Inept handling

By the time this issue of the Power Politics comes out, the 50-days 'forbearance time' that Prime Minister Narendra Modi