Friday, June 9, 2023

Demonetization is a foolish step… The poor will suffer the most: Prof Arun Kumar

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Economics professor ARUN KUMAR is one of the most widely quoted authors on black money. He has authored The Black Economy in India (Penguin, 1999) and Indian Economy since Independence: Persisting Colonial Disruption (Vision Books, 2013).

In an interview to India Legal’s Editor-in-Chief, INDERJIT BADHWAR and Associate Editor MEHA MATHUR, Prof Kumar describes how this hasty drive will adversely impact demand, employment and investments. Excerpts:

When and under what circumstances is demonetization used as an economic tool and how common is this practice worldwide?

As a tool for economic surgery it has been used elsewhere, but not in the context it has been used in India. Where it has been used largely is where currency has totally lost its value, like the Soviet Union or Weimar Republic—where you had to carry sackfull of currency to buy your daily supply. There the currency was abolished and new currency created. But India is not in that situation.

Was the Indian economy facing a crisis that needed such a swift and heavy surgical strike?

Not at all. In fact, our macro-economic indicators were reasonably good. But the real point is, what does this move achieve? According to the prime minister, there are two objectives. One is (curbing) terrorist financing and counterfeit currency—and the second is that the black economy has become very large and it is the source of poverty and all the problems in India so we need to get rid of the black economy.

The question is—does demonetization overcome these two problems. As far as counterfeit notes are concerned, they are only 400 per million, which is very tiny. And according to RBI, there is only Rs 400 crore worth of counterfeit currency.

Total currency in circulation is Rs 17.5 lakh crore. It’s not even “oont ke muh me zeera”, as they say in Hindi. It’s negligible.

Terrorists need financing. So they print these fake notes and circulate it. But once they have given the money to another person, it’s circulating within the economy. So they have to print more and more money. That is what you have to stop. And how do you stop that? Not by demonetization, because there are state actors involved in counterfeiting. They can counterfeit the new currency notes also.


If you take out 85 percent blood from somebody’s body and then put five percent into it, what will happen to that person? He will die. Similarly, when you take out 85 percent liquidity from the economy and slowly replace it by five percent, then the circulation of income goes down.

India’s growth rate, trade, GDP and forex reserves have been relatively steady. Why meddle so drastically with a system that seemed to be producing results?

This is a complete miscalculation that you have to overcome black economy through this measure. Understand the meaning of this. First you earn income, out of which you save and you create wealth. Whatever income you have, you consume a part, you save a part of it, and that saving you invest in various assets. That gives you your wealth. Wealth is held as a portfolio—you can put it in real estate gold, share market or cash. Cash is only one component of your wealth— possibly one per cent of your wealth. The black economy, which, according to my estimate is 62 percent of GDP, for the current GDP of Rs 150 lakh crore, we are generating Rs 93 lakh crore this year as black income. Black wealth could be three times more so about Rs 300 lakh crore. Out of that, rupees three lakh crore would be held as cash which we can call black money.

So there is a difference between black wealth and black income?

Yes, black income, black money and black wealth, all three are different.

This is the common mistake that people make. They think the three are same. Black money is only one percent of your black wealth. So suppose you are completely successful in eliminating three lakh crore, you are only eliminating 1 percent of your black wealth and three percent of your black income.

The next point is, will you be able to eliminate even rupees three lakh crore? People have found ways of recycling this. On the day this announcement was made, jewelry shops were reported to be open till 3 am, issuing backdated receipts for purchase of gold, etc. One businessman said he had Rs 20 crore rupees and he gave four months’ advance salary to his workers. They will deposit it in their banks. So your black gets utilised. Then, the Jan Dhan Yojana is being used in large amount in rural areas. The landlord can tell, say, 100 people to take Rs 20,000 each from him, deposit, and return it to him later. So you won’t be able to demobilize even rupees three lakh crore, at best you may demobilize Rs 50,000 to Rs 70,000 crore, so neither of the two objectives that the PM has stated will be fulfilled.

Further, you are only demobilizing rupees three lakh crore at the most for one year but black income generation will continue as before. Say, by selling spurious drugs, narcotic drugs, charging capitation fee, under-invoicing and over-invoicing in business and trade and so on. Therefore, cash will again be generated here. And you are introducing Rs 2,000 notes so storage of black will be even more easy. Therefore, you are defeating your own logic that large denomination currency is used to stash black money so it needs to be demonetized.


In fact, 97 percent are already the sufferers due to the black economy and now another burden is placed on them, without solving the problem of the black.

We all know India has a huge and thriving parallel economy. Perversely, this parallel economy, run entirely on cash, has produced results in terms of employment, consumer demand, rural credit, informal “banking,” and money-flow. How will demonetization hit/hurt this sector? This is also being projected as a Robin Hood kind of measure—taking it from the rich and giving it to the poor. That is the political message going out. Is this a pro-poor measure?

No. basically, it’s not a parallel economy. Black economy and white economy are largely intertwined in India. So when you sell your real estate property you generate black and white income simultaneously. When you produce sugar, you don’t show 10 percent and show 90 percent of the output. That’s why when the black economy is affected the white economy is also affected. This move, which is supposed to impact the black economy, is affecting the white economy terribly. Demand is going down.

As someone gave a very good analogy, if you take out 85 percent blood from somebody’s body and then put five percent into it, what will happen to that person? He will die. Similarly, when you take out 85 percent liquidity from the economy and slowly replace it by five percent, then the circulation of income goes down. Footfalls in malls are falling, charging of mobile phones is declining, the balloon seller is not able to sell balloons, the small trader is not able to sell goods. Even the large trader is not able to sell produce because discretionary expenditure has slowed down. For example, instead of buying a shirt I decide to buy it next month. So circulation of income is slowing down, leading to a decrease in demand. When demand slows down, production slows down, employment drops and investment falls. And when investment falls it will have long-term consequences.

If this goes on for a month or two, investment will decline and, the impact will persist for more than a year. Anyway the cash shortage will not be sorted out very quickly so demand will be affected for much longer than 50 days.

You have to replace the Rs 500 and Rs 1,000 notes worth Rs 14.5 lakh crore that you printed over 15 years and you have to replace it very quickly. That is not possible because you need paper and ink which are largely imported. And ink is in short supply, which is why they floated a tender a few days back. According to Business Standard, it will take 108 days to replace the old currency, provided there is no shortage of ink or paper. And if you are printing Rs 100 notes, then you need to print 10 times more notes than for a Rs 1,000 note and that will take a lot more time.


Circulation of income is slowing down, leading to a decrease in demand. When demand slows down, production slows down, employment drops and investment falls. And when investment falls it will have long-term consequences.

The next point is, people are hoarding currency because they are not sure when the supply will be normalized. As a result, the demand for currency will be 50 percent more. The people who will suffer the most are those in the unorganized sector, as they don’t have credit or debit cards or card readers. They are the ones who need more currency in circulation. The entire agriculture is unorganized sector. This sector is also a major component of manufacturing and services.

Is there the danger of a huge chunk of people being left “economically disabled” for a long time to come?

