India lost between US$23.7-$27.3 billion annually in illicit financial flows (IFFs) during 2002-2006, making it one of the top exporters of such capital. —The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, Global Financial Integrity http://www.gfintegrity.org/wp-content/uploads/2014/02/GFI_India.pdf
On the eve when everyone was curious about the results of the US Presidential elections, the Government in Bharat led by Prime Minister Shri Narendra Modi gave a shocker by scrapping the high denomination notes of Rs 500 and Rs 1,000. There are usual whimpering voices who are mumbling in the name of poor and farmers. The reality is that the Modi led Government is delivering what it is voted for, if one sees this as a process. Many tend to see this as a sudden and out of turn decision. There are solid reasons to believe that it is a well articulated policy decision that was on the offing for quite some time.
This Government assumed power on the background of fierce campaign against corrupt system and practices. The overwhelming mandate was meant for changing the system and not sustaining it. The day after this Government took over it formed the Special Investigation Team (SIT) to curb black money, as expected by the Supreme Court from the previous Government. Bringing transparency in allotting contracts and auctioning resources, digital infrastructure was created. International agreements and communication was established to curb the routes known for parking the black money. Internally, financial inclusion infrastructure was created through schemes like the Jan Dhan Yojana, linking it to Aadhar and Direct Money Transfer. The digital infrastructure was given the major fillip to make the e-transactions smoother. A window was opened for people to declare their undisclosed income and once tax declaration was made, though less than the expected numbers, this disruptive decision was executed with precision.
If someone believes that that it was out of blue they are not missing the underlying process involved in this execution. The new high denomination notes cannot be printed overnight. Neither the high level preparations for executing such risk taking decision in electoral terms can be taken with mere Cabinet level deliberations. So the stakeholders were involved in the process but like many other decisions timing and style was perfect catching the black money holders off- guard. The Government also should be complemented for going for the bold and beautiful move on the verge of forthcoming Assembly elections, which only people with clear agenda can afford to do.
This is a testing time for us not only as a Government system but also as nation. It will certainly put society at large in stress and chaos as we are used to usage of those notes over a period of time. Many people are still out of banking system, especially with plastic currency or e-transaction mode, so enabling them though proper training will require gigantic effort. More importantly, as Kautilya rightly said, corruption is a mindset and it has crippled in our mindsets over a period of time, changing that value system is the real challenge. Some people have rightly expressed reservations about the new high denomination notes amounting to the value of Rs 2,000. Hope that Government creates the right system to monitor the printing and usage of this currency. It is certainly a big blow to the counterfeit currency business supporting the terror industry. Creating systems and nurturing values so that some people do not fall in the trap of generating dirt in the economy is the challenge.
Lastly, unless the big ticket electoral reforms are promulgated, generation and circulation of unaccounted money at the origin cannot be controlled. Recently, Prime Minister while interacting with journalists in a Deepawali get together called for a serious dialogue on simultaneous elections. Unless we deliberate such radical proposition along with State funding for political parties, elections, the very basis of democracy, will continue to remain as the spinning factor for black money. This may require another churning at the societal level, especially among the
intellectuals. If they accept that this Government is there to deliver the mandate and stop diverting national
discourse in an intolerant fashion, this daring decision can be a turning point for the rejuvenated Bharat.