Apparently we are in for another economic pandemonium with reports of severe cash crunch affecting a number of states in the country. Over the past few days, multiple reports of non-functional ATMs have revived fears of the nation’s fraud-hit financial system from worsening.
While a statement issued by the Ministry of Finance assuring adequate supply of currency notes to the banks serves to alleviate public apprehensions over the spectre of a similar situation akin to the one brought about by the government’s financial shock of November ’16, the fact remains that the roots of the abrupt cash squeeze lie in Modi’s decision to overnight void 86 percent of currency in circulation from where cash levels have never quite fully recovered.
Suggestions that growth in currency is not keeping pace with the typical pick-up in demand leading to the obvious shortage cannot be dismissed either. However, the lack of clarity on our economy prevents an appropriate explanation to the sudden spell of ATMs running dry!
It is now averred that the country may need an additional 70,000-1 lakh crore Rupees to meet the cash demand of a growing economy. The ATM fiasco has however laid bare the nation’s emphatic reluctance to switch over to a cashless economy.
But it is the panic-like situation building up over the cash-crunch across the country that warrants the immediate attention of the authorities. Quite often it is the misinformation than anything factual about the problem in hand that sets the public on a panic mode.
Although states like Goa don’t seem to be adversely affected by the dry spell experienced at the ATMs in other parts of the country as yet, the hyper-active social media will ensure that the temporariness of the problem will be (mis)handled in such a manner so as to bring about a catastrophic situation.
Unnecessary withdrawals by people will only hasten depletion of currency reserves at various teller machines adding to the chaos. But it would be wrong to entirely blame the public for the current woes.
Ever since the “Crash of ‘16”, Indians have been quite wary of Modi-sarkar’s financial experimentations that have only tended to add to the misery of the common man. Sceptical that they are now, any perceived breakdown in the country’s fiscal order will only prompt the public to go berserk.
Now, let us understand the mindset of a common man. For a class used to the comfort of crisp paper notes buying them items of their daily sustenance, a rebellious attitude towards any machinations that disturb the set norms is a natural reaction.
The demonetization exercise of the government was one such salvo that threw the life of the ‘mango man’ helter-skelter. The ghosts of the old-currency ‘purge’ continue to haunt him even after all these months. More than anything else, the belief that the government has never had its best interests at heart when evolving such financial reforms seems to have taken a deep-rooted seat in public minds.
The ‘corruption plank’ has been well exploited by the Modi-government to justify the harsh stance taken on a number of issues perceived as off shoots of the corruption malaise, with the Indian banknote demonetization being one of them.
With claims by the government that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund various nefarious and illegal activities, taking all the 500 and 1000 currency notes of the Mahatma Gandhi series out of circulation however proved to be a damper for the Modi-ensemble.
In the meanwhile, a first-ever report on dubious deposits made in the wake of the 2016 notes ban has revealed that the country’s banks received an all-time high amount of fake currency and also detected an over 480 percent jump in suspicious transactions post demonetization.
India’s struggle with demonetization has apparently had far-reaching effects. As mentioned earlier, the cash-crunch experienced of late definitely seems to be a fall-out of the mahayaga as well.
The BJP-alliance at the centre is slowly but surely losing the trust of the middle and lower income class of the populace that actually formed the chunk of the voters which had envisioned a Ram Rajya under Modi.
If a cashless economy is what has been desired all along why hasn’t it been pursued in a more vigorous manner as is the practice with all the agendas that bear the distinct stamp of Modiji’s ‘strategic brilliance’ written all over them!
It is now being maintained that the cash crunch experienced in certain parts of the country is ‘one of the many teething problems for a cash-based economy which is trying to make a transition to a cashless economy’.
The slew of measures announced by the government to ease the cash crunch which underline the need to have cashless transactions by facilitating e-payments directly through banks and going digital by promoting the use of plastic money however fails to convince the public as paper money continues to remain the most reliable as far as dealings are concerned.
No, not for the common man the luxuries of the plastic money! That is not to say that digital transactions are to be shunned.
The contention that the consumer preference for cash accentuates the Indian mentality for evading taxes however contradicts itself considering that many of the countrymen still live on the fringes of the stipulated tax limits and naturally depend on cash for their survival.
The government appears to be in a hurry as if in just these five years it is envisioning an India shining. It could well be said that ever since the ‘installation’ of Modi as the nation’s Premier, Indians are being treated to a crash course in economics! ‘Demonetization and ‘Remonetization’ were never part of the normal terminology for the common man.
Reforms are to be ushered in gently. They should have gentle flow before getting entrenched in the mainstream. People need to gradually get used to the changes. A fiscal regimen enforced abruptly has never boded well for any economy.
But above all it is the compatibility with the changing times - and ordinances - for the common man that is the measure of good governance for any dispensation.
(Published on 30th April 2018, Volume XXX, Issue 18)