New notes sing and singe


Ab Ki Baar, Modi Sarkar and its Finance Minister Arun Jaitley, have taken their most brazen action, ‘Mumbai-based brokerage Edelweiss Securities Ltd predicts the government’s surprise crack down on high-value currency notes will uncover Rs.3 trillion ($45 billion) in black money, which is cash that’s stashed away to avoid tax.’ In a sudden rush to exchange Rs 1,000 and 500 Notes people are standing in long queues including senior citizens, to get day to day spending money. In an economy that ran mainly on Black Money exchanging hands for services, now the hordes of currency stashed away has to be declared and taxes paid to the tune of 5 billion dollars. ‘The move will suck out about 86 % of the Rs.17.8 trillion of currency in circulation.’

With the digitization and financial enablement of a billion people India is changing. The public sector banks were strapped for cash, and now billions will come pouring in from the underground cellars of honest, and corrupt citizens. Corruption had become a way of life, and many services were paid in cash by house wives, and families hoarded cash, to get through daily needs. With a white economy three times the size of Iceland’s economy increase, from a single financial move; is brilliant and pro-growth, in the long term. Initial transition to the new currency, done in the name of fighting terrorism and smuggling; will also pull out all political contributions, that were kept in the underground economy, for use in elections in various states by political parties.

The king is about to be shown in all his nudity, when the notes have to be exchanged for new tender. They will have to pay penalties on the Black Money. Some honest citizens will also suffer in the consequences, but the final cleaning of ALL old large currency, will leave counterfeiters, and corrupt money out of the market. All financial transactions will become banked, and the tax collection will help fund more growth in infrastructure, and other needs. The great build out in highways, railroads, ports, airports, nuclear power, green energy, smart cities require major investments in infrastructure.  Capital investment in the long run will improve, and the opportunity to make India a major power, in the next century, is getting closer. This is a war on corruption, and they have to have the guts to take on the crony capitalism; which has left the banks, with massive bad, or non-performing loans.  Clean public balance sheets are required, for the massive insurance companies and unit trusts, to return positive returns.

With a young population India sits on the cusp of history. Heavy investment in skill development, will pay off in massive returns, in a global economy. India has always fared best as a knowledge economy for anyone who has studied its history. For over a thousand years, India’s economy led the world in GDP. The post independence return to this norm, is shown by the recent rise of millions of IT workers. We can raise teachers, nurses, engineers, scientists, doctors, accountants to service humanity. As Europe and Japan age along with other countries, somebody has to provide essential human services to the masses. India’s young need education and training, to become the next productive citizens of our world. They have a tireless leader in Modi and his Minister Arun Jaitley, who are hell bent on taking India, to the next level, of economic prosperity.

With Jaitely they have an able Finance Minister who can not only make financial policy, but also ensure it is implemented. This is a change for the better for India and its billion consumers suddenly exposed to a modern, digital currency and financial system. A rude but needed, awakening to the realization of political action, and its consequences in a series of financial acts and moves over the past few months. Trump fought on a platform for rooting out political corruption and outside lobbying in politics, and won the Presidential elections in the US. Jaitley has done one better, in changing the currency, political game, he has removed the source of hidden funding, in Indian elections.

Meanwhile my niece is delighted, that somebody finally had the good sense, to make purple, 2,000 Rupee notes!

This entry was posted in Economics, Hope by Rajiv Kapoor. Bookmark the permalink.

About Rajiv Kapoor

Rajiv Kapoor was born in New Delhi. He was educated by the Jesuits at St Xavier’s, and graduated with Honors, from The University of Delhi. Rajiv Kapoor did his MBA in International Business from Penn State and is now settled in the US. He has traveled across most states of India, when he was working on modernization of Rice Mills, and understands their diverse culture and history. This book is a historical fiction, dedicated to his city of birth. His extensive research dives deep into a critical moment, in India’s long history, for his latest Historical Thriller “The Peacock Throne Wars”..

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