If you have a 500 or a 1000 Rs. note, then frame it. It depicts an end of an era. The sudden, surprising and a definitely bold move of the government to ban denominations of Rs.500 and Rs.1000, has left all in a huge panic. With banks and ATMs closed for 2 days, people are in a state of helplessness. Any change/revolution needs a bit of sacrifice. How useful will this sacrifice be for India and our fight against corruption?
A huge and costly dent in black money
1. The most prominent effect would be seen on people having money stored in form of currency notes. Most of the unaccounted money (Black Money) is hidden in denomination of 500 and 1000. This move will render that money useless.
2. This move will enormously affect the funding of terrorist organizations and arms dealers as they can never be able to legalize the currency notes they possess.
3. This would also remove a large chunk of counterfeit currency from circulation.
4. Many would cite that even earlier such a move was tried, yet black money prevailed. However, this time since the amount of black money is huge; the dent in it will also be huge.
5. Due to inability to use the entire black money or convert it to legal money in such a short time of 50 days, will lead to reduction in prices of many commodities. Black money has been prominent in increasing inflation as cash transaction is the most prevalent form of transaction in India.
6. Since Income Tax department and banks will report large transaction and deposits into a bank account, transferring money in others name would not be possible. This will tighten the noose on illegal and benami assets.
7. If any person possessing Black money decides to deposit money in his/her account and pay the taxes which he/she might have avoided, these taxes will benefit the nation itself.
8. The newer currency notes of denomination 500 and 2000 will be much more secure and difficult to fake.
Corruption – Just changing clothes
1. Corruption can never be uprooted completely by such measures as it is a tendency of humans and only a change within ourselves can be a solution.
2. The only effect this move will have is the inconvenience it is causing citizens and some small time corrupt people who might have cash stored away. The big fish will escape with small bruises.
3. Even though the notes are banned, there are host of other measures to maintain unaccounted and illegal assets.
4. The government will be introducing new 500 Rs and 2000Rs. Notes. This is pointless as people will again get chance to have unaccounted money because of the higher denomination.
5. Though some may not be able to use the huge stack of money they have stored away, most of them have their money in form of gold, etc. This will not be affected at all.
6. Since many will be using the unaccounted money to buy stuff like gold, jewelry, precious stones, etc. under fake names, the prices of these commodities will increase a lot. This will again be an inconvenience to common citizens as these things will get out of their reach.
7. Many having black money have already kept it in tax havens, etc. This is a huge amount compared the amount we might find in India or as unaccounted cash money with corrupt people. So as such it will not bring back the unaccounted wealth stored outside.
8. The 50 days’ time given for currency conversion is more than enough for tax avoiders to come with a scheme to make their other arrangements for their money.
It is a start. There can be no panacea for human tendency to be greedy and corrupt, but there can be measures to keep such people under control. Though banning currency notes may not be a long term solution, but in the short term it can have a huge effect as the stored caches will be rendered useless. It might not be a huge victory but it is a victory nonetheless. This measure when supported by other better policies and good governance will surely tighten the noose on corruption. So, it is important to support this venture and hail it as positive step towards corruption free India.
Ban 500, 1000 notes – Corruption Uprooted or just changing clothes!