lawyerskhoj-blog

[lawyerskhoj-blog]

Demonetization- hit or miss!?

“Either cry for exchanging new currency notes for couple of days or crib for corruption for ages and generations with old one. Choice is yours.”- Vikram Verma

Dr. Bhimrao Ramji Ambedkar was among the first political leaders and an unsung economist of the country who way back in 1923 in his book titled ‘Problems of Indian Rupee’ had recommended that the Indian currency should be replaced every 10 years to end the menace of hoarding of Rupees and checking inflation,” But, he had underlined the need for adopting a flawless methodology to ensure that the currency change serves the real objective to nab those dodging the system and help the common man.

Following the ideology of B.R. Ambedkar, the latest initiative of the BJP government is the direct result of the injury caused to the Indian democracy and its citizens by the amount of corruption taking place in India. Corruption is a menace in the society.

The steps taken by the BJP Government was much needed for a very long time to remove this tumor which was killing the society.

After almost two months of demonetization, it is the time to evaluate the bold move of the BJP government to which the opposition has not able to provide a strong logical dissent to yet under the leadership of Mr. Rahul Gandhi.

Although the Government is trying to prove that the move was successful but the statistics of RBI proves the opposite and the lines outside banks are still seen despite 2 months since 8th November,2016, the day demonetization was announced.

As per the RBI, the total value of the Rs 500 and Rs 1,000 notes in circulation till March 2016 was Rs 14.18 lakh crore. Of this amount, 15,707 million comprised Rs 500 notes and 6,326 million of Rs 1,000 notes. This accounted for 86% of the total currency in the system. This means that Rs 11 lakh crore would comprise nearly 80% of the total banned currency. The statement by the Deputy Governor on December 13, 2016 which said Rs. 12.44 lakh crore of the old Rs 500 and Rs 1000 notes (‘invalid notes’) had been received by the RBI. By now as reports go almost 85% of such notes released by RBI have been deposited back to RBI by the people of India. It appears that by December 31st, 2016 100% of the so-called black money hoarded by people in the last 70 years made it back to the banksand shall later be subject to Income tax and penalties in appropriate cases.

There are few questions disturbing us all through. Where people issue a cheque and the cheque bounces for the reason that there were no sufficient funds in the account, the Negotiable Instruments Act, 1881 declares it to be an offence. Such people would be prosecuted and punished by the law. Now, people are in queues for months altogether for their own hard earned money. Banks and ATMs are not making payments for the reasons that there are insufficient funds in the banks and ATMs, where is the law to prosecute and punish these bankers. Is this a 2 months collapse of the banking system or what?

In some way or the other the opposition has acted against this scheme and especially Mr. Rahul Gandhi quotes such as “Do you see any black money players in the bank lines? It’s only farmers, government servants and the common man” have added further fuel to the fire.

But then Mr. Rahul Gandhi too gets down from a two Crore plus luxury car to stand in these bank lines to withdraw 4000 Rupees which seems nothing short of a stunt. It’s not possible to bifurcate his genuine concern from his politics of opposing for the sake of opposing.

And let's not forget he has given India enough reasons to be amused before too.

So let’s try and offer some real suggestions after examining the details, evaluating the ground situation & then offer solutions to how this great idea of demonetization could have perhaps been better handled and implemented:

1. Imagine this, we take you back to July, 2016 when our Government led by Shri Narendra Modi through Finance Minister Shri Arun Jaitley in consultation with RBI would have decided to print 2000 Rs. new notes. The instructions given to RBI at the time would have simply been to print 2000 Rs. notes which would be brought into circulation and to the public later in the year.

2. RBI then goes about printing these new notes of 2000 Rs. in heaps full, and the word that goes out to one and all would simply be that the 2000 Rs. notes is the natural extension of the already existing 500 Rs. and 1000 Rs Notes. There would be no talk of demonetization whatsoever.

3. ATMs are then recalibrated with instructions to the banks between September and October to accommodate the new 2000 Rs note dispensation, without till such time bringing the 2000 Rs note into actual circulation.

4. All this while, the news out would have been is that a new 2000 Rs currency is to be brought to the market soon and nothing else – not a word of demonetization of any currency or note whatsoever.

5. The government then led by Shri Narendra Modi, along with Finance Minister Shri Arun Jaitley and the RBI together then sits in a brainstorming consultative process and work at establishing a core group of say 20-25 members who are experts to work out two major issues and could be concerns which on hind sight have indeed been the disaster areas:

(a) To come with a process of putting into place a system with no holes, which is watertight to ensure that there is an eye and a supervisory force manning every Private Bank in the country for a two months period, where from bank security guards to bank tellers, to bank managers and other bank staff can be watched with 24x7 surveillance on them including but not limited to phone tapping etc. in such a way that under such system for at least a period of two months in the future every bank under the sun in India cannot put a foot wrong and operate as per procedures with no scope and room for committing any illegality.

Think about it as Nana Patekar in a Filmy dialogue famously said "Mera Bharat Mahan, yaha 100 mein hain 99 baiman par phirbhi Mera Desh mahan'. In that backdrop to assume that for a 2 months period where literally the bankers in the country will assume more importance than anyone else during demonetization- to think they would operate as the holy cow was more than just a tad bit knaive- don't you think??

(b) An exact same watertight system to be set up to watch and do 24x7 surveillance over the central charge of the Income Tax Department having authority to conduct raids in matters of black money.

It's well known how pious ;-) the income tax department of the country is- give us a break!?

6. Come, 8th November, 2016 the Government of India under the leadership of PM Sh. Narendra Modi could have announced demonetization at 8:00 pm in the exact same fashion as he did and what followed since that day till date resulting in the chaos and the border line back firing of what was a great and a stupendous idea into what has turned into perhaps a disaster when implemented, could have been avoided and forgotten like a bad dream.

Also think of this-

It is clearly mentioned on the currency notes that “I promise to pay the bearer the sum of one thousands rupees”.  And now if we analyze this fact then demonetizing notes within four hours or by overnight, this works against the “Principles of Natural Justice i.e- audi alteram partem” and also operates against the fundamentals of Indian Contract Act, 1872. These are principles of law and statute- which have indeed been thrown out of the window by the Modi lead BJP Government during Demonetization.

Unfortunately for India, the people of India have to live with this bad dream today, had the above six points mentioned been strictly implemented by the Modi Government, the demonetization idea would have indeed been a great success. Our Government of today has missed the bus and the damage has been done.

Our advice to the Government of today is to now get into damage control mode and at least ensure that further avenues of corruption deeply engraved in our system are not allowed to flourish in the months ahead- We are referring to the days after 1st April, 2017 when the income-tax department all over the country will get into a jet paced mode of issuing notices to every Tom, Dick or Harry, opening doors of harassment and corruption in more than 80% of the cases leading to the taxman getting rich in the corruption. This needs to be stopped and systems need to be put in place by our Government to ensure that does not happen.

As they say, the proof of the pudding is in the eating, if by November, 2017 the bank lending rates do indeed fall to levels where they are sub 7% and below, all this pain caused to India by demonetization would not have been worth it and if it does, then this demonetization move would indeed have been the single greatest ever move made by a Government against black money since Independence.

Time will tell whether the Modi Government was right or wrong come November, 2017. Demonetization will of course be a huge factor in the 2019 elections too without a doubt.

This is our view. Thank you for reading.

Editorial Team, Lawyers Khoj

 0