Demonetisation Archives - Lokmarg

‘₹2000-Note Withdrawal Will Pinch Only Hoarders, Not Commoners’

By LokMarg 6th June 2023

Nitin Khanna, a Chartered Accountant based in Lucknow, says the current currency withdrawal is soft demonetisation, not comparable to the 2016 exercise. His views:

Withdrawal of high-denomination notes is a routine exercise the world over and is often used as a measure to curtail black marketing and bring the hoarded currency into formal circulation. We all remember how it created panic in 2016 when both ₹1000 and ₹500 notes were withdrawn, causing much distress to common people. This time, however, the issue is different. Allow me to explain.

First, this time the withdrawal is a soft demonetization process. There is four-month window to exchange the notes which gives ample buffer and breathing space for the exchange. More important, ₹2000 comprises only 10.8 per cent of total printed currency in circulation as the printing of this highest-value legal tender was stopped in 2018-19. So, considering the long period for exchange and the low volume of notes soften the process.

Besides, the poor masses hardly keep such high-value currency notes in hand while the middle class has them in small volumes. So, the only section which may feel the pinch is the hoarders of large amount of cash for transactions outside the ambit of taxation. Thus in the end it will only benefit our formal finance sector.

ALSO READ: No Need To Rush For Exchange, Advises RBI

The cash component is used mostly for high-value real estate transaction or in sale and purchase of precious metal and stones. This is the reason, that there was a sudden spurt in real estate or jewelry shops transactions soon after the announcement of ₹2000 note withdrawal. Being a Chartered Accountant, I noticed this myself. So, the unaccounted currency is being pushed into formal circulation. This is a good sign for the economy.

On the lighter note, the move is bound to bring more income tax litigations for professionals like us. As I mentioned transactions have shot up from the minute the RBI declared the withdrawal. Individual fresh sales of ₹2-3 crore against available cash balance are being reported every day. This means more work for CAs and finance professionals. There are still pendency related to tax litigations from the demonetization of 2016 and now this fresh ‘outbreak’. You see we have more work at hand now.

One negative aspect of this announcement is that many shopkeepers are refusing to accept ₹2000 notes though there are some cases where shops-owners are welcoming customers with offers to use the same currency notes. But overall, the Reserve Bank of India has laid down very lenient process for exchange and re-use of these notes. So for the common man, there is little to worry about.

People must realize that every currency note has an expiry date or value period. This is particularly true for the high-value denomination. It is thus desirable to use digitized or formal procedures while making high-value transactions in a sale or purchase deal. Taxations reforms will continue to create hardships for black marketers and tax-evaders.

As told to Rajat Rai

Supreme Court Upholds Govt’s 2016 Demonetization Decision

By LokMarg 2nd January 2023

The Supreme Court on Monday upheld the decision of the Central government taken in 2016 to demonetize the currency notes of ₹500 and ₹1,000 denominations.

A five-judge Constitution bench dismissed a batch of petitions challenging the Centre’s 2016 decision to demonetize Rs 500 and Rs 1000 currency notes and said the decision, being the Executive’s economic policy, cannot be reversed.

Supreme Court bench said: “There was consultation between the Centre and the RBI before demonetization. There was a reasonable nexus to bring such a measure, and we hold that the doctrine of proportionality did not hit demonetization.”

The apex court had reserved its judgments on the batch of 58 petitions on December 7.

Earlier, it had asked the Centre and Reserve Bank of India to place before it the records pertaining to the 2016 demonetization decision in a sealed envelope.

It had said that it has the power to examine the manner in which the decision for demonetization was taken adding that “the judiciary cannot fold its hands and sit just because it is an economic policy decision”.

The top court’s remarks came when the Reserve Bank of India counsel made the submission that judicial review cannot apply to economic policy decisions.

The RBI had told the apex court about the objective of the demonetization policy to curb black money and fake currencies.

Attorney General R Venkatramani had said that the economic policy of demonetization was connected to a social policy where three evils are attempted to be addressed. (ANI)

‘Centre Did Little To Help Businesses Amid Covid’

By LokMarg 7th April 2021

Biplob Basu, 34, a food entrepreneur, says small businesses suffered due to demonetisation, GST and there was little help during pandemic from the BJP-led government at the Centre

My story is one for the books. Both my parents are doctors but I pursued Hotel Management and chose to be a food entrepreneur. And it hasn’t been a smooth ride. The year I opened Petuk, a home-based eatery with a catering division in Kolkata was also the time when politics began over the palate. What you were eating and serving came under scanner.

People with no understanding of Bangla food, wanted to dictate what others should or should not eat. I would therefore prefer a government which is open-minded and understands plural cultures and cuisines.

