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Modi is riding a NOTE-CHANGE tiger

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  Never before has India faced  such  a  dramatic change where 86% of all currency  notes  would  be withdrawn  suddenly in a country of  130 crores.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 .

  1. 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 ..
  2. 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 .
  3. 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
  4. 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.

 

  1. 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.

 

  1. 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.
  2. 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 ;

  1. 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.
  2. 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 .
  3. 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

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