My Opinion – ‘Demonetization’ Unanswered Questions

Background

Now that we have survived the economic shock of Demonetization, it is about time to ask some serious unanswered questions. Government must come up with the official answers. I must put a disclaimer here that I am a supporter of PM Modi. I admire his dedication, hard working nature and decisiveness. The reasons why we chose him as our Prime Minister. That’s why I consider it our duty to critically analyze every step PM Modi’s government takes. For long time we have been hearing wishy-washy answers from some facets of government like FM Arun Jaitley and some BJP spokespersons. I believe, if PM Modi addressed the nation on 8th of November about Demonetization, then it is his duty to give answers raised about it as well. I must also clearly state that the answers given so far are not convincing and adequate.

Readers will agree with me. Whichever answers or clarifications have been shown in the media for demonetization, they have have following prefixes

1. According to our sources in the government
2. A finance ministry official told us
3. BJP’s spokesperson said
4. According to an estimate

All these answers cannot be considered official in any scientific way. There has to be a public document available with all information. If people have to file RTI to get answers then it isn’t transparent governance. Now, before asking any questions let me put my criteria of an accurate official answer

1. Answer must be officially given by respective authority (ideally by PM, because he initialized the whole process)
2. Answer must be given through publicly available documents
3. Numbers and analysis must be backed by official documents which should be made publicly available
4. No portion of answer should be blacked out under the name of secrecy or national security
5. Government is technically not allowed to give ‘no answer’ in a democracy
6. In short answer should be scientifically proven and accepted

I believe these criteria are just and logical. We live in a democracy where the government must answerable to people. With this background, let me begin putting forward some serious questions on demonetization.

Q 1. How much black money was caught/removed by demonetization?

First and foremost, on 8th November, PM Modi said in his his speech that demonetization is going to happen to remove black money from the system. So, naturally the first logical question to be asked here is how much black money was caught or removed from the system? First of all, did government know exactly what percentage of the cash currency in the system was black money? If not then how can one eliminate something if you don’t know the quantity.

I don’t expect the sweeping statement that ‘all black money was removed’ because then we are living a loophole in the system. If we did not know how much black money was in circulation, what is the guarantee that the government will know how much black money will be in the system some years in future? In that case are we supposed to do demonetization again and again like a regular feature? Obviously not! So, the government must find out a way to tell us how much black money was in circulation and how much of it got removed or caught.

Q 2. How much money was deposited into banks during demonetization?

This is the most pertinent question asked regarding demonetization. How much money was deposited into private and public banks? Also, as a supplement to this question, how much tax was paid in cash during demonetization? We have so many numbers in the media but none of them follows criteria of official answer. This question is also important because it was said by government that more than 86% of the total transactions in India are made by cash. Hence, logically speaking government must know exactly how much cash was distributed by the government to the public till now.

I read in the news papers that government doesn’t know exactly how cash is printed till now. But again I am asking a scientific question, how much cash was printed? Strictly speaking cash deposited into banks in old currency should be more than or equal to the cash distributed by government. In today’s world every transaction goes through computer system. So, why doesn’t government come up with list of banks and amount of cash deposited in the banks during demonetization period? Is it too much to ask?

Also, there were some accusations made on the government regarding secrecy of the planning of demonetization. So, as a sub question, how much money was deposited into banks at least 3 months prior to demonetization? Answer to this question will also help debunking conspiracy theories. According to me asking answers to these questions is completely legitimate. There is no reason why government should refuse to answer.

Q 3. What about corrupt banks and bankers?

During the exercise of demonetization, lots cases of corrupt banks and bankers emerged onto the surface. Many cases were filed against the branch managers and accountants of variety of banks across the country. Just like any other citizen I also felt good when these corrupt bankers were caught. But, as the time passed by, I started realizing suddenly there is a stunning silence about these cases. It raises suspicions on the intent of government on two levels.

First, if corrupt bankers were not sent behind the bars what is our law-enforcement and judiciary system doing? If they are sent behind the bars which measures and steps are taken by the government to prevent these kind of situations in the future? How is government working to close these loopholes?

Another question that comes to mind. Normally if a company does anything legally wrong financially, a case is filed against it. When officials of the company are found guilty, company is supposed to pay fines or in worst case the whole company is shut down. So, after corrupt bankers are caught, what actions have been taken against these banks? How much fine was collected as a result of misconduct by the bankers? This is also an unanswered question.

Q 3. What about rogue RBI officials?

We all know that some the RBI officials were caught in corruption during demonetization. What happened to those corrupt officials? Can government come up with names and the papers related to their cases which are publicly available?

Q 4. What about money launderers?

Just like bankers and RBI officials, we heard/read and watched about money launderers being caught with old and new currencies. Can government come up with names and money seized from them (old and new currency)? If government comes up with names of guilty people and the money seized it will be a major step making this government transparent as promised by PM Modi.

Whenever a trench is dug there will be a pile of soil. So, whatever money seized from these money launderers, cannot come to them in thin air! Someone who has access to the new currency in huge amount must have helped them. So, it is obligation of the government to catch those who helped these money launderers. In case of demonetization, only people who had access to such huge amounts of new currency were bankers and Post officials. What happened to those corrupt ones? There is no official statement and a document with numbers from the government which has whole list of money launderers and whole trails of the corrupt bankers and post officials (if any) connected to them.