That’s what is happening. So the balloonwala’s earning has dropped sharply. A beggar complained that people are not giving alms now and she had four children and one of them died for lack of food. Even those who don’t deal with Rs 500 and Rs 1,000 notes are being impacted. In rural areas, farmers are not able to buy seeds and fertilizers. Arhtiyas (rural commission agents) don’t have money to lend. So, sowing next season may also be affected. Money is what you don’t eat. With money you buy food, clothes and services. So money is for circulation. It’s like the blood flow of the body, which keeps everything going. If there is a shortage of that then there is a problem.

At the moment we are feeling the discomfort. When do you think will real pain start?

The real pain for the poor is already on. Real pain for the middle classes is less because we can use credit cards, etc. It will start when our income gets affected. When production slows then middle class people will face lay off. And they will begin to feel the pain. When truckers go on strike, which is a possibility. If the government had prepared properly and managed to create enough supply of new currency then possibly this pain would have been less.

The other option would have been benign neglect.

Coming to options, this move does not sort out the black economy but creates problems for the whole economy. The point is that black economy has not been created yesterday. It has been growing for 70 years. So this problem can’t be solved overnight. There is no magic wand. What you could have done immediately is to appoint a Lokpal to bring about accountability in the system; one of the key ways of tackling black money. Businessmen, politicians, bureaucrats, police and judiciary are not accountable. So how do you bring about accountability? That’s the key. If you can bring about accountability of these sections then you can solve the problem of black money. So RTI for political parties is essential but they do not agree. Whistleblowers are very important because they are the ones who expose the scams—be it Vyapam or Adarsh etc. But instead of strengthening the Whistleblowers Act it is sought to be diluted.

Then we are not doing much about simplifying direct tax. There is GST but more important is the Direct Tax Code Bill. You have to simplify your direct taxes. Intelligence agencies tab Hawala on daily basis but you are not doing anything about that. So, there are many things you can do immediately because you have the laws. That shows the intention is not there. If you had taken recourse to these laws, you could have targeted the three percent of people who indulge in black money without adversely affecting the 97 percent not generating black incomes. In fact, 97 percent are already the sufferers due to the black economy and now another burden is placed on them, without solving the problem of the black.

And you have not offered carrot to those who have by default become part of the black economy.

No, the Income Declaration Scheme (IDS) was there till September 30, wherein you could disclose the black amount for 15 percent penalty. The FM said: “Please come clean, then you can sleep in peace.” But as long as you say we will not take steps against the corrupt businessman he is happy. So wherever amnesty has been given that has not worked.

Voluntary disclosure scheme (VDS) has been implemented six times in India. The government gave an undertaking in the Supreme Court in 1997 that we will not have this scheme ever again, the reason being that it’s unfair to the honest person. The honest businessman’s capital is rising slowly because he is paying full tax. The dishonest businessman’s capital is rising fast. So the honest one says let me also become dishonest. The CAG report on voluntary disclosure scheme in 1997 said two things. People have become habitual tax offenders. Those who declared in the earlier five schemes also declared in the sixth scheme. They think another scheme will come, let me generate more black income today. Therefore after 1997 they have not done a VDS, although the IDS of 2016 was also like VDS.


The balloonwala’s earning has dropped sharply. A beggar complained that people are not giving alms now and she had four children and one of them died for lack of food. Even those who don’t deal with Rs 500 and Rs 1,000 notes are being impacted.

The Mauritius route is also like a VDS. You take the money out, bring it back through round tripping and so you don’t pay tax. So the system has created these easy ways of generating black income. We have wonderful laws. But we don’t implement them. Political will is needed to implement laws.

Another thing, cash does not necessarily mean black. So of the Rs 17.5 lakh crore, Rs 14.5 lakh crore is in Rs 500 and Rs 1,000 notes. Out of that, at least 50 percent would be with businesses. If you go to petrol pump or shops you see wads of currency notes with the cashier at the end of the day. Railways, airport—everywhere it’s needed. Companies have petty cash. Bulk of the cash is white which has to be used for circulating the economy. As to households, an ordinary peon generating Rs 10,000-20,000 of black is nothing compared to the size of the black economy. One Madhu Koda generating Rs 6,000 crore of black is more than the entire black income generated by all class C and D employees.

The misnomer is that black economy means cash. That is where the understanding of Modi is lacking. He thought that if he demobilizes the cash the black economy will collapse.

But that sounds more like a self-serving political ideology….

The political ideology is that I will be the hero of the poor, that I have eliminated the black economy that was affecting the poor. What he might do if that Rs 2 lakh crore doesn’t come back is to say I am giving 10 crore families Rs 20,000 each. These rich people had stolen this amount, so I have taken it back from them and distributed it to the poor. But it can fall flat for the following reason: while they may get Rs 20,000 one shot, if they lose their employment, they will lose far more over the year.

So as you are saying its very basic genetic structural reforms and which means gradualismBecause reforms can’t come without gradualism. Like Chandrashekhar had to mortgage gold as that was a crisis situation. Even to some extent wheat control orders of Indira Gandhi in 1972 were passed during shortage times.

But the point is that those (measures) were affecting where the crisis was. This is affecting everything.

So it is a billion dollar political blunder.

The trading community will desert him as far as I can tell, because traders are very upset. Farmers are upset, workers are upset.

What they will do is to restore money supply to Delhi, Mumbai, Kolkata and Chennai so that the national press says the queues are dwindling. But there will be little money in villages. They have to walk long distances to get to the bank for money and often return empty handed. And there’s little money in Tier-2 and Tier-3 towns.

Now they will go after lockers….

No, that will affect only the middle class. The poor doesn’t use lockers.


Black economy has not been created yesterday. It has been growing for 70 years. So this problem can’t be solved overnight. There is no magic wand.

But you get money for political parties from this three percent.

But if you have the political will to do this you should also have had the political will to do that. Like, a UP leader is reported to have told funders to take back old notes and give new notes. So, political funding won’t stop. Now it will be easier with Rs 2,000 notes. They won’t be harmed. I was talking to a commissioner who said we don’t touch those cases where we know there is political backing. Anyway, Income Tax department doesn’t have the capability to handle so many cases.

It’s just one man’s mind at work….

He just didn’t consult anyone. In his address he said that the departments of government and bankers are hearing this for the first time.

We have to look at Article 21 of the constitution. Property right has been granted by the constitution. Your job has been recognized as a fundamental right.

He is not doing that. He is replacing old currency with new currency. He is not depriving you of your property.

But he is taking away livelihoods.

That’s the consequence of this move. As far as property is concerned, he is not taking away your property. It’s a legal tender saying “I promise to pay” and government is paying with new currency—of equal value. But it creates recession. It’s a foolish step. Any policy can go wrong.

The SC can condemn you for the process.

The SC is a responsible institution. It can say anything orally, scold, but when it comes to judgment it is circumspect. PILs have been filed and government wants them consolidated in the Supreme Court but the court has refused that till now. But ultimately it is quite likely that the court will say it’s a policy issue and therefore we can’t do anything.

