15

D – Demonetisation | #AtoZChallenge

D – Demonetisation #AtoZChallenge #BlogchatterA2Z

If this topic interests you – please spend some time on a more elaborate post on Demonetisation that I wrote ten days after it was announced on November 8th, 2016.

Why I want to discuss it because I believe since emergency in 1975 this was one such move where each citizen of the country was taken-for-granted. It deeply disturbed me, what is even disturbing is the silence of the educated class that understands the perils of such moves. They are just for political gains. Even the economists who support the ideology of the current party in power agreed to the fact that the GST implementation was in haste leave alone the execution of demonetisation.

We now have proof that demonetisation was implemented like a joke. Just to create a furor of slogans stirring the sentiments of nationalism with no end result. Has anyone noticed that there is no mention of it in the political rallies this election season – it’s like the Gujarat model, which even Gujarat is not talking about.Demonetisation was declared with these major objectives:

Curbing black money

Niti Aayog member and senior economist Bibek Debroy had said, “approximately Rs 1.6 lakh crore – 10% of the demonetised currency – would be extinguished and not come back into the system.”

The fact of the matter is as per the RBI report released in August 2018 that 99.3% of the demonetised currency or roughly Rs 15.31 lakh crore was returned and back into the system. The finance minister keeps stating that they are looking into the accounts and going after the culprits. How many people did you see going to jail on black money? Frankly, there is no data, yet, released that can give a suggestive account of the amount of Black money currently in the system.

Counterfeit Currency

There is again no data released that out of the total currency that returned to the system how much of it was counterfeit currency. But there is definitely data available suggesting a sudden spike in counterfeit Rs. 50 and Rs. 100 notes. The Rs. 50 counterfeit note has grown by a whopping 130%. So what now, are they going to demonetize these all as well?

Corruption

After my father expired in 2017, I have been visiting government offices and courts on a weekly basis for some work or the other. The system stands as it was in the pre-demonetization era. Corruption is as rampant as it was; the only difference being the thinner Rs. 2000 has replaced the thicker Rs. 1000 in bribes.

The election rallies are in full swing. Do you know that the ruling party has booked about 60% of the charters and helicopters? There are a plethora new five star offices being unveiled – about 51 of them will be inaugurated in UP alone. Are you sure all this is done with white money and no corruption?

But nobody dares to question the government.

Terrorism and its funding

Between 2014 and 2018, the number of civilians killed in Jammu & Kashmir has risen by 35.71%; the number of security persons killed has increased by 93%, and the number of terrorists killed has seen a rise of 133.63%. In Naxal-affected states, terror incidents are down 45% but the number of security personnel killed is up a massive 82%, according to data from the South Asia Terrorism Portal or SATP.

Do I need to present more data on how terror is still on the rise?

The government kept on changing ‘goal-posts’ after goal posts citing as objectives of demonetisation. One of them which was never mentioned in the speech of November 8, 2016, was ‘Cashless economy.’

Cashless Economy

Cash in circulation (CIC) has jumped by 19.14 percent to a record high of Rs 21.41 lakh crore as on March 15, 2019 from the pre-demonetisation level of Rs 17.97 lakh crore on November 4, 2016, indicating that cash is back in the reckoning in the financial system. To their credit the cashless transactions are on a rise too but honestly, the figures reveal that it has less to do with demonetisation. In fact, if you force everyone to use a single medium for transactions then the data related to that is not giving a clear picture.

The illiteracy of the banking officials on digital payments front has been beautifully summarized by BP Kanungo, deputy governor of the Reserve Bank of India (RBI). On Tuesday (May 29, 2018) in Mumbai he said, “…(There is) lack of consumer awareness not just on the various payment options and features available, but even on the grievance redressal mechanisms available. This illiteracy transcends all geographies and regions, not just rural or semi-urban, north or south, and is equally true of the staff at the front desks of bank branches.”

How much did it cost:

The RBI spent close to Rs 13,000 crore over the next two years to remonetize Indian money market in post-demonetisation phase.

According to the Centre for Monitoring Indian Economy (CMIE), demonetisation caused loss of about 15 lakh jobs with an immediate GDP fall of around 1.5% that cost another Rs 2 lakh crore to the system.

Ironically RBI wasn’t able to count the returned currency for nearly two years. In fact, there is a shocking report that suggests that RBI doesn’t know how much money was put back into the system.

Please don’t forget the losses of more than 100 lives that it took, the loss of two RBI governors and one ‘confidante’ economic advisor and the loss of credibility in banking system cause of this futile exercise

Touted as one of the greatest financial moves ever – Something that was talked about as a Masterstroke turned out to be a ‘Hit-Wicket’.

For all those who love cash,

For all those who stood in those ATM queues,

For all those who have lost faith in banks,

And

For all those who think it was for political gains…

It’s not a goodbye,

But it’s a GOOD BYE.

See you tomorrow with another issue related to the upcoming elections.

