Dr P Pullarao
On November 9, 2016, every Indian suddenly found himself without any money, no access to banks and had become totally powerless by the single act of government. This was un-precedented in peacetime in the world. Every single Indian faced a challenge from his government . On November 8, 2016, Narendra Modi dramatically announced that 500 and 100 rupee notes were being cancelled. He said this will control black money, remove counterfeit currency and stop funding of terrorists from Pakistan . These are great objectives. Immediately, most political parties said they supported it. No politician ( except Mamta Banerjee ) wanted to say that Note-Change was bad as they feared public would think they are corrupt. Never before has India faced such a dramatic change where 86% of all currency notes would be withdrawn suddenly in a country of 130 crores.
In 1812, Napoleon, the great all-powerful king of France suddenly got angry with Russia for not agreeing with him on England-related issues and launched a war in June, 1812 on Russia. Napoleon was defeated and he was thrown out of France forever.. Even 200 years after the defeat, no one can say why a clever man like Napoleon destroyed himself by a foolish war with Russia with whom France had no territorial boundaries.
In 1941, just when it looked like Hitler will defeat Britain and Europe , suddenly he decided to attack Russia ,with whom he had a Peace treaty . By attacking Russia, Hitler lost the war . Till now, no one knows why Hitler attacked Russia and lost everything .
From both these incidents, one can say that clever strong men are never defeated by their enemies but by themselves .Modi jumped onto a tiger and now cannot get off. Either he keeps riding or the tiger will get at him .
In very simple terms, some facts about Note-Change .
- In the last 200 years, no major country has ever had Note-Change or Demonetization like India does now. Neither USA ,England or any other developed country ever did this . There might have been some Note-Changes during war but never in peacetime . Does this mean that other countries and their great economists did not have brains ? Today, the most counterfeited currency is the dollar. The terrorists of Afghanistan, Pakistan, Iraq and elsewhere deal only in US dollars. The entire drug lords of South America have hundreds of billions of dollars in US dollars. The US can simply hurt them by cancelling the dollar. But the USA does not do that since that is dangerous and not a solution. The USA knows that confidence in the Dollar is supreme national interest ..
- No economist in history ever advocated such NOTE-CHANGE as India now faces . Note change is like saying your illness will go away if you change your clothes. Earlier black money was kept in 1000 rupee notes. Now it will be kept in 2000 rupee notes. Treat the disease, not change your clothes .
- Government said that by changing notes, Pakistan cannot send counterfeit notes to India. Just because India issued new notes, it cannot stop Pakistan from making counterfeit notes. That is totally wrong. Pakistan has made a nuclear bomb just like India. If Pakistan can make nuclear bombs, it can easily make any kind of currency India makes. So Pakistan will make counterfeit currency again and again
- Government also said that now Indian terrorists cannot get counterfeit or Black-money from Pakistan to create trouble in India. . This is also wrong. Just yesterday, 2 terrorists in Kashmir were killed and they had the new 2000 Rs notes . Our enemies need not spend huge sums to finance terrorists in India. Small sums are enough. Right now, it is winter in Kashmir and terrorism always goes down in winter . We have to wait till April to see whether Modi is right. War cannot be stopped by Note-Change.
- Govt. also said that by Note-Change ,only rich Indians will suffer and the poor will gain. But Modi forgets that nearly 40 % of Indian population is Middle Class. Most middle classes save money in cash . Government has shown no concern and put 130 crore people to hardship and worry. Rich people with huge black-money do not keep it under their mattresses. They invest the money immediately in money-lending, films, real estate , foreign currencies or buy land . Those who think that black money vanishes by Note-Change are ignorant of economics.
- The most serious sufferers are workers, farmers, daily wagers, rickshaw pullers, taxi and auto drivers , hotel workers ,widows, middle class people and those who save a little money outside banks. Many old people keep cash to avoid giving it to their children.
- Modi also said that now banks will get huge deposit with which they can invest in the country. India has the highest savings rate in the world. If banks get huge deposits, they will give it to big people. Everyone knows, that banks now face lakhs of crores of bad debts. Modi must remember that these huge deposits will go into the pockets of rich people like Vijay Mallya who will vanish.
Consequences of Note-Change ;
- The common man will never have confidence in the Indian rupee again . The Rupee has existed for hundreds of years. Govt. has made it into a worthless piece of paper. The Rupee was there even before the American dollar. Now they know that Modi or anyone can just make their money worthless. The prestige of Indian rupee across the world is lower.
- The suffering of people of every class from November 9, 2016 is difficult to describe. Tears, begging and pleadings did not help. Crores of people have stood in queues for hours everyday to get money. They have to go everyday. Their own money in banks has been made zero by the government .
- People suffer without money and work. Since there is no money, there is no employment. Crores of people are out of work. Laborers are sitting idle. Every hard working person is now a beggar without work. It is like a nuclear bomb has exploded and life ended. The secret miseries of people are not known because everything cannot be known. But every single person out of 130 crores has been affected .
Dr P Pulla Rao is a Socio-political and Economic analyst