One man is trying to deliver on something that is undeliverable, against the advice of everybody else. 

That’s not how you run such a complex country like India. If I were there I would have asked 100 people. He didn’t trust his own cabinet and took away their mobiles and confined them to a hall till 8 pm. Urjit Patel called all bankers and told them to watch an important announcement. This is absolutely not the way to make such a complex policy in a complex country like India.

Lead picture: Professor Arun Kumar is regarded as an authority on the black economy of India. All PhotosAnil Shakya


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  1. Today we have huge part of our cash as working capital in an inefficient manner. If we can handle the working capital requirement [ cash plus stock ] in more efficient manner, that fund can be used for investment. Today we are having 15 lakh crores. Assuming if we can live with 7.5 lakh crores and the remaining moves faster in the digital payment, india will get 7.5 lakh crore for investment in any sector which government and bank wants to do. Hope and pray the good efforts of narendra modi works and shows the outdated left guys their place as it is happening all over the world

  2. “one of the key ways of tackling black money. Businessmen, politicians, bureaucrats, police and judiciary are not accountable.”This is the main reason i have no faith left in democracy. All these elements of high society are the products of Democratic way of governing. Every man is greedy, he sustains himself as a parasite on poor people and becomes richer day by day. Even today, it is poor people who are feeding him with new notes by standing in long queues. Lokpal is not the answer. Quick justice and severe punishment alone will stop the black money creation like in China. Remember how a top incometax official was executed in 15 days when found out.

  3. Target of a nation facing huge unemployment problem despite highly skilled young professionals And biggest human resource in the world is multi fold one of which is recovering and plugging generation of black money to capitalise the available potential both fiscal & resources of nation and churn it to the fullest as does our heart does in coordination with lungs And kidneys for driving junk out of system regularly. like mother nature does clean itself by rains and wind to remove pollution from the environment and assimilate it to it’s ineffectiveness to cause disruption, likewise the potential of black economy can we regularly allowed to be settled with tough system of zero tolerance &100% compliance and such inbuilt system shall be put to minimise /control / regulate ill effects with severest financial & physical punishment in special court within time frame of one year.
    Better to educate young to resist and shun such cash/black money through education system from primary levels .Police powers to be curtailed to great extant from all indulgent entity and so be taxing &other such penalising authorities. Courts may be restricted to Justice advancement than time consuming role and it be so empowered to speedy disposal in shortest span of time .
    Govt. fund shall be accounted for each penny in terms of physical achievements and wealth creation.
    Private sector always shall be open for spot audit and stock checking with certification from banker.
    Unorganised sector must be registered and provide no. of wagers /staff/labourer required for project/ daily /monthly basis & out go….it shall be independent ally and voluntarily made. Electric consumption &other inputs must be accounted for.
    The bigger question is ,the regulatory check & balance mechanism has fallen flat due to indulgence of executors/enforcers direct involvement due to patron ship…. that won’t stop unless Lok Pal , Lok ayukta and criminal Justice system is strengthened Greatly with curb on individual meeting of Power/ Position holders with seekers who provide at time of need.

  4. Alongside action for unearthing Tax avoidance cash dependent trade & services, people may be provide with delivery of services of all establishment at his door steps through Apps & involvement of post offices.

  5. Amusing to hear Prof. Arun Kumar’s logic on black money.
    Its a daily seen in India that cash is used in purchasing houses, sarees, jewelry, electronic items, air tickets. Why not pay by card or cheque for these items?
    It is obvious, that this cash is black, if not why carry around Rps1000 in bundles.

    When someone is trying eradicate this black money from the Indian way of life, there is
    a lot of hue and cry. In fact, political parties are protesting in parliament against this move to demonetization of Rps 500 and Rp 1000 bank notes.

    People of India should have been standing together to support wholeheartedly against corruption, terrorism & black money that has been strangling the growth of this nation.

    It is really sad that the opposition parties behave as if they are some kind of enemy to the government, as the go about disrupting the parliament proceedings. However, the common people understand that this demonetization is good for the country. It is well know fact now that the people with the bulk of black money who is making the most noise,

  6. I think this guy wants india to be begger economy when you have blood cancer, all your cells are impacted you not only suck 86% you recycle the entire 100% and also 62% of the black economy means they are not part of your system , with this means new blood will be infused and everything will be part of your system,And also how many times you have given 100 rs/ 500rs note to beggar. This will also enable them to work and not beg.

    When you left 14 % of the money in the system and total online payment accounted for more than 14% and also made enough arrangment to use old 500Rs note you have provided enough support to run the economy.

    How many times you have withdrawn more than necessary , in this scenario you are not withdrawing more than necessary and leaving enough money in the system for other development work.

    So theory apart the idea of demonetization can be debated but intent cannot. One problem what i see is people drawing money are not spending instead hoarding so that is a problem in recirculating the currency. But for that not the government you should be blamed.

    Regarding the slowness yes the demand will definitely slow down , but it is not permanent and if the demands slows down for a while but it will jump back to normal in sometime when the good cash circulates.

    This guy is talking gibberish, when you kill the countefeit currency you have not only stopped the 400 million fake note but also did break their channel of circulation.

    You have also promoted a means of cashless economy, don’t think that poors don’t know that is true, but the owners who have made and kept them poor will definitely know.

    And also not the poors were the one who had hoarded money the owners and so called people who kept them poor had hoarded.

    Guys all the economist/intellectuals if given bungalow in the posh garden they will only talk positive.

  7. अगर देश को cashless इकॉनमी बनाने की पहले शुरुवात करने के एक वर्ष बाद नोट बंदी की होती तो देश के गरीब आदमी जिसे ही केवल इस नोट बंदी का सबसे ज्यादा नुकसान उठाना पड़ा है नहीं उठाना पड़ता ।

    अभी भी समय है अगर राजस्व बढ़ाना है व कालेधन को समस्या को कम करना है तो
    “(1)बैंको से cash निकले की सीमा सेविंग अकाउंट के लिए ₹50000 प्रति माह व् करंट अकाउंट जो इंकॉमेटाक्स ऑडिट लिमिट के अंतर्गत आते है मैक्सिमम ₹ 2 लाख प्रति माह करने के साथ साथ अपने साथ cash रखने या केरी करने की लिमिट मैक्सिमम ₹ 5 लाख या लास्ट दो दिन को सेल्स जो भी अधिक हो से ज्यादा नहीं होनी चाहिए।
    (2)All the payment done by Central Govt., State Govt. ,semi Govt., all Public Limited & Pvt. Limited companies , Nagar Nigums , Trust, partnership firm & other Individual & HUF organisation which come under Audit as per Income Tax act Should be mandatory to receive sales proceeds above ₹ 10000
    and pay their liability i.e.. Tax payment, Suppliers & venders payment, employee’s salary, Transporting , expenses above ₹2000 etc. (दैनिक मजदूरी की छोड़कर जो सैस्थान मे एक सप्ताह से कम काम करते है जिनका साप्ताहिक भुगतान ₹5000 से कम है)through Electronic Fund transfer mode i.e. RTGS/NEFT/ECS /electronic cheque , Debit card, credit card,e-vallets etc. instead of Physical Cheque & cash. In long term after 5 years This will help to increase cash flow & Increase Countries GDP minimum by 3% and also reduce Corruption & frauds and Tax evasions. For the success of this All online e- payment transaction charges should be zero I.e. nil service charges basis

