Modi government should take note of cash chaos
The decision to withdraw the Rs500 and Rs1,000 denomination notes in an attempt to fight graft seems to have backfired.
India faces a serious cash problem. The decision to withdraw the Rs500 and Rs1,000 denomination notes in an attempt to fight graft seems to have backfired. There are long queues outside banks and several ATMs, and people are craving for legal tender. The government's move aimed at tackling corruption and tax evasion has brought with it multiple problems for the common man, who now finds himself in a gridlock. An overwhelming number of traders and small-scale businesses usually depend on cash transactions, and they seem to be the most hit in this crisis. Owing to limits on cash withdrawal from banks and ATMs running out of big denomination notes, the wheel of Indian economy has hit snags.
The government has to move fast to not only ease the crisis but also to assert its writ, as it takes on those who hoard black money. The decision to curb black money circulation and bring in transparency faces a litmus test at this moment. Though the move was expected to benefit the poor, and the middle class, apart from cleaning the deck of black money and counterfeit currency, the haste in its implementation has caused a stir. In the aftermath of this currency haul, Indians are likely to prefer the emerging cashless e-transaction regime. This will be good for the economy and the society. But the million-dollar question is how to ward off the currency crunch at the moment, and enable smooth sailing? There shouldn't be any going back, and the government must see to it that the crackdown on black money comes full circle. It is a question of unaccounted wealth gained through unlawful means.
Which is why it has to be accounted for, and shady dealers brought to book. People are free to make as much deposits as they can in banks, which is a good thing. The only limit is on withdrawals. More money in the economy will act as a catalyst in growth and productivity. The transition to the new currency notes could have been more smoother and public-friendly had the government kick-started a dialogue with big cash-holders. The massive disruption - owing to the cash crunch - has to come to an end, and the wheel of the economy should move on.