It’s been sometime I have been at the receiving end of the effects of demonetization. I still am confused whether what the government is telling is right, that it’s today’s pain and tomorrow’s gain. Or what the opposition parties are claiming is true, that it’s not going to serve the intended purpose of eliminating black money, that it’s legalized loot, that nothing will prevent counterfeiters from counterfeiting the newly introduced notes and so on.
Whichever side of the argument you are on, a few things are very clear. It’s almost a month since demonetization and the situation on ground is still not back to normal. Most ATMs are not functioning, barring a few located in prominent places per area. The load on these few functioning ATMs is so high, as a result, that they are running out of cash within a few hours of refill. I stood in long queues of several such ATMs and the cash ran out when my turn was two to three people away. The luckiest ones walked away with 100 rupee notes, the luckier with 2000, some (including me) had to return emptyhanded. Even if you are lucky to get some cash, there is restriction to how much you can draw. Until some time ago ATMs cards from banks other than the host bank were not working. Now they are.
Like many of you, I am tracking this development closely and have read several articles and heard some interviews. Posthumously, they say a range of things which could have prevented or at least brought down the scale of the crisis. Instead of banning both 500 and 1000 rupee notes, they say, the government could have banned one – preferably 1000 – and left the other, which would have given them time to replenish the banned notes and also the option of targeting the 500 rupee denomination later. If they had taken some time to make all the notes the same size, which is how it is in many countries, the ATM machines would not require recalibration, they say.
These ‘should have beens’ may not bother us much now that it’s too late, but at a national and personal level there are a few possible outcomes of them. The happy political consensus over GST seems to have dissipated and reorganized itself as a pan India opposition against the government over demonetization. No one seems to mind the purported goals – end of black money, cashless economy etc - of demonetization; given their lofty nature, they are slightly unchallengeable. The opposition parties seem to smell a political opportunity in how demonetization has been carried out. And that seems to be the bone of contention for the amm janta too…who may think, if the mainstream media reports are to go by, that little bit of pain is worth the long term gains. But as each day goes by without the situation coming under control, the concern that’s becoming bigger and bigger is: how long the patience will hold out?
The answer to that lies in several things. How long will the government take to pull the situation under control? How soon, in what forms and how tangibly will people see the benefits of the pain they are undergoing? How long the government will be able to prevent the growing voice of a uniting opposition into becoming a nationwide roar (something like the G scams)?
A lot of this will require perception handling. Also, as the government works towards getting things in order, care has to be taken to make sure that nothing undermines the ground which is being covered on the way to normalcy. The system has countless holes through which illegal money can travel back and forth having a termite-like effect. And there is enough evidence that this is happening. New notes worth over Rs 4 crore have been seized in income tax raids in Bengaluru. Similar incidents have been reported from other parts of the country. And there are inherent challenges. One of them is the unorganized economy in India is intricately entwined with the mainstream economy and the former is mostly (unless it is illegal) cash based.
On ground a few things need to be made smooth so that after I get a 2000 rupee note it’s easy for me to find change or there are enough 100 notes in ATMs. The number of functioning ATMs should start growing so that I don’t have to stand in queues for too long. If the problem is to linger for a few more months, then special arrangements should be made on payment days, either by pumping in more currencies or devising ways to identify and move as many as possible to crediting their stuff salary into their accounts. None is easy. And what makes it difficult is this hydraheaded monster has to be tamed FAST.