  8. It’s a good narrative by Economics Prof. On one hand we should respect domain experts and on another we should also trust the executives. Finally constitutional authority doesn’t lie with domain experts. It lies with the political representative. Domain expert has his own domain knowledge only whereas Politico head has all round vision before he takes a call.
    On one hand we want a corruption free country and on another we are trying to see benefits of parallel economy. This is absolutely contradictory.
    I think there’s enough consensus in the country on getting rid of corruption, which is not the domain of only rich. It begins at grassroots. We only tell a shopkeeper “Bhaiya bill rehne do. Tax bachega”. Has anyone told “Bhaiya bill do. Tax bhatna hai”. And we say we are Serious about removing corruption.
    There’s no gain without pain. And as Indians we are really used to thinking that its possible to gain without pain. No where else in the world it’s a given.
    I think demonetization was long due. This madness about hoarding money had to stop to enliven human values in our society.
    Once every transaction becomes white you see the life changing for yourself and our lives changing for better like people live abroad in an environment free from fear and work pressures with more money with government to provide for heightened social security.

  9. yes in complex country like india everyone should be informed that please arrange for your black money, steps are gonna be taken in next two months. i dunno the affects still but i still feel they are jumping boats.. to criticise the move if i was an eminent economist i will work with data. i will not create theory out of thin air like he is doing. so do we have sufficient data to say the move is gonna fail. all author is trying to say is theory not practical stuff. because we never had practical data from any previous such exercises.

  10. Undercurrents of Demonetization and its Socio- Political and Economic Impact

    P.P. Abdul Abdul Razak

    The demonetization of the currencies without the consent of the democratically elected parliament is tantamount to the dictatorial action and is a blatant breach of the social contract. It creates the trust deficit in the governing system which in long term works as a prelude of the socio-political anarchy. Such a dictatorial act without taking the states into confidence is against the spirit of the federalism that our constitution upholds as well especially taking into consideration of the fact that the ruling party BJP doesn’t have representation in many states like Kerala. These kinds of dictatorial declarations from the top sow the seeds of separatism in the bottom parts of any country, leave alone India which is actually a wonderful nation of diversities with so many sub-nationalities inside it.

    Federalism as practiced in Modi’s India seems to be equivalent to incipient anarchy, governed by a patchwork quilt of Sanghis from Gujrath and other northern regions where the base of Sangh Pariwar seems to be more or less strong whereas the conditions of other regions where Sangh Pariwar didn’t have any parliamentary representation are not really taken into account at all. Even the national budget itself seems to have become politicized immediately after Modi has come into power. If things are moving at the current pace, the Federal government public policy won’t be consistently implemented across the country in any sphere.

    Historically speaking, all the countries that had tried demonetization before were either dictatorial and despotic or totalitarian and militaristic in nature. Demonetization done by military junta of Myanmar in 1987 ended up in mass protests and chaos that led into the oppression by the brutal military force killing thousands. Soviet Union had tried it in Jan 1991 and got disintegrated by August 1991 which led to the emergence of 28 post communist states. One of the reasons for disintegration of the Soviet Union, the then Super Power, into 28 nations was economic. In 2010, demonetization in North Korea left people without food and shelter. North Korean President Kim Jong II was forced to revise the plan by knocking off the two zeroes from the face value of the old currency and executed the then Finance Minister who probably had proposed the idea of demonetization initially. At the time of its independence, the Democratic Republic of Congo (Zaire) was the second most industrialized country in Africa after South Africa. In October 1993, When the Zaire regime again attempted to resolve its chronic liquidity crisis by announcing the introduction of a new zaire (nouveau zaire–NZ), the old currency was to be withdrawn from circulation. The result of the announcement alone had, however, been a drastic plunge in the exchange rate in the black market and another surge in prices. Once again rioting and looting occurred when opposition forces promoted a boycott of the new currency. People lost the trust in their own currency and switched into using Dollars instead.

    Economic activity is cyclical in nature. Even a patch in the wheel will force the whole cycle to stop as we had seen it during the 2008 global economic recession that took place in the wake of US Subprime crisis. The currency represents the air in the tire. If the tire is made air empty, there is no way for the cycle to move ahead. That’s what happened in the wake of the demonetization of 86% of the currencies used in India. By any measure, the collapse of the Indian economy will be catastrophic.

    I had stood in the long queue for two days in front of SBI branch in my home place. I saw thousands of people standing in the long queue and I couldn’t see any filthy rich among them on both days. Observing the long queue, I was wondering how many man hours will be lost all over India in coming months and its severely adverse effect in our GDP! The people I saw were all labors and daily wagers. I felt it as a sign of failure of our democratic system itself. Demonetization of the economy that leads into the apparent expansion of barter in the remote villages of India will put considerable portion of the economy beyond the reach of the center, frustrating efforts to collect taxes, failing the very goal behind the demonetization. To anyone familiar with the powerful state apparatus, this looks like total collapse. Political agendas have worsened the situation because very few corrupt corporates are benefiting in times of crisis while the Modi government let the people they are leading suffer. Many deaths in the wake of demonetization are the result of not having basic needs which shows how the economy affects its people who are treated by the government like slaves.

    I don’t think we can expect anything better from Modi. For me our Prime Minister seems to be megalomaniac, callous, cruel, unscrupulous and dictatorial. Above all, this demonetization act declared dictatorially without doing any risk benefit analysis or any precautionary measures and devoid of any back up plan definitely is a Himalayan blunder. A stupid act by an ordinary person normally won’t have much social consequences. But a stupid act by a ruler will be a national tragedy of enormous proportion. One of the intentions and goals behind our parliamentary democratic and federal political system and other state Institutions is to protect the ruler from falling into the pitfalls of stupidity in policies related to the governance. When those systems and institutions are bypassed, usually people bear its brunt as we see it in the case of demonetization.

    We had seen Our Prime Minister Modi’s megalomania from the 1 million dollar valued cot he had put on with the inscription of his own name on it a million times when he had met with Obama for the first time, and when he had fluttered a kite inscribing his and Obama’s names on it ect. There is no need of any more proof for his cruelty, callousness and unscrupulousness. Gujrat pogrom, his eloquent mum on Najeeb’s disappearance from JNU after the cruelty meted to him by ABVP’s gory goons, his willful passivity and voluntary indifference towards Bhopal and other fake encounters, his connivance and collosion towards Muzafarnagar massacre orchestrated by Sangh Pariwar for the Lok Sabha election dividends through communal polarization, his deafening silence on murder of and mayhem done on Dalits and minorities allegedly for eating beef, his kindless desertion of his own wife, forcing his own old mother standing in long queue as a sham and sadistic playing of a whistle and drumming in Japan making fun of his own people in India who were suffering from his own illogical, indiscriminate, erratic and arbitrary action, all prove the same cruelty, callousness and unscrupulousness. His dictatorial trait was observed even while he was the CM of Gujrat and it is felt by each and every citizen of India now. The way he declared the Demonetization action cemented the dictatorial trait.

