In #india, #modi's government decision to demonetize 500 & 1000 note by 8th November Midnight gave the whole nation a massive jolt. The objective is to tackle #corruption by tax evasion and wipe out the parallel economy of black money from the country. It is also hoped it will deal with the menace of across the border terrorism in the form of fake currency by putting a full stop to currency infiltration.
The notes in circulation are to be deposited in the banks and post offices of the country by December 31st. Meanwhile, a few concessions are allowed for the next few days for services like government hospitals, public transport, and key utilities.
"At one end we are leading in economic growth as a nation, and on the other hand, we are ranked 100 in global corruption rankings," Prime Minister Modi said in this address to the nation.
The Chaos that emerged by demonetizing 500 & 1000 notes
There is a general feeling among the people that sufficient time was needed to adjust to this sudden scrapping of 500 & 1000 notes. For a nation where black money, tax evasion, and overall corruption has lurked into everyday life, this move was criticized by many. The general public swamped ATMs and petrol pumps with all banks being declared closed on the day after the announcement..
When the banks re-opened, massive crowds were witnessed trying to exchange and deposit demonetized 500 & 1000 notes to meet the daily needs of the family. Post Offices across the nation where the currency can be exchanged showed similar chaos. The shops and smaller businesses are witnessing a total shutdown due to lack of cash on the market. The impact of Prime Minister Modi's decision over the legitimate cash-based rural economy is also huge.
A brilliant yet inherently flawed decision to fight corruption
For a vast nation like India, it is only a matter of time before black money, and tax evasion again makes inroads in the economy. One-time policy measures won't wipe out the deep rooted corruption from the country's mindset. Until the time the sources of cash generation which lead to black money are curbed, this one-time exercise won't serve the purpose on a long term basis.
The local businesses will witness a downslide in business for the next few months due to lack of circulation cash. Above all, will the political and social system of this country thrive and emerge unharmed from such a situation? Will this decision of the Modi government attain it's objective? Is it sufficient to curb the fake currency infiltration from across the border?
Let us see.