There are other reasons too why I would choose Mamata Didi’s Trinamool over the BJP. My food venture had just about begun to break even in 2016 when the Centre announced demonetisation. It was taxing time as people queued before ATMs and eating out was not a priority. Just about when that phase was over, the GST (goods and services tax) was rolled out. My expenses (taxation) rose but not my earnings.

I was barely able to understand the nitty gritty of GST when rumours spread in Kolkata that many eateries were serving carcass meat. People in food business came under stress for two years (2018-19).

***Biplob Basu is against mixing politic and palate***

I waded through all this and stepping ahead of home-based catering, I opened a restaurant at Hazra (Kolkata) in 2018. A little over an year, and I managed to open another restaurant in Jadavpur in December 2019. And then the pandemic struck, strict lockdown was announced.

The new restaurant was at a rented property. I had to pay the rent, salaries of the staff, while there was no income. That broke my back. I am sure other MSMEs like me suffered a lot too, but Bengal also faced a cyclone (Amphan) during lockdown.

ALSO READ: ‘How I Turned The (Dining) Tables On Covid’

Even when the ‘Unlock’ began in phases, the business did not pick up. I was forced to shut one of the restaurant. I read about Central assistance to small and medium businesses so I went to apply for an MSME loan, only to realise that the process was lengthy and cumbersome, not beneficial for ventures like ours.

Now, with elections upon us, it is payback time. I want a party in power which understands that their decisions taken at the spur of the moment can adversely impact lives of people for years to come. I want a government that can create both a good social and business environment. I want a government that understands people as individuals and not a homogeneous groups with a single story. Clearly, my choice is the incumbent party. I am very happy with the way the Mamata government handled the pandemic.

There were strict checks at regular intervals to see if business units were following all due measures from face masks to hair masks, to regular sanitization of the premises to temperature checks. My entrepreneurship spirit is still alive and kicking and I will definitely steady myself up; all we need is a government that can put a spark into the hospitality sector again.

As Told To Yog Maya Singh

MyVote2019 – ‘Modi Has Nehru’s Charisma’

By LokMarg Publishing 4th February 2019

Having said that, there are some things that Modiji needs to take care of if he gets the mandate. He needs to take care that he doesn’t just limit himself to being a ‘ghoshna naresh’ (king of big promises and announcements). He should fulfil the promises he made to people or else people will stop trusting him. The Indian electorate is very astute. A certain section of the society is not happy that he has not followed up on his promise about the Ram Mandir in Ayodhya. Artists like me feel hurt that he only talks about curbing cow vigilantism, but does not act on it.

As a pensioner, the price rise in petrol costs and the subsequent rise in prices of perishable items like vegetables etc. do pinch my pocket, yet being a part of the middle-class, we have been making adjustments almost all our lives. Also, Modiji should think several times over before taking a step like demonetization. I was preparing for my daughter’s wedding when the announcement was made and had a very difficult time organising her wedding and paying off everyone.

I think it was purely a political strategy, rather than an economic one, that was played out keeping the then UP elections in mind. Recently the government announced 10 percent reservation for the economically weak among the upper castes, but what use is it if there is no job creation? Practical legislations are the need of the hour. However, I feel Modi has done some good work as the Prime Minister. People now take cleanliness way more seriously.

Modes of public transport like buses and trains are cleaner — one doesn’t shudder at the thought of undertaking long journeys. The seed of being sincere towards taking care of the country has definitely been planted in the minds of youngsters. However, end to end waste management still needs to be taken care of. That is something that should be focused upon in 2019. Some members in Modi’s cabinet, such as external affairs minister, Sushma Swaraj and defence minister, Nirmala Sitharaman have thoroughly impressed me.

I love how they conduct themselves without any fear. I am impressed by the way women are taking centre stage in Modi’s cabinet. When I hear people say that there is an atmosphere of hatred that has been created, I feel that they are just jumping to conclusions, without going in-depth. I have many friends in the Muslim community and we have no problems with each other.

We participate in kavi sammelans and mushairas and enjoy being together. Yes there are people who kill others in the name of religion (lynchings), but in my opinion they are not representatives of Hinduism, rather they are anti-social elements who deserve to be punished. There’s a lot of love in this country of ours and I am proud that as an artist I have been able to spread love among the people. In 2019, I want a balanced country; a country that is strong both on the outside and inside; a country that values both modernity and tradition.

People, who will vote this year need to be careful not be swayed by fake news that is being spread around these days. I personally try to keep myself well-informed, so that I am able to take the right decision when the time comes.

