Rupee legacy is being digitized, and technology on a massive scale, is being unleashed. To the super wealthy who may have been effected by the latest reforms, I will only request to listen to one of the greatest industrialists, and consider their sacrifices to be for the good of the community.  “Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community. -Andrew Carnegie, industrialist (25 Nov 1835-1919)

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