My Take on Present Demonetization!!

My friends know that I am supporter of PM Narendra Modi and his initiatives, and I have done lot of arguments in support of him. But as a responsible finance student and professional I feel its my duty to write my thoughts on the present crisis.

Its been almost 6 days since PM announced roll back of Rs 500 and Rs 1000 currency notes by removing the legal tendency of the notes. The instant reaction in social media including facebook, was overwhelmingly applauding the decision of the Government.

Yes, the decision is a bold one and much needed at this time when you can expect large amount of counterfeit notes of Rs 1000 and Rs 500 getting exported from our neighbors because of the present position India has taken against them. Unless the present notes are flushed out of the system, the counterfeit menace cannot be solved to a large extent.

Keeping that in mind, however the sudden announcement has given much discomfort to people who are travelling, admitted in hospitals etc. Yes, unless there is a surprise, the whole purpose would have destroyed. But I feel Government should have given time for using the utility services up to November 30th than extending the dates twice(At present the time limit is November 24th, I am sure it would get extended mostly up to November 30th). This was rightly said by Dr.T.M Thomas Isaac, the finance minister of Kerala.That would have reduced the queues in front of Banks and ATM to a large extend. However immediate curb on accepting notes by Jewellery and other high risk sectors where people usually convert their unaccounted money is well appreciated.

Even though I am not an economist or an expert on finance, I feel that Government and RBI should have started infusing new Rs 100/50/20/10 notes to the system since the plan to demonetization was taken. That would have solved the issue of availability of liquid notes to convert the high value notes. But I believe in RBI, which is one the best Central banks of the world, remember we were the only country that survived the waves of economic breakdown in 2008 because of stringent involvement of RBI in credit and liquidity. I believe necessary counter measures to solve the present crisis would be taken by RBI.

The drive to cleanup the domestic black money hoarders is important, as it would lead to reduction in inflation in wholesale market, retail markets, real estate and also reduction in Interest Rate. Yes these are all long term benefits which will be seen in coming months. That is why people are cooperating so much even though they are been made to wait for hours in Queue. The appeal to politicians is that the common man understands how important the clean up drive is and it would be benefiting in the future, so the Hallabulla made by you would give you a short term TRP but a long term loss.

And personally I feel anyone who deposited money in bank will be under the system, because it is to be understood bankers are entering the details of depositors in a separate software, which is accessible to all investigating agencies, and they can every well scrutinize the depositors to understand whether they are been used by hawala or black money hoader/holders.

Lets all come together to support to initiative and do our part to make things a little easy for others, those who have cards please use them, and also help others.

The present situation is that everyone is agreeing to disagree on the the demonetization, agreeing Yes actions has to be taken, disagreeing Yes better planning and resources should have been used in the first week itself. My appeal to the Government and PM is that Your Credibility depends on how you put your words into action, the domestic black money mess up will be cleaned to a large extent, the major ones are still out in Swiss, and other tax haven countries.We all know that our PM is ambitious politically too, so your survival also depends on concrete steps taken against black money holders in tax haven countries. Ultimately its a democracy.

Jai Hind.