Manas ‘Sameer’ Mukul

This is the 4th post for the #AtoZChallenge #BlogchatterA2Z. My theme in Politics Category is ‘IPL – Indian Parliamentary League’, where I would be covering some relevant issues with the General Elections 2019 through the course of 26 posts.

D – Demonetisation

Read the previous post here

A – Anti-National

B – Banking

C – Climate Change

Please do visit tomorrow for the next post with letter ‘E’

I am also taking part in the #AtoZChallenge #BlogchatterA2Z using another theme –‘Dubai – City of Gold‘. If you love travel head over to the Travel Theme and share your feedback.

16

B – Banking

B – Banking #AtoZChallenge #BlogchatterA2Z

Banking is the institution that has taken the biggest toll with respect to its credibility during the last five years. With the government dumping most of the reports that are produced by either the government agencies themselves or come out as a part of PILs / RTIs, the integrity becomes questionable.

The only time when during the tenure of five years, the RBI has become so weak losing two governors in the process. But a common man cannot ask questions to the government.

Some positives:

The thing that goes in the favor of the government is the Insolvency and Bankruptcy Code introduced in 2016, was passed in parliament to address the issue of NPAs. The code allows either the creditor or the borrower to approach the National Company Law Tribunal (NCLT) to initiate insolvency proceedings

The other big plus is the much-publicized Pradhan Mantri Jan Dhan Yojna (PMJDY) which was a renaming of the ‘Basic Savings Bank Deposit Accounts (BSBDA) scheme of the previous UPA government. In 2012, the ‘no-frills account’ was renamed as ‘Basic Savings Bank Deposit Accounts (BSBDA).

Let’s get straight to some facts and data.

The present government has been very vocal in listing out that they have inherited most of the NPAs from the previous regime and they are the ones who have kept a check on it.

As per an Economic Times report, Gross non-performing assets on public sector banks surged to Rs 7.8 lakh crore as of December 2018 from Rs 2.4 lakh crore in June 2014. Private sector banks have too witnessed a substantial increase in bad loans in the last four years. I don’t need to say much on this, it is for everyone to decide.

Moving on to the other issue of bank accounts. An astonishing amount of about 32 crore bank accounts were opened in the PMJDY. At least 18 crore accounts were opened in rural and semi-urban centers while more than 13 crore accounts opened in urban metro centers.

The opening of bank accounts is one thing but their actual contribution to the inclusion of unprivileged in the mainstream is another.

The accounts opened under the PMJDY are zero balance account, that means banks cannot levy any charges for not maintaining the MAB. The other benefits include insurance cover of Rs. 30000 and overdraft facilities and many individuals who already have bank accounts may have had accounts created for them, lured by these facilities.

“Our preliminary estimation shows that around 25 percent of accounts are a repeat or multiple accounts opened by people already holding accounts in different banks,” said G S Sandhu, secretary for financial services in the ministry of finance.

According to a paper published in May 2017 by Manuela Kristin Günther from the Overseas Development Institute, 90% of Indian households have at least one bank account as opposed to the government’s claim of over 99%. Of these, the paper pointed out that 79% of the households with Jan Dhan accounts also have a regular bank account.

On top of this, even a statement from the current finance minister says that about 22-25% of these are lying empty.

On average a bank account costs Rs. 125 to the bank to maintain that account. Apart from charges related to non-maintenance of MAB, SBI had an annual maintenance fee of Rs 125-300 for debit cards depending on the category of the card.

Nobody questions how much it is costing the government to maintain these accounts and whether these accounts are actually serving the purpose they were supposed to.

In the past four years, 25 banks – including public and private sector banks have collectively collected 11500 cr for not maintaining MAB, which is more than the total money owed by Vijaya Mallya.

To be honest, it usually the poor and the lower middle class who is unable to maintain the minimum account balance. When you want to encourage people to use more of mainstream banking then you should incentivize it rather than penalizing. What happened to the ‘cashless economy’ after demonetization? As per RBI, the cash in circulation is even more than what it was pre-demo. PMJDY is heading in the same direction

A single account opened in United Bank of India, under the Pradhan Mantri Jan Dhan Yojana (PMJDY), or the ‘no frills’ or Basic Savings Bank Deposit Account (BSBDA) had a whopping Rs 93.82 crore deposited.

These accounts have become an easy place to launder money and without proper checks and the government shelving reports after reports the NPAs and Black Money is not going anywhere.

 

For all those who are fed up with the policies,

For all those who hate fines,

For all those who hate NPAs,

And

For all those who are in Banking…

It’s not a goodbye,

But it’s a GOOD BYE

Manas ‘Sameer’ Mukul

This is the second post for the #AtoZChallenge #BlogchatterA2Z. My theme in Politics Category is ‘IPL – Indian Parliamentary League’, where I would be covering some relevant issues with the General Elections 2019 through the course of 26 posts.

‘B – Banking’

Read the previous post here

A – Anti-National

Please do visit tomorrow for the next post with letter ‘C’

I am also taking part in the #AtoZChallenge #BlogchatterA2Z using another theme – ‘Dubai – City of Gold‘. If you love travel head over to the Travel Theme and share your feedback.