The jury is still out on whether it was a wise decision. Will the surgical strike on black money yield the desired result or will it just add to the woes of the common citizen? The issue was discussed threadbare on APN news channel’s special show, Aafatkaal
By India Legal Bureau
In the government’s fight against black money and fake currency, Prime Minister Narendra Modi took a drastic step on November 8, 2016, by demonetizing all Rs 500 and Rs 1,000 notes in the country. Following the announcement, all ATMs were closed for 48 hours and banks discontinued operations for a day.
The nation was told that the old high denomination notes could be exchanged for value at any of the 19 offices of the Reserve Bank of India or at any of the bank branches or at any head post office or sub-post office. The announcement came with a number of directions:
- A cap of Rs 4,000 per person in cash was put on the old notes tendered at designated places. The rest of the money tendered would have to be deposited in the bank.
- Once the ATMs become functional, an individual can withdraw up to a maximum of Rs 2,000 per card per day up to November 18, 2016. The limit will be raised to Rs 4,000 per day per card from November 19 onwards.
- Cash can be withdrawn against a withdrawal slip or cheque subject to a ceiling of Rs 10,000 in a day within an overall limit of Rs 20,000 a week (including withdrawals from ATMs) up to November 24, 2016.
The demonetization move was discussed threadbare on APN news channel’s special show, Aafatkaal. The opinion of the expert panel was varied, although the consensus was that it was a good move which could have been implemented in a more effective and well-planned manner.
Pradeep Rai, senior advocate, Supreme Court, had this take: “When it comes to black money, what has been funneled out of the country has been converted into dollars and pounds. The original idea was to bring back illegal money stashed abroad. But now the focus has shifted to tackling black money inside the country. Seven months back when Modi had decided to bring such a demonetization scheme into effect, then RBI governor Raghuram Rajan had his doubts as he felt that the price of the Indian rupee would fall globally. He had, in any case, already given the notification to stop all notes printed before 2005 by March 2016. So can the earlier notification be made void by another notification now? If you are doing that then enough time must be given.”
He added: “I am not saying the step is wrong. I am saying it could have been implemented in a more orderly way with proper discussions with experts.”
Inderjit Badhwar, editor-in-chief of India Legal, said: “I hope it works out. Apart from the raids in Pakistan, nothing significant has happened in the past two years. Common citizens are the most affected by this demonetization move. Unfortunately, people have found a way to take full advantage of the situation. They are asking for a commission of Rs 100 in exchange of Rs 500. People like Arvind Kejriwal will take advantage and start a political protest.”
However, JD (U) leader KC Tyagi endorsed and backed the government’s move: “Our party has supported the central government in its fight against black money from the beginning. A parallel economy amounting to lakhs of crores of black money is operating in the largest cash economy of the world.” However, Tyagi’s only criticism was that the move was “like a cosmetic surgery which might not have an immediate effect”.
Stockbroker and investor Alok Churiwala did not think it was a hasty move: “In my opinion, it is not a sudden move. First, they introduced the Aadhaar scheme, then the government facilitated opening of bank accounts under Jan Dhan Yojana scheme. Then, there was a scheme wherein people could declare their black money. It was only after all these steps that the demonetization scheme came into effect. I am sure black money will come out. Drug money, counterfeit notes and terror money will stop.”
According to Dilip Bobb, senior managing editor, India Legal, the immediate impact of the demonetization would be on the common citizen. He spoke about the confusion and panic that had set in among the aam janata: “People are not sure of the rules and what will happen next. So there is confusion and panic. As far as Modi is concerned, he has taken a bit of a risk. He will alienate the common man.”
K Sreedhar Rao, former chief justice of The Gauhati High Court, fully supported the scheme and was all praise for the government: “The Supreme Court has been very serious about the black money issue. When public interest litigations were filed before it, the apex court pulled up the government for not taking proper steps to bring back black money. The difficulty was that most of the black money was stashed abroad. So the other more actionable step was to tackle domestic black money. As for public reaction, it is momentary. In fact, it is the common man who will be benefitted by this in the long term. The corrupt bureaucrat is finished. So many areas where black money played a key role like films and real estate will be hit.”
Advocate Keshav Mohan, however, pointed out loopholes in Narendra Modi’s surgical strike: “Neither was this notification published in the public domain nor were any views taken on it. This should have been implemented phase-wise.” According to him, the reason for such a sudden and dramatic move by the government was to ensure that those with black money do not get an opportunity to convert their ill-gotten gains. “We are yet to see its long-term effect though,” Mohan said.
Indeed, it would be weeks before a clearer picture emerges on the failure or success of the latest strike against black money.