Hello Fellow Steemians

This is a post from my personal blog about the cash ban that happened in India during Nov-Dec 2016. Non-Indians would have been very curious about this ban and this post will enlighten you about the same. I am  not an economist, but what I understand as a common Indian man, I will  tell you. 

Please note that most parts of this blogpost were written in November, and many things have been changed by now. These changes have been mentioned in the last part of the post. 

                    

                                                    Shopkeeper displaying, "I ain't taking old cash."!! 

 

Indian  government recently banned Indian currency of 500 and 1000 denominations, which are the most  circulated currency denominations in India. These 2 notes can not be used for daily business now. Now,  for those who have this currency, they can deposit it in their banks,  till 31st December 2016, and it will be  legitimate.   People can also exchange (up to 2000 INR/day) the old banned currency  with the new currency. They will need to provide their national ID  proofs like voter card, driver license etc. to exchange their old  currency with the new currency. Smaller currency remains untouched.  There were many  reasons to ban the old currency. This project was a super secret  project. Only a few politicians of the ruling party and some top  bureaucrats knew about it. Not even the members of the opposition party  knew about it! There were many reasons for this drastic step.

 1)  Actually  India is a very rich country, not poor as western people see it. But  the thing is that the gap between poor and rich is very large. And the  rich  are so rich because they accumulate large amounts of black money, which  is the earning without paying taxes. So because of this govt. gets less  income and therefore less welfare programmes. The 500 and 1000  denomination notes were used by these tax evaders as it is much easier  to transport or  keep them at home (in comparison to smaller denomination notes). These  big  notes can be easily consumed at real estate and gold markets also. So  by banning these notes, the black money becomes useless for those who  accumulated it. Those who are  honestly paying taxes don't have to fear, as they can deposit their  money in bank accounts. But those who have large amounts of unaccounted  cash in form of 500 and 1000 denominations, they will be charged 200%  fine if they deposit their money in  the banks. So basically that black money becomes waste for the tax  evaders.

                                                            

                                                             Nah, black money doesn't look like this! 

2)  We have a big problem of fake currency in India. A neighboring country  of ours supply fake currency here. Since 500 and 1000 notes are more  cost effective to make and transport, therefore almost all the fake  currency was made in 500 and 1000 style. Now that fake currency is also a  waste.

                                                     

                                      Fake currency is actually much more difficult to detect than this! 

3) The fake currency and black money was also  used to support terrorism, violent Marxism and many illegal trades like  drugs etc. So the ban on old currency will also limit that. 

                                                          

                                                           Shit load of cash and shit load of weapons! 

 4)  A lot of this black money was used in elections also, for promotions  and giving goodies to the poor to make them vote for a certain  politician. That issue will also be solved to some extent.

                                                    

                                                               Vote for ME, vote for ME! 

 5)  The ban also forces (not by government, but by situation) people to use more of digital methods of payments,  so it will help govt. to keep a tab on tax evaders, plus in long term it  will be convenient for the people.

                                                        

                                                                  Which phone is it? Any idea! 

Now there were so many advantages of this ban. But since every coin has 2 sides, this ban also has:

 1)  People are standing in long queues to deposit/exchange their old notes.  Some old people have died by standing in such long queue for so many  hours.

                                                     

                                                        Not long ago, I was also one of them!

 2) People are unable to buy medicines and  pay for medical emergency, so some people (very unfortunates ones) are  dying there as well. Although there is no such problem in govt.  hospitals as the old currency is still valid there for some time.

                                                            

                                                                           LOL, this is so true!

 3)  It is hard to buy daily necessities as people don't have smaller  denomination notes. Although some local shopkeepers are selling goods on  credit to their loyal customers.

                                                           

                                                            I wonder why they are smiling at this time! 

 4) Since India has  for centuries been a cash trading society, therefore this ban comes as a  shock for people living in rural areas ( where banking facilities are  not available as in cities).                                                  

                                                    

                                                                       No banks here for sure!

 5) Business depending  on cash have suffered losses and many have fired their employees also.  But the truth is that these cash dependent business were the biggest  sources of black money.

                                                               

                                                                                        Dummy boss! 

 6)  Foreigners are also facing problems as many of them have old currency  with them. Although they can exchange their old currency at the  airports, but the amount is very small. Plus, there is a shortage of  lower denomination notes right now, so tourists may end up paying more  for cash bought goods and services.

                                                           

                                                           Cash ban was not the best time to visit India!

 

 

As  for the current govt. will win next election  or not. I think it will be very very difficult for them to win the next elections, as people hate inconvenience, even if it is for their better  tomorrow. Also, all the opposition parties have come together against  this ban, and are asking the govt. to rollback this order. They are  fully cashing on the discomfort caused to common people due to this ban.

My  personal opinion is that there is no such plan as perfect plan. Instead  of wasting decades and centuries to make that perfect, foolproof plan,  it is much better to experiment with the good plans. So I fully welcome  this currency ban. Whatever happens, my vote is for the current  government, as they dared to take such a drastic step. Maybe, it caused  widespread inconvenience to the people, but the intentions behind this  plan were good. I hope my Indian brothers and sisters will happily adopt  this new change. We all can't go to borders to secure our country, but  by accepting these kind of changes, we can make our contribution.

Current Situation: After around 5 months

1) The cash problem has been now solved and adequate amount of cash flow is there in the market. Although there has been a sharp increase in digital transactions. Indians have also started adopting cryptos (almost Bitcoins only), as a safe option.

2) After the cash ban, there was a huge amount of black money recovered from people who were trying illegal methods to convert their old currency to new currency.

3) Terrorist acts declined to some extent after the cash ban, but have again increased in some parts of the country.

4) There is no evidence that politicians stopped bribing the voters with the money. This will become clearer in coming years.

5) Foreigners can now again visit India without any tensions. There is ample amount of cash available. Although using the credit/debit cards is still a good option to save the smaller currency notes for other things.

6) Markets are lively again, but as a precaution most medium and big shopkeepers are now keeping card swipe machines, e-wallets to facilitate digital transactions.

7) The current government is winning one election after the another in states, municipal corporations etc. and that too with a clear majority. Who would have thought that!!!

                                                               

                                                                        Girls will surely like the pink one! 

That's it guys. Thanks for reading my such a long post. Hope you found it interesting and informative. Please  don't forget to share yOUR opinions regarding this cash ban. I would  specially like to know what non-Indians think about it. Would they adopt  such a change if it is implemented in their country or would they protest?

Thanking You

Siddartha

Image Courtesy: 1, 2, 3, 4, 5, 6, 7, 8, 9. 10, 11, 12

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