    Black money comes from four sources.. First is through bribery. Will his demonetization stop bribery in India? No.. The bribery of 3 lakh rupees taken in the newly printed 2000 rupee denomination by a Kandla Port official in Gujrat immediately after the declaration of the demonetization proved demonetization to prevent the accumulation of black money is an exercise in futility. The extravagant wedding of BJP leader Sriramalu’s daughter in Karnataka also proved the extent of the bribery and the black money amassed by the politicians in the ruling party itself. Second and third source of black money is smuggling of gold and difference in the value of rupee in the domestic and foreign markets. This will not stop until parity of Gold price and Rupee in domestic and foreign market is ensured. The immediate effect of the demonetization will be the plunge in the value of the rupee and the widening trade deficit because of the lesser revenue from the export and more dollars required to pay for the import. The possibility of widespread use of US dollars for the domestic commercial transactions cannot be ruled out since demonetization of national currencies has caused huge trust deficit. Growth may even go to negative because of the difficulty of meeting the conditions of international customers and suppliers, continued low prices of key exports, and post-demonetization economic instability. Economically, the situation will continue to decline and by mid of 2017 the purchasing power of the people will diminish drastically. India probably will have to undergo a self imposed economic recession that will trigger the outflow of foreign investment as well. Much of the money available will be embezzled by the Sangh Pariwar circle as it is alarmingly clear that the corruptive system with all its wicked and ugly manifestations, its mismanagement and fraud will waste away all sufferings borne by the people and will destroy perseverance paid by the people. Chances for recovering the loans by the creditors on time won’t be bright. The money that was lent will be either embezzled, stolen, or wasted on projects that do not cater the needs of the common people. Political rivalries and the state sponsored monopolistic corporates will aggravate the situation. Increased poverty and hunger from the demonetization may prompt people to riot as Supreme Court has warned. The armed militias will try to take advantage out of the worsening situation and may resume its fight with the government in the north eastern section of the country as government’s weak policies lead to the socio-political and economic instabilities. The abuse of human rights by the Sangh Pariwar government also will ruin the economic activity.

    Fourthly, the black money is accumulated through tax evasion. Each and every citizen of India is already paying 30% indirect tax on everything he consumes from grocery, to car and petrol. When we drive on the road, we have to pay the toll. Even health insurance is not exempted. It seems only death is exempted from this exorbitant tax. Why the people who usually pay a lot in charity hesitate to pay direct tax to the government? For this, the government has to do an introspection. People don’t feel government delivering any service except mongering hatred, indirectly orchestrating communal riots and fattening the corrupt officials. The poor condition of the road, hospitals, education and other infrastructural facilities says a lot about it. After all, people are forced to pay bribe to each and every government official for any service they avail which really constitutes more than the tax amount that government wants them to pay. So, government needs to improve its services, stop practicing of taking bribery by the government officials including income tax officers, declare incentives in terms of health care, old age pension ect. for those who pay the tax in order to improve the tax return by the rich rather than punishing them all by demonetization.

    After all, will demonetization act help to flush out the black money..? Not at all.. 95% of these black money is kept in the form of savings in the overseas banks, shares, bullion and real estate. Modi’s action won’t have any impact on any of these forms except in making the market stagnant and standstill temporarily with huge loss in our national GDP. 5% of the black money probably is kept in the form of currencies. Those hawala and money laundering people will have their own net works for whitening it with the help of the corrupt politicians. That’s why we don’t see any of them and the political leaders among the tens of millions of people standing on long queues in each and every nook and corner of India. This makes Demonetization action tantamount to the collective punishment for no sin done by 95% of the people in India.
    So, what is the real objectives behind this? Apart from the political gimmick to hide his failure in recovering the black money of 1.65 lakh crore rupee kept in the over seas banks which he had promised during his election campaign, the Sangh pariwar wanted to win UP election at any cost. After safeguarding their money and cash balance for the UP election campaign, they wanted to make opposition parties bankrupt and cash less. Secondly, the national banks seemed to be facing a liquidity crunch since withdrawals during the period of 2015 Nov till 2016 October was in the alarming level of 2.54 lakh crores rupees when compared with annual withdrawals of around one lakh crore rupees during the previous years. So, the government apparently wanted all people to deposit their money and small savings into the bank to save the national banks from becoming defunct.. That’s why we see all people standing in the long queue being forced to deposit their own money in the bank. That’s why we see government has put a control on withdrawal also. Here we have to remember the fact that the Asian tigers of 1990’s crumbled in 1997 due to their banking problem. The triggering point of 2008 global financial meltdown was US banks. Iceland jailed 26 of its major baking executives immediately after it was declared bankrupt in 2014.. Thirdly, Government wanted to retrieve 30,000 crore rupees that was printed without security thread. It wanted to hide the mistake and punish the people for its own mistake. Historically speaking, the demonetization act done by other countries like Soviet Union ( in 1990) , North Korea and Myanmar were utter failure and created chaos and protests. All those countries were and are dictatorial in nature. Our PM also is seen treading on the same path. Let us wait and see where India also is heading for.

  11. Whatever he said is correct.. But he ignored the major turnover of the scheme itself.. The ‘accountability’ thing thats needed for the country right now is a stringant it scrutiny..

  12. Just could not find anywhere in the article suggestions to tackle black income, wealth and money. If he is such an economist of great repute, how come he doesn’t know that such measures take time to heal the deep wounds. It’s not even a fortnight and he has did the surgery of the whole process. Pity that these arm chair activists still have an audience. When will we stop listening to these leftist voices that has stifled our voices and ambitions for decades. Their contribution to the society is just the red flag with thee sickle that knows only to cut.

  13. He’s out of date. Cashless transactions will become prevalent, as they can be carried out on mobiles by less well off people, though not by the very poorest.

  14. I consider Professor Arun Kumar real authority on black economy.Here also he has analysed the issue scholarly and without any bias.,but those who are really biased may not agree to my view.What Pro.Arun couldn’t spell out ,because he can’t substantiate it,is that it is not one person,because he is not so knowledgeable,but the institution,which has groomed him.I personally consider him robot of that institution.

  15. I entirely agree with Professor Arun kumar ‘s Views , still feel; there are hidden agendas and it’s part of long term plan. There is method in Madness/ cleverness to favour something. Period.? ay we expect a white paper by Govt. on sudden proclamation & viciousness of painting everyone opposing logically even without political tinges…’supporter of black money’ surely & certainly point to some planned devious design.Let it be probed By JPC.

