Demonetisation & Jugaad


By Proloy Bagchi

Notwithstanding the never ending long queues of the common man for that elusive cash in hand and the Opposition MPs raising the pitch of their protests, Modi’s demonetisation of high value currency notes also exposes the rather large and bloated underbelly of our society. The shenanigans of this section of Indians has put us to shame in front of the world, which has been watching the developments with interest. Every country, as indeed every Indian, is aware of how our economy has had to contend with a parallel economy of formidable proportions. But its ramifications as they unfold make most wonder whether we are crooks and have no patriotic feelings.

As Modi’s surprise announcement about demonetisation came late evening, people thought they would take it easy and look for ways out to get most of their unaccounted cash, if any, disposed of some way or the other next day but mostly in a regular manner.  The demonetisation would not yield much as an opportunity had already been given to all the cash hoarders to declare their holdings on payment of minimal tax, penalty and surcharge amounting to a total of 45% under the Income Disclosure Scheme 2016 (IDS) that was run for as many as three months from 1st June to 30th September 2016.

The Scheme yielded more than Rs. 65000 crore (Rs. 650 billion, around $95 billon), by itself an astronomical sum. But for the size of the unaccounted wealth that was estimated to be a mindboggling sum of around 9 lakh crore (Rs. 90000 billion, approximately $1500 billion) this was considered chicken feed. And as the Prime Minister had warned earlier that further action would follow if the outcome of the IDS was not satisfactory action to further squeeze out unaccounted cash was expected.

As the high value currency notes were to scrapped by the 8th midnight, the hoarders tried most of the tricks that they could possibly use. They made a beeline for the jewellers and unloaded the cash there and were prepared to get in return whatever was offered. The shopping hours, at least for jewellers, got extended and the business during those hours was reported to be of Rs. 100 crores in Bhopal alone. Many of the jewellers are going to have to answer for their indiscretions in course of time.

Apart from buying jewellery, the hoarders tried to buy railway tickets to be cancelled later. Enormous number of these for all air-conditioned classes were bought with the intention of cancelling them eventually. The government had to block that route of changing the colour of the ill-gotten money. That Indian attribute of “jugaad” was in full play.

A day later the black money barons put all their human resources for exchanging their stack of cash at the bank counters. That the exchanged amount would only be of a paltry Rs. 4000/- (later raised to 4500/- and eventually reduced to Rs. 2000/-) did not really matter. Initially only the same representative was asked to join the queue in a bank repeatedly with different IDs. When the authorities intervened to check this ploy multiple representatives were mobilised to exchange the cash at different locations. For all their labours the representatives got a petty commission but they were clogging the banks to the detriment of genuine exchangers whose wait at the banks was avoidably lengthened.

The authorities were apparently watching the proceedings with a keen eye. When it was realised that the same set of men were exchanging cash at different times in the same bank or at different banks they introduced the marking of the fingers with indelible ink that is generally used during elections. As even then some misuse of the facility was noticed the authorities reduced the amount dispensed for exchange to only Rs. 2000/-. Ingenious as all crooks are, even this they tried to circumvent. Then the practice of exchanging only in the branch where the depositor had his account was introduced to further bar the hoarders from attempts to whiten their money.

It has been a very difficult and strenuous time for people all over the country. As somebody remarked, the nation was seemingly waiting in long, serpentine queues to exchange their defunct cash in order to run their households, businesses or whatever. Here too the hoarders, who are nothing but anti-socials increased the pain of the general public by sending their hired hands.

Likewise, it has been a tough time for the bankers. A few deaths took place in banks too due to over-strain. Nonetheless, they did a tremendous job. Not only did they have to contend with long line of money exchangers, they had to deal with enormous amounts of cash which in many cases were mixed with fake Indian currency. The fake ones, especially those printed in Pakistan, are difficult to detect as it had made special efforts to set up a press that was capable of introducing almost the same security features. The Bank had, therefore, to be careful, keeping a sharp eye while receiving cash that was tendered over the counter. It was kind of a game of matching of wits virtually at every step and checkmating the fraudsters and frustrating their pernicious efforts to cheat the government.

Not only did they try to recover whatever was possible from their piles of cash that had become trash, they even tried to save themselves from the arms of the law. They not only burned them, but also dumped in rivers and drains huge numbers of currency notes of high denominations that they were left holding in their offices, business sites or residences. A whole truck-load of currency was reported to have been set fire to. The rot has seeped in so deep that a large number of seizures were made in small towns from Gujarat to Bihar and from Punjab to Tamil Nadu. Many seizures were effected while the cash was being transported by these crooks to places that they thought were convenient for their illicit purposes.

No reports of our “netas” (political leaders), the repositories of substantial amounts of black money, have, however, surfaced so far except one from Bhopal where it was reported that they were browbeating cooperative banks to provide them with back-dated FDRs. Cooperative banks still operate manually and the records can be easily fudged

But the unscrupulous man in business or industry is, kind of, never-say-die person.  Hence, only a small proportion of dirty cash is likely to be exposed, brought over ground and a lot will remain underground as liquid cash. A far greater proportion has been invested in fixed assets like land, real estate, etc. But Modi is not relenting; he is going for broke after the cheats and the unscrupulous. Already, raids have been conducted on jewellers – their shops and residences – and he has announced a drive against “benami” property, i.e. property held against the name of a fictitious person where most of the black money has been invested.

If not anything else, the proceedings show how rich the country is, only the riches have been cornered by a few crooks. The Mughal raiders, the Europeans, the British and now the crooked politician and businessmen have looted it. Modi has taken a step, which might electorally backfire on him.—INFA

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