This Article is From Nov 10, 2016

Chaos Over Ban On Rs 500, Rs 1,000 Notes To Continue For Months

At 7.00 pm on November 8, I boarded a flight from Kolkata to Mumbai. When I landed at 9.30 pm, I found an unusually high number of missed calls and text and WhatsApp messages waiting for me. In the interim, unknown to me, the currency landscape had changed and the Prime Minister had announced the demonetisation of Rs 500 and Rs 1,000 notes. This was presented as a measure against black money.

The Trinamool Congress has been vocal and active on the black money issue and we are sure that the steps that have been announced - despite the propaganda and publicity blitz - will not serve any purpose in the long run. Here is one of the many Mamata Banerjee tweets on the subject: "I am from the grassroots. I have met people all day, heard their stories and felt their pain. Black money hoarders and the corrupt need to be punished, but why put the burden on commoners and the poor." 

When the BJP came to office, it promised to bring back slush funds kept in overseas accounts. At the minimum, it said, every Indian would be richer by Rs 15 lakh and the money that came home would fund infrastructure projects.

Little if any of that money has come in. The HSBC Swiss private banking accounts have 1,200-odd Indians holding Rs 25,000 crores. That alone is a huge quantum, and much of it is surely dubious money, earned in bribes or siphoned away. Are we closer to getting it back? And there is the issue of generation of black money - in real estate and election campaigns. Have long-term, structural reforms - including state funding of elections, which Trinamool has long advocated - been attempted or discussed? 

The BJP-led government has done none of this. Instead it has resorted to a gimmicky measure and withdrawn Rs 500 and Rs 1,000 notes and inconvenienced people. From young working class people, in the informal sector, to retired and aged folk who keep some cash with them - not huge amounts for bankers and tycoons, just a little, but quite a significant sum for the individuals concerned - have suffered. The government may pretend this will be over in a matter of days. My guess is it will take months and the confusion will extend to the summer of 2017.

Three examples that show the chaos caused and emphasised this implementation mess to me. These are three case studies of ordinary people my friends actually met: vendors and shopkeepers. Friends I have known for years. They have no reason to lie:

A medicine shop owner: "Our business is affected. People should have been given time. Seventy-two hours [the time given to medicine shops and hospitals to continue to accept Rs 500 and Rs 1,000 notes] is not enough. Just now I gave change for Rs 500 to one person but had to send back another customer because even we are short of change."

A flower-seller in a south Kolkata market: "Every day some 300 vehicles transact business here in our market, but today only 100 came. We had the flowers for today, but how will we buy them tomorrow? We need a constant cash flow."

A meat-seller in Park Circus market, Kolkata: "This has hurt our business. We have had to turn away customers. Everyone has big currency notes but they are useless. It is not practical to use notes of Rs 100...The whole market is affected."

The government has now decided to introduce new Rs 500 currency notes as well as Rs 2,000 notes. Yes, there has been a short-term clean up as current notes that cannot be explained by the income sources of those who hold them have become useless. 

But what of the future? Why will cash transactions and bribe-giving and taking and election spending of a dodgy nature simply not move to the new Rs 500 and Rs 2,000 notes? Will the government then demonetise those notes as well, and will this endless cycle continue? The government has tacked the symptom but is refusing to address the underlying disease.

The fact is we are doing little to tackle the creation of black money. One of the reasons Trinamool has been consistent - in fact, more consistent than both the BJP and the Congress - in backing a Goods and Services Tax (GST) is because it creates an audit trail, makes under-invoicing and tax avoidance that much more difficult, and helps clean up the economy.

We need similar steps in real estate transactions and in the structuring of a genuine real estate market where every landowner - including a humble farmer - gets a fair and transparent price against a clear land title, and straight into a bank account. A similar project is needed for election funding, where again cash is regrettably common.

From the common person on the street, though, there are no cheers. Only jeers.

Derek O'Brien is leader, parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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