  16. Simpler solution to reduce Black money, Corruption…..
    is to have person’s,

    “mobile Number”
    “Bank Account Number”
    in all Banks,

    Same number for Equity’s, Funds, Gold Receipt, Real Estate……. all Transactions.

    (mobile number be connected to ADHAR, PAN)

    One country, One Tax,
    1% Transaction Tax on Received.

    For Cash Received, pay 1% Tax, like Post paid Mobile.
    Pay INR 10- for every 1,000- Received, on daily basis.
    Payable weekly.
    So cash Transaction also will be Traceable……

    Pl. Comment/ Share/ Likes

  17. Sub:- (i)- Before High Court Judge (Retd) a lady dies in Hospital due to non-availability of NEW currency (ii)- Law should be same for all. The Govt & RBI should be prosecuted for causing deaths by negligence u/s 304 A IPC etc

    — On November, 25 evening on a business TV channel ‘magic bricks NOW’ one of the panelist Justice (Ret) M F Saldanha said that in his housing society at Mumbai a lady had heart problem hence her family members and neighbors [including Justice (Ret) M F Saldanha] took her to a nearest private hospital but she died because her family did not have NEW cash currency to meet the demand of the hospital (though they had suddenly demonetized old currency)

    A negligent driver is prosecuted and punished for killing a person by car / truck. The organizers / management of public functions / utilities are prosecuted and punished in case of fire due to negligence in which people get killed. Similarly the authorities / officials of Government and Reserve Bank of India should also be prosecuted and punished for negligence about demonetization which has allegedly killed ~ 70 persons, as mentioned at:-

    It is expected that Justice (Ret) M F Saldanha will take this matter to its logical / legal end and would get justice to the victim and her family, relatives and friends by getting the GOI & RBI (and hospital authorities) prosecuted for negligence etc about illegal demonetization program which has caused this death of the lady.



    • Why should Govt of India RBI be charged with causing deaths by negligence? Even private hospitals are authorized to accept old currency. Blame the hospitals!

  18. Currency notes are issued by the sovereign only. Business can and does go on
    among chain of traders using bills of exchange. The banks discount the
    bills of exchange for cash if the chain is broken by a trader. Personal IOU or hundi is the Indian name for bill of exchange. They carry an audit trail or traders names. In land
    sales the history of sale for about 200 years forms part of the sale deed. It is not the price of a sale but the chain of ‘right to sell’ covering over 200 years which is held in the sale deed. In short this is the audit trail of right to possess the land or audit trail of value in a bill of exchange which is not the liquid part of a trade exchange.
    The liquid part is the transfer of credit which takes place. The sale
    deed of bill of exchange which carries the credit on transfer of title
    to land for a value or transfer of goods say food grains for a value.
    The value is mentioned in terms of currency notes issued by the
    sovereign. In e-commerce which is like sale deed and bill of exchange
    the audit trail to title in traded material is on record. In unaccounted
    sale there is no audit trail of sale. Without audit trail sold goods
    become benami in the sense that possessor of the goods is the owner in
    law. One can park title in others after taking possession so that
    perceivable possession is what can be subjected to tax by law.
    Protection of law is available to benami holder even though enjoyment
    may not be with him. The more the currency used in sales without audit
    trail the less the tax revenues and also less the enjoyment of material
    goods by benami holders. The uncomplaining benami holders are paper
    companies. They include foreign investing companies.

    If benami holding of working capital in cash in Indian trade and business
    is demonetized the true owner and benami holder will squeal. Thereafter
    efforts may be made to topple the very govt that demonetized and to
    return to status quo ante. If benami holder of landed property or shares
    of companies (ongoing or paper ones) is systematically questioned, it
    will have to start from the most highly valued assets and not those of
    the poor and middle class who may be owners of say 1000 lakhs of crores
    of rupees of assets created with savings in GDP of say 100 lakh crores
    per year in the last 10 years. If questioning is limited to the very
    rich they may turn out to own nothing, while their trusts and companies
    have allowed them to enjoy the property they are enjoying. Gandhiji’s
    idea of trusteeship on held assets was in relation to enjoyment of the
    trust held by the rich only by the poor. The beneficiaries of many
    trusts are so defined that none has the right to demand the benefits. So
    tackling benami trusts will require going into intricacies of religious
    or charitable companies/ societies and NGOs. Not an easy task as
    compared to demonetization.

    Issue of currency is a function of the sovereign. In relation to issue of currency the person best identifiable with the sovereign in India today is the PM enjoying
    majority in Lok Sabha (necessary for passing money bills). He and not
    the court of law can decide on how much of audit trail in trade in India
    can be erased by over use of the monetary currency in trade. The loss
    of audit trail It is strongly linked to creation of benami property
    which goes against true trusteeship in the rich for the enjoyment of the
    the trust holdings by the poor.

    In cashless transactions the credit in bank enjoyed by a holder of bank account is
    transferable in cashless sale for goods and services received.
    Demonetization promotes cashless sales but the con side is that it wipes
    out not only liquidity in cash held but also the working capital in the
    cash held. The loss of this capital must be replaced with credit in
    bank account of holder as soon as the demonetized currency notes are
    deposited in the bank. The amended tax law and may well
    force many to deposit old notes held as sizeable working
    capital, and after a date laid down by law the RBI may be freed from honouring its IOU on demonetized notes. But the undisputed 50% or 40 % of the deposit may not be
    credited to the depositor’s bank account immediately on deposit. Since depositor is turning a new leaf, bank loan for deposited amount or 50 % of it needs to be offered to depositor against security of his business over the years and his other assets. This is not charity but national economic necessity.

    What is wrong with return to status quo ante is that the world over the so called political sovereign is letting the rich in its country run its economy to its own
    advantage. The rich are getting richer and the poor are getting poorer.
    If rule by economic power of the rich is to be opposed, only the political power of the poor, in a democracy, or the armed struggle of the poor in non-democracies,
    can do it. The resurgent political power has now a strategy in India.
    Why not intellectuals, who do not have political or economic power or
    patronage affecting their reason, support the resurgent political power, in which the poor have a hope.

  19. My reading of Modiji’s move is that Rs 2000 will also be made illegal tender after some time and it will not be replaced.

  20. Ironically, the very same Arun Kumar, the acclaimed economist has been been critical and skeptical about India’s GDP numbers and now is using demonetization as a tool to cry over the to be lost GDP with mere speculations. Hypocrisy enough? If the counterfeit money being circulated in economy is like “uth k muh me jeera” I don’t get the reason why terrorism has taken such a blow and everyday newspapers contain daily’s on Naxalis and Terrorists forcing people with Jan Dhan accounts to keep their black money into their account.
    The same Mr. Arun has been so skeptical about a cashless economy, that he doesn’t even consider that cashless economy can be a counter to black income “generation”. I don’t know if we would ever get an able “constructive criticism” or mere one sided views from the side of such acclaimed economist.

    • Actually it doesn’t require Arun Kumar to tell us the impact of this demonetization, but if this can really contain terrorism and naxalism even by 1%, its worth the pain of standing in the queues to use our own hard earned money, while those big ticket black money holders were watching us from their cars and laughing at us.