Q 5. How much illegal money was seized and what happened to that money?

Regarding this question, all the answers given so far have the prefixes I mentioned above. Hence, they can’t be called scientifically correct official answers, because they can’t be verified and correlated. Hence, I urge government to come up with official paper with total amount of the illegal money seized. Also, just throwing a number on the face will not be considered scientifically correct answer, because there must be an official paper trail to prove the validity of the numbers. If the seized money went back to government accounts, under what name that money will be used for public. Has government made any provisions in this direction?

Also, how much of the illegal money was in counterfeit currency? There should be a clear documented answer to this question. Regarding counterfeit currency, was government able to track down the ways by which it enters our country? I am sure government must have found out those ways and the people who facilitated that currency to enter our country. So, I think it is just to ask this question how much illegal money was seized during demonetization?

Q 6. How did ATM’s started working properly just after demonetization?

ATM’s were the stars of the TV’s during demonetization. Nothing was more showed and talked about more than ATM’s during demonetization. We saw long queues in front of ATM’s awaiting to withdraw money. I can understand that during first few days of demonetization, there was shortage of the currency. Also, there was question of re-calibrating of the machines for new notes. I can also understand restrictions on the amount of money that can be withdrawn during demonetization. It is everyone’s experience that most of the ATM’s in their region were either closed or were provided with insufficient currency.

But, it was a big surprise that suddenly 2-3 days before demonetization period ended, all of a sudden all ATM’s started working just fine! All banks had sufficient cash to distribute. Some people may criticize me for asking this question. I also understand economy that the demand had gone down and supply had gone up. But my question is not why my question is how? I suspect government or rather RBI did not print or distribute enough cash during this period. So to debunk my theory the best answer will be, if the government can give numbers or amount of cash printed during each day.

If there will be an official answer to this question and if government comes up with a document where there will be an official list of total cash printed on each day during demonetization, my suspicions will be proven wrong. I will be happier than anybody else, because I have mentioned earlier that I am a fan of PM Modi and it will be glad to see this government performing its duty in transparent way.

Q 7. Why the goal post got shifted for demonetization exercise?

This is one serious question rather reservation I have against the whole demonetization exercise. I was totally convinced on 8th November and I am still convinced that demonetization has helped curbing the black money (even though there are no official figures given). But, towards the end of the year 2016 all of a sudden the whole new phenomenon call ‘cashless society’ was floated.

According to me it was somewhat forced transition that people had to go through. Common people started asking where did this come from? Waiting in the queues for money is one thing and using cash less transactions for daily purposes in another. Even though many people are okay with it I am not. Because, not all card translations are free. There are taxes that one has to pay while using a card for payment. Why should common people bear that? Why didn’t government give some time for the people who had never used card or phone applications to pay someone before, to understand how the whole cashless system work?

I lived in USA for more than 6 years and during that time I never carried more than 10-20 $ cash in my pocket wherever I went. But, was it or rather is it the same case with India? Of course not. Just because I am comfortable with payments through apps, cards and online banking; it doesn’t mean that everyone else must be comfortable with it. Anyone who thinks I am right please ask your parent and grandparents who are still struggling with cashless systems of payments.

So my question is why the goal post was shifted from removing black money from system to being a cashless economy? I know there will be people saying that, cashless economy means lesser chances of black money. But this will be true for the future. What about now? Also, why is forced on someone? I will call it forced because there news that banks are going to tax cash transactions. Is that good for a free country? A person must be allowed to do transaction with his legal money as he wants. It is the duty of the government to find out if there is some foul play.

I think there could have been another campaign just like Swachh Bharat to promote and make people voluntarily choose cashless payments rather that changing the goal post of demonetization.

Q 8. When can we expect government to come up with full and final numbers regarding demonetization?

I think the question doesn’t need explanation. I just want to mention here that in good democracies, government comes up with papers documents and sometimes whole reports/commissions whenever something big happens in the country. So when can we expect the government to come up with full and final numbers regarding demonetization? Or Can we really expect that? which is the undertone question.

Now, that I have posted my questions, I don’t expect the government will answer them. I am not an eminent person to be taken serious notice of. But, I am certainly hoping that people who admire PM Modi and want him succeed (because I think he is the best person right now to bring our country on the right track) will think about these questions. May be I am wrong or may be I am less informed, but if there are official answers to any of these question available I will be happier than anybody else. I am a well wisher of this government, hence I have more responsibility towards it. Thank you.

 

P.S.

After the Demonetization, we were assured by the government that it will stop terrorism and stone pelting in Kashmir. We were assured that, demonetization has broken the backbone of separatists. Looking at the current situation, it doesn’t seem like happening on the ground. Stone pelters are creating ruckus in the state, the separatists are free to give hate speech. The reality on the ground is that Demonetization has failed to eliminate terrorism and stone pelting in Kashmir. So I would like to ask this question to the government as well, “what happened to these promises?”