Tuesday, 21 July 2015

Cash Less Corruption Free Society - Demonetization of Currency

Tax Evasion in India
In my earlier articles also I have been impressing upon the need for a Cash Less Society to weed out Corruption from India. The GOI needs strong will Power to go in for Demonetization of Currency as Money Supply has grown to a dangerous level and if not checked - it can be disastrous for the Indian Economy in the long run.

Demonetization of Currency (Last carried out by Late Sh.Morarji Desai the then Prime Minister of India in 1977-78) along with Cash transaction Less Society will yield the following benefits :
  • Expenditure on Printing and Minting of Currency will be reduced to negligible whereas GOI is spending huge budget for import of paper,ink and technology for Security Printing Press in India.
  • Counterfeit Currency is a big challenge for any economy as it increases the money supply without any addition to Gross Domestic Product or National Income and fuels inflation.Govt. has to make huge expenditure on detection and confiscation (by law enforcing agencies like Police, CBI and EOW of the State Governments) of the Counterfeit Currency .By demonetizing Currency  - we will not only be able to check infiltration of fake currency but the Black Money will also come out and can be ploughed back in the Indian Economic System.
  • Only after we demonetize currency - we can arrive at the True Figure of Money Supply in India the biggest source of inflation. As we are not aware of the True figures of money supply - all our efforts ,economic policies yield no results as we are neither able to judge the strength of the Indian Rupee (INR) nor able to frame reliable Fiscal Policy as Black Money in the shape of Cash is also multiplying.
How can we achieve it in India - when we are struggling with Poverty, unemployment, Uncontrolled Inflation, Shelter, Education, Health ,Social
Security and our Leaders are not finding ways and means come out of the vicious circles of the economy.

Vicious Circles

India is not devoid of Leaders like Indira Gandhi, who had the courage to nationalize the Banking Industry in India in 1969 and a second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery to the Priority Sector as Private Banks used to look after the interests of Capitalists and ignored the masses and the downtrodden. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Now question is - whether it does not hold good even today.What is the role of the Banks - to regulate flow of surplus credit - from individuals, regions, sectors  to deficient individuals, regions and sectors so that there are no economic imbalance within the society.
  • Anyhow - I am a bit distracted from my motive "How can we achieve it in India" as you will appreciate that Economics is a Complex Subject and it will remain Complex even for the future generations as Human Necessities will go on changing with the passage of time. "Luxury" of today may become "Necessity" of the Future.
  • When India can achieve the feat of "Mobile in Every Hand" why cant we achieve that every Indian has a Bank Account from the date of birth itself linked to the Unique Identification Number to be issued along with the Birth Certificate.
  • Every Indian's  UCIC (Proposed by RBI) w.e.f. 01-04-13 needs to be linked with UID and for all financial transactions inter transfer of funds between the UID's can be a reality through Mobile/ATM networking. 
  • Once we achieve the dream of "Cash Less Society"; as hard, easy, fake and unaccounted cash is the generator of all evils economic offenses including terrorism and main hurdle in the economic growth of a country ; we can think of the Basics to improve economic condition of a Nation like India.
  • Basics , I mean, is utilization of Resources in any shape - Vast Land for developing Agriculture, Underground resources for Infrastructure, Water Resources . India is not deficient in raw sources but we lack the capability to manage resources which are in plenty. What to talk of natural resources - we are not even able to utilize our Vast Manpower resources - which if channelized can create Wonders in Industrialization, Agriculture and above all SELF DEPENDENCE to demonstrate to the world that India is still a Golden Sparrow.

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