      As a citizen I started doubting the intention behind the demonetization, the decision seems to be influenced by politics more than economics, that is why we see that not one of the politicians, bureaucrats, cinema actors, top industrialists or even some swamijis who are main holders of black money being arrest arrested.

      Anyways let us wait and see for another 31 days and see how honest this idea is…

      Hope Modiji hits at the root cause, corruption, lack of transparency, high taxes etc need to be addressed first to strike at the root.

      I wish India a good future under the dynamic leadership of Modiji.

  21. The bright side? Gives us a chance to question consumerism and humanity’s over-dependence on the state. In rural areas, there is going to be a clear advantage for the traditional organic farmers who save their seeds and grow their own food. With the loss of the illusion of government-backed financial security, resilient and sustainable ways of living will get an opportunity to shine in this storm.

  22. These Leftists ideologues are the biggest curse to our nation. They always hold distorted views and want everyone to be carried away by their flawed, skewed and perverted logic.

  23. The hype on black money and black economy was the creation of the arm chair economists like Arun Kumar, who have been churning out papers and books and the leftists were blaming the entire elite. Now that the secular lobby has been caught pants down, the leftist lobby is against the demonetization. Either they should have understood that the black economy was good for the informal and rural sector, comprising of money lenders to bleed the poor farmers and labourers, gamblers, match fixers, extortionists, illegal hawala operators etc. What was the use of the money which had been lying under the carpet and behind walls or in cold storage for the economy, except its use during elections, organise anti establishment agitations like IAC, against all developmental activities, stone pelting, periodical bomb blasts, riots etc. The man days lost due to all strikes, bandhs, lock outs were more in the history of India and several sectors like Jute, Textiles, farming have been ruined during 70 years. If the rural folks are fully employed, why there had been migration of labour from the very areas like Bengal, Bihar, UP despite MNREGA. People have migrated to places where there is employment in Real Estate, Construction, etc which are more or less organised. Despite strict guidelines to regulate the payment of wages of the contractual and casual labours thro Banks, why States and Inspectors are permitting cash payment to the workers, which is intended to befool their expenditure and profits. Let all the political parties agree to make it mandatory for every household, at least one member to have bank accounts, credit/debit cards and all licensed traders irrespective of their scale of operation be provided connectivity to Banks. The main problem in some areas is control of the traders and small vendors thro political functionaries and the extortion. Despite several court orders, pavements are occupied by unauthorised vendors with protection from local bullies and this type of unauthorised trading is now being termed unorganised sector. Why can’t they be given a proper place to do their business by construction of multi storey buildings with parking lots, so that the inconvenience to the general public through out life can be reduced. When they talk about temporary inconvenience for 50 days as a big issue, why not they ensure less inconvenience to the traders and general public throout their life. Precisely for these reasons, the general public is not in support of the bullies and in fact they seem to be deriving a whimsical pleasure now seeing the predicament of their looters for 70 odd years. Introspect and change the course, behave in a civilised way, help the poor by showing them the right path with facilities for honest living; not only they will improve their business, many wandering for Rs.200 party fund may wish to some honest business or engage themselves in occupations which may propel them in society. The non doers and looters of poor for years should get out of the road of the progress of the poor and help them come up at least now by plucking the loopholes and encourage adoption of more transperency. Let them have mercy on the poor at least now.

    • With about 80% transaction in cash, 70% population living in villages and with a large section of the population being illeterate cashless economy is an utopian thought.Moreover many villages in the East and North East there is no existence of commercial banks.

      • Illiterate? Know somethibg about POS machines? Also, when an illiterate goes to bank and haa to withdraw money, they have to fill atleast forms. Many people cannot, but does that mean people don’t withdraw money from their account? ATM started while 100% people were literate? Don’t tell me only literate can use ATM’s. It’s about starting to use it, things would eventuakly follow.

        Again, Kenya has shown remarkable growth as far as a less cash economy is concerned. For that matter, most of African states have, thanks to M-Pesa and airtel. Don’t tell me all are literate. Even Brazil, with a chunk of illiterate population has moved towards being less cash, and they are doing remarkably good.

        Everything seems utopian until it starts. Demonetization was utopian too, u think even BJP in power with less seats could have dared to take this?

        Everything has to start somewhere.

  24. ” you take out 85 percent blood from somebody’s body and then put five percent into it”
    By you are not taking out money from the economy – merely from people’s lockers and into banking system.. In fact you are doing a massive infusion of money into the economy..

    As for recycling cash – the business-person who is paying staffers 4 month advance salary is doing it with white money because he will be showing tha as a cash expense in his books.. And his employees will have to deposit it in banks, bringing it into the system.. That example shows the success rather than failure of the move..

    • Rs 14.5 lakh crore is in Rs 500 and Rs 1,000 notes.
      In one month govt can printed only 3000 crore rupees and printing starts from 2 month earlier before demonetization in 3 months you will be have new currency only 10000 crores. the locker part may than how long it willtake to reach this stage,may be 1 lakh-2lakh crore but rest 12 lakh crore is in market and rotate to develop economy. and what will be guarantee this new currency 100% will roate in market immediately. read the interview of economist interview completely In India it will create problem because more people are living in rurals where they dont use credit card/devit card/internet then how they will live there live.
      India have 24% illeterate rate today then how they will knowall this income tax/cashless transaction/banking system

      • Very nicely explained by Mr. Puneet.Those who are thumping the desk for Brazil have no idea about that country.With huge corruption and never ending drug problem the country is simply gasping for breath.Without literacy cashless economy has no meaning in India.How will they remember their PIN? Will they divulge the number to others?Moreover with a substantial unbanked area poor internet connectivity use of Debit/Credit Card appears to be an utopian thought.There is a saying look before you leap.

        • Wekl jan dhan is fir poor. Either we always stay in present state or do something big. Now everyone wud have rushed to bank to get debut card use account n free money from black money holders.

  25. With due respect to the author, he seems too much affected by the demonetization situation. On a different note, background of all the images showing a lavish place to live in. Who knows where from all the money came to decorate in such a way.

  26. On the day of announcement of demonetization, I had Rs 2.7 lakhs cash with me. My average monthly expenses for the family is Rs, 0.6 lakhs. After depositing all the money, I have drawn so far Rs. 30000, and found it sufficient so far. We are used to hold 5 to 50 times more cash, than we actually need and transact.
    The perceived problem of liquidity, based on money in circulation, will not lead us to logical discussion, and often forays into wilful conclusion.
    You cannot reliably estimate or guess the quantum of liquid cash required at national level.
    The SIMI may have problems for wages and working capital, may be due to poor planning, which may merit consideration.

    • You said that normally your family would spend Rs. 60,000 per month. After demonetization, you have spent only Rs. 30,000. This is 50% reduction in expenses. You expense is someone else’s income. So, when you reduced your expenses, it also means that you indirectly had a negative impact on somebody’s (could be multiple people too) income. Who, in-turn, would also reduce their expenses. This is recession!