MyVote2019 – ‘Bad Rule But Good Oratory’

By LokMarg Publishing 31st January 2019

The decision to reserve 10 percent of jobs for upper caste poor too, I feel, is a way to cover up for five years of bad governance. I firmly believe in merit and people who have courage and self-belief do not need any kind of reservation. People who lack confidence, will always be needing something more, no matter how many incentives they get.

But I do believe that there are people in very remote areas who don’t have access to good education, they should definitely be helped in getting access to good education. Coming back to bad governance… I have overcome many a tough situations in life, but demonetisation perhaps posed one of the toughest challenges for me. Oh! those long queues at the banks and the uncertainty of whether I will be able to withdraw money after the wait! Demonetisation happened bang at the beginning of the wedding season.

Beauty parlour owners like me wait all year round for the wedding season since it is the most lucrative period for us. I am not too upbeat about the Goods and Services Tax (GST) either. Maybe in big cities, people don’t mind paying more after GST was introduced, but women in small towns are not at all ready to shell out extra bucks. Even if you tell them that the charges of services like manicure, pedicure, waxing etc. have gone up because of GST.

In the 2019 election I would like to vote for a candidate who understands both microeconomics as well as macroeconomics. Or at least tries to learn about them and open to other dissenting views. However, there is a marked difference as far as cleanliness is concerned. Things are definitely getting better in the heart of the town. But I get disheartened, when I see that garbage is still being dumped on the outskirts of the town. The concept of recycling is still alien to most people here.

Also Read: MyVote2019 – ‘Modi Must Return As PM’

My tip to Narendra Modi: Since people feel so connected to him, I think he should have a Chai pe charcha at the end of his tenure and this time he should take feedback from people to ensure good governance. (The narrator did not wish to share her photograph. The images used are representational)

MyVote2019 – ‘GST Helpful In Long Run’

By LokMarg Publishing 30th January 2019

The move had brought our everyday lives to a standstill. But in hindsight, I feel it was a blessing in disguise for me. The move helped me switch to digital money. I started electronic payment facility in my shop. Now about 50 percent of my customers prefer e-payment over cash. The Goods and Services Tax (GST) also came with its own package of initial hiccups. Once we understood the tax slabs, things got easier for us and helped us in our business.

Earlier a service tax of 12 percent was charged on all footwear products. Now, goods up to Rs 500 come under a tax slab of 5 percent; and footwear above costing Rs 500 come under the 12 percent bracket. My shop is frequented more by people from lower middle and middle class. And they prefer buying products that are cheaper and priced below Rs 500. So a good chunk of sale in my shop is of products priced below Rs 500 and the benefit of a lower GST of 5 percent is thus, passed on to the customers.

There is also an additional benefit – we also make it a point to inform our high-end customers (who purchase goods priced over Rs 500) about the tax slab and the benefit of buying a product worth Rs 500 or less. Some of them happily agree and buy a pair of slippers or sandals in addition to what they have already bought.

Also Read: MyVote2019 – ‘Bad Rule But Good Oratory’

The Modi government has also been successful in implementing the Swachha Bharat campaign. My shop is located in a busy market with all kind of shops such as, eateries, groceries, wholesale, etc. Earlier there was no provision for dumping garbage. Heaps of garbage would pile up right at the entrance of the market. Also an open nallah (sewage canal) passing adjacent to the market used to drive away customers. Now you can see these dustbins — both for wet and dry waste installed around the market.

Representatives from the municipality too, visit us on a regular basis to make sure the market is cleaned up properly. I would give Modi, eight out of 10 marks for the Swachha Bharat campaign. Modi should be given another term since I do not see a better candidate to fit the bill.

MyVote2019 – ‘I Won’t Buy Modi’s Dreams’

By LokMarg Publishing 28th January 2019

Achhe Din’. But that is not the case anymore. After being in power for five years and not having fulfilled most of the promises he made to people, he himself seems to have changed the goalpost.

Now, he says he needs more time, till 2024. Whether it is doubling the income of farmers or building affordable houses, he wants another term for the job. Promises Falling Flat I voted for Modi in 2014, because he had pledged to clean river Ganga. Had he succeeded in doing so, I would have voted for him once again downright. But all his promises are falling flat. Not even half of his promises have been fulfilled. The problem is that this government has always identified itself with Narendra Modi — it was always called the ‘Modi’ government.

It was never perceived as the government of the people of India. Had it been the government of the people of India — it would have respected dissenting views of the Opposition as well. On the contrary it launched a campaign for ‘Congress-mukt Bharat’, as if there weren’t any better things, our country needed to be ‘mukt’ of.

