Demonetisation came on the heels of voluntary disclosure scheme which unearthed Rs 65 thousand crores. Credit also goes to banks for the way they
handled immense pressure of work in dealing with unprecedented numbers.
To say that the move is bold and
daring sounds like an understatement. As at the end of last fiscal year the number of such currency notes in
circulation was 22 trillion and their value, over Rs 14 lakh crores.
Although notes can be deposited till 31 December, there was huge rush and panic everywhere when the banks opened after two days because, people needed small denomination notes for day to day expenses. To make it worse, ATMs were not calibrated for the new Rs 2000 denomination notes and
number of Rs 100 notes were soon
exhausted. A week on the situation
continues to be grim. It is a war like
situation and requires unorthodox ways like longer public transaction hours and recall of retired bank cashiers, to deal with the rush and panic.
Banks should feel happy that their deposits will go up by Rs 14 lakh crores and the Income Tax Department will see huge spike in tax collection.
Compared to 42 per cent in USA, our tax base is just about 2 per cent of the population. Their effective rate, federal and state tax combined is 40 per cent. With innumerable exemptions and deductions ours may be just about 20 per cent. The Finance Minister should also be happy for the scope it has created for him to provide for some ambitious schemes in the next budget. We must create jobs in very large number, something that as even Hon’ble President has pointed out, is not happening.
But bigger challenge is to put in place a system to mitigate the
sufferings of the micro entrepreneurs, the artisans, marginal farmers, rural laborers and casual laborers who depend on cash economy. Abrupt disruption of this age old system has left these poor people high and dry. Even with all self-help groups, Bank Mitras, cooperative societies, banks branches and post offices we may not be able to support 37 crore workers earning less than Rs 1.5 lakhs, annually with their daily requirements of micro credit.
(The writer is senior columnist)