      By the way, you have been lucky to draw Rs. 30,000 cash in the last month!

      • Rs. 30000 is for half month; hence no arithmetic issue. Intent of the posting is to highlight we are used to hold more money in stock, than we actually require. It is common Indian perception to hold even white money for meeting unforeseen expenses.
        At this rate, may be 10 percent of money in currency may be sufficient.
        Hence money in circulation cannot be an ideal criterion to discuss the quantum of notes.

      • So it mean that if I reduce my expense, it will reduce one’s income. It appears that savings is discouraged and spending is encouraged. Kind of western economy !!!!! If I’m not mistaken

    • my salary is transferred to my account, so withdrawal was the problem, but as he said its the long term consequences that will hit middle class unlike poor classes.

    • Yes, you’re 100% right n I agree with you. The writer himself is confused on usage of currency in lower denominations n bothered about beggars ! Thanks.

  27. To my understanding of this scenario, there is always a positive and a negative, advantages and disadvantages to every idea or action we take. Every person sees it differently and their views matter because they are important and unique. In this context also, with the ban of ₹500 and ₹1000 old notes, where on one hand there had been an attempt to reduce circulation of unnotified money in the market, make these unused and saved money deposit in the bank, and also positively forced poor people or the ones who do not hold bank account, to open their account and deposit their income which will not only help them in saving money but also the government to account it for tax and re evaluate for country’s economy; on the other hand it has created some difficult situation for everyone as stated in the article. In this situation with the loss of black money, there are high chances for people to again make an attempt to restore it. The shopkeepers for example who make sale with cash, they again won’t deposit in their bank account the full money earned by them resulting in them paying lower tax on one side and on the other restoring the non taxed money. If simultaneously it would have been made compulsory for shops or stores, even a small one, to use credit/depit cards to make sale, the chances for the above mentioned situation to occure would be less and the people would not all time run for atm to take cash out . Most shops refuse to take card nowadays for some obvious reasons and so daily needs of people have now become highly dependent on cash. With the availability of only ₹2000 notes in the atm is also making it difficult for ones who do not hold much money in their account are facing problems in taking out momey less than ₹2000.
    Its the time to think to club in more policies or rules to support the idea or the rules which has already been implanted in the system. Through these platform we all can interchange our views and try to improve existing situation and avoid future problem.

  28. If you take out 85 percent blood from somebody’s body and then put five percent into it, what will happen to that person? He will die. Similarly, when you take out 85 percent liquidity from the economy and slowly replace it by five percent, then the circulation of income goes down.

    bull shit reason….

    your facts are not clear, government is not hyjacking any ones money, you and so called garibs are allowed to use all the money they have, only do it with check so the now government can have an eye on every one and differentiate who is garib and who is honest…

    so using the above phare of taking 85% blood and person will die are all bullshit…

    • He was saying it for indian economy conditions, indian economic condition can be die with this decision.

      How the people of that country survive ,whose economic condition is weak or highly unstable?

      u are really don’t aware about indian market condition in current situation and the role of indian market in the indian economic and the role of country economic in people lives livelihood

  29. am not a great person !!! i just read the title and the first line of the article !!! u say modi is an idiot the poor are affect !! there are some if’s and but’s . but firstly the poor are more supportive than you scholars who have just participated and been an entrepreneur of some thing u just keep of talk u don’t bring any action u r there idle from independence what was the reform that u made Sir ??? It was in ur presence the dollar money raised from 10 to 70 rs. where did u keep ur scholar brain !
    now modi ji has made almost 75 percent of people in my area to use cards and forced my house maid to open an account do u think these elegant moves spark to an idiot who u defy u now see the circulation of FIVE HUNDREAD notes that much easily !!! this is the worst part ?? banks atms dispense much of 500 !!! but now the “antique” 100 rs notes have come into existence how?? i think u have to improve ur analysing skills i will read ur arcticle and add an one more comment !!

    • Okay, so if the higher denomination notes are being discourage in preference to cheques and the bank account, why did the Modi govt. bring out Rs 2000 note? You seem to be a literate person, can read English but a bit slow to understand reasons and logic given in the interview by Arun Kumar. Suggestion: Read this interview at least three or four times, your mind will open up.

      • You yourselves seem to have the habit of reading carefully selectively. You have not payed attention to the complete address made that day. The 2000 currency notes will not be printed unchecked. It’s for limited time and only for making the initial days of exchange more easy.

      • Had 2000 rs notes not been there, India would have faced a huge crisis… As of now the crowds have reduced… Things are getting back to normalcy..

        Rs.2000 gradually “fades” over time.. So any storage of it as cash will make it void soon

    • He was saying it for indian economy conditions, indian economic condition can be die with this decision.
      How the people of that country survive ,whose economic condition is weak or highly unstable?

      u are really don’t aware about indian retail market condition in current
      situation and the role of indian retail market in the indian economic and the
      role of country economic in people lives livelihood!

  30. Hasty and a very foolish step without considering it’s consiquences especially on unorganised sectors and common people. We were very much disturbed by the decision of the PM as it going to affect the very fabric of Indian economy which depends on liquid cash.
    . – Prof PC Narasimha Reddy

    • I don’t really understand y people are against the drive by PM. He gave chances to poor people to open bank accounts. He told to open it with zero balance and urged the people to do transactions through bank. No body listened to his thoughts and now u r blaming him for this step.

      • The author seems to be outdated. Blood is not taken it is preserved in bloodbank .
        is being used through cashless system and no money taken from any body. Who restricted you to do cashless transaction only people dont want to disclose their money face the problem. Think about othercountry where economy is running on cashless. Im worried how an author missed to these points. Appears this article is bias.

  31. Considering your age, I wish you live long enough to see the yourself being proved wrong. Your analysis is no doubt very accurate and thus your bias. But you have just neglected ‘n’ other factors in your analysis and ‘n’ other benefits, while solely focusing on numbers and economy nature.

    You are very much correct on your attempt and you are just like star trek Spock, very logical Vs people who have taken this judgement are like Captain Kirk and sometime go with their gut feeling.

    • Gut feeling !!! Seriously we are nt talkin about 2007 t20 world cup final.. We are talkin about lives of crores of people.. You need to take logic and facts into consideration..

    • Apart from your Star Trek knowledge what credentials do you have to challenge Prof. Arun Kumar. I hope decisions like these are not being made based on “gut feeling”. We are talking about livelihoods here not the next Star Trek movie.

      • All legendary revolutions looks foolish or even susidal in the beginning. The noblemen of the society are the critics. But then the such revolutions becomes legendary only when the outcome proves the critics wrong

    • You seem to be an ignorant middle class guy of Star Trek generation and have lost touch with the ground realities in India. Accountability of politician, bureaucrats, businessmen, police etc. is what can stop the generation of black wealth from black money. Read the interview carefully my boy, you will get the point.

      • And till that happens(the so called accountability) you suggest us to warm the chairs sitting on our assess.
        You seem to be of the generation of the habit of only warming chairs contemplating actions(or may be not even that) but taking none.

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