In a parallel universe created by the Modi government, our country already seems to have gotten rid of poverty, malnourishment, pollution and other maladies. With no positive achievements to showcase, Modi has resorted back to the Ram temple issue to garner votes. I don’t know if Ram Lalla was born where they claim. But I know for sure that Maryada-Purshottam Ram would be deeply hurt after watching all the hateful, communal content being circulated in his name.

Secondly, this government succeeded in putting a ban on cow slaughter but did not have a robust plan of what it would be doing with all the stray cows roaming around, once they were abandoned by their keepers/caretakers. Demonetisation and Fuel price hike Demonetisation was badly planned and people suffered because of its childish execution. It had been better if it was done after systems like UPI, online banking, other online payment methods were well established in the country.

In a country where a large section of society still works on cash transactions, a move like demonetisation was bound to be a disaster. Now, according to RBI figures, it seems even the white money that was already there in circulation got out of the system. This is because a person, who earns Rs 1,000 per day was not keen on losing one day’s salary by standing in line, rather he chose to get Rs 800 of new notes in exchange of old notes of Rs 1,000 by illegal means.

People made a racket out of demonetisation and got away with it. Apart from demonetisation, the rising prices of commodities hurt the economy. The price of a commodity is decided by various factors, such as land, labour, availability of raw materials and most importantly cost of transportation. With fuel prices increasing, the price of everything goes up.

Petrol prices can still be tolerated but price hike of diesel hurts a lot because mainly trucks run on diesel, and they carry everyday consumables, namely vegetables and fruits etc. A common man can opt for public transport instead of his own vehicle to save money, but there is no replacement for food. The Delhi government’s economic policy is a good example of how a budget should be made. They have focused on health and education primarily, which any economist would approve of.

This in my opinion is the right long- term solution for the nation’s economy. Quota Politics in an Election Year The Supreme Court had put a cap on reservation and stated that reservation should not be more than 50 percent. Petitions have been filed in the Supreme Court challenging the reservation in jobs for the people in General Category and as per reports though the Supreme Court has not stayed the decision, it will be examining the decision.

I think the EWS quota is just a populist measure to garner votes from the upper castes. To me the truth is pretty apparent. The government is well aware of the fact that that Supreme Court will strike down this constitutional amendment. But the Modi government has brought about the amendment in an election year because the SC will take some time to give its verdict.

I feel a decision will be taken only after the elections. But even if SC announces its verdict early, BJP will very smartly blame the Apex Court for playing spoilt sport. This is just another way of making fools out of us. Opposition also can’t openly challenge it because it would hamper their upper-caste vote bank. No Strong Opposition The Opposition led by Congress needs to raise issues such as price rise, farmer distress from the very beginning.

Also Read: MyVote2019 – ‘GST Helpful In Long Run’

These issues strike a chord with the common man. They have talked about Rafale deal case, is difficult for a layman to connect to. Alas! Because of lack of a strong opposition, I think Modi will be elected again. We have seen many a khichdi sarkars earlier. These governments were always constrained by the demands of smaller regional parties in the coalition.

All opposition parties are trying to form a ‘grand alliance’ only at the fag end of Modi’s term. Thus, it is easier for Modi to brand them as a ‘coalition of opportunists’. Also it is very unlikely that a coalition government will work in harmony.

#MyVote2019 – ‘I Have Full Faith In Modi’

By LokMarg Publishing 26th January 2019

The Modi government’s Swachha Bharat campaign has worked, at least in my mohalla at Tiwari Chowk in Deoghar. There has been a marked difference in the way the waste is managed here now. Earlier, garbage would be left on the roadsides to rot and would be picked up after a gap of many, many days. But now, the municipality workers come every day at a fixed time to pick up the garbage.

The street lights here are working and the women in my family feel safe to venture outside at night. I’m a shop-owner and I was pretty inconvenienced by the Goods and Services Tax (GST) when it was introduced. I suffered losses in the beginning because nobody was really able to understand the sudden rise in the prices of goods, the new billing invoices etc. But the sales tax officer of our area turned out to be a saviour.

He helped all the shop owners in my area get acquainted with the process. In turn, we were able to explain the new tax structure to our customers. I am a happy man now and have no regrets about voting for Modiji. He wishes the good for the country and his actions mean business. Detractors often argue about the ‘disastrous demonetisation’ but I believe the decision was a step in the right direction. People will now think twice before hoarding money. I am not going to get into the other details of demonetization because, frankly, it is a vast topic and I am not really an expert.

Petrol prices of late have definitely been bothersome. But I do not let that bother me. I like how Modiji is leading the country and would want him to continue. I don’t hate the leaders of the Opposition parties, but you can say that I love Modiji’s personality more. He has the qualities of a true leader. I sometimes wish I could be as decisive as he is. Rahul Gandhi, I feel, still has a long way to go before he can even think of leading the country. His heart is in the right place, but he lacks the spark.

#MyVote2019 – 'Hope Quota For Poor Works'

By LokMarg Publishing 22nd January 2019

I must clarify here that I am neither a fan of Modi nor of Rahul. In fact, I feel a candidate other than these two, one who is more balanced, would be better suited as our next Prime Minister. I hope 2019 gives us just the right kind of leader. In 2019, I am looking for a well-informed government that has an understanding of the needs of the both the masses and the classes. Because both the segments of society are important for its proper and smooth functioning.

I am deeply disappointed at the way religion is being brought into the mainstream discourse by almost every party worth its weight. Also, even though Kolkata is safe for women, the goings on in the rest of the country when it comes to women’s safety, especially that of young girls, do sadden me. It’s time the government also gave a thought to mass sensitisation, apart from just strengthening the anti-rape law.

To Modiji’s credit, many government offices have pulled up their socks when it comes to punctuality, sensitivity and getting the work done on time. However, his silence on many major issues do rankle. Of course, there is this decision to allocate 10 per cent reservation for economically poor just before the Lok Sabha elections. I believe it is a good idea but the timing is suspect. Even when the idea of reservation was implemented in the beginning, the motive was to help the economically weaker sections of society.

I hope the reservation for the poor works out well. But the Prime Minster should seriously consider the rise in the prices of LPG as well as petrol which have almost doubled. This is what is pinching poor and middle-class households a lot. My own finances are stretched. Even in a relatively cheaper city like Kolkata, I am spending more than Rs 3,000 per month for my daily commute to office.

Aur LPG ke dam ka to kehna hi kya? (the less said about LPG prices, the better). The government should think about the common man. Narendra Modi didn’t think about the common man before taking a huge step like demonetisation. The worst affected were the daily wage labourers whose many a working day were lost because they were required to stand in line to exchange notes.

And even if they did find work, they couldn’t be paid easily because either their pay masters didn’t have cash in right denomination or they preferred to use it as a ploy to delay payments. The poor knows little when it comes to online modes of payment. At a personal level, my banker husband was really overworked for several months in the period, until things settled down.

I hope we don’t have to go through this ever again. As an individual voter, I would like to see better public transport facilities in Kolkata. I have to change as many as four autos to be able to reach work on time because the buses are so packed during morning rush hours that it is almost impossible to board them. Hope the political parties are listening.

But as an educated, informed and compassionate voter that is not where my concerns end. I would like to vote for someone who cares as much for my neighbour as much he/she cares for me, somebody who promotes the politics of love.

#MyVote2019 – ‘Coalitions Help Democracy’

By LokMarg Publishing 10th January 2019

Bhajpa – turns autocratic when it has an absolute majority. This is against the grain of jamhooriyat, democracy.

It is always better to have a coalition government where the alliance partners keep working as checks and balances in the government and arrive at a broad consensus on policy issue, which is what democracy is all about. Neither Congress nor the BJP has done anything for the minorities and majority alike other than holding them out false fairyland.

For decades, the Congress’ main slogan was `garibi hatao’. But the poor remain marginalised even today. Likely, BJP shouted `sabka saath sabka vikas’ from the rooftop in 2014, but this also remained a mirage’ the poor, down-trodden remain as neglected and as oppressed as they were four and half years ago. Political promises, slogans, speeches mean little to us now as they never materialise. Successive governments have done nothing for the upliftment of the oppressed class, religion no bar.

I often wonder why the people cannot see through these false promises in all these years. Sixty years after Independence, we are yet to fall into their traps, year after every five years. Mister Modi talked about his humble background but does he realise that the biggest impact of demonetisation was on the poor and I personally experienced it.

I have seen small businessmen running from pillar to post to bring their business on track when demonetization happened and later coupled with GST, many lost their livelihood. Who will compensate for their losses? Political parties draft manifestos that only talk about the poor and the down trodden these document remain where they are printed – on paper.

Not even 10 per cent of the promises have ever been fulfilled. That is why I advocate a coalition government to rule New Delhi. That will purposely pursue a programme which has a wider appeal and leaves no section of society (call them their respective vote banks, if you like) behind I am not going to press NOTA ever, as I have full faith in electoral politics; my only hope is to find a benevolent and decisive leadership. For me, the Congress and the BJP and ek he thali ke chatte batte (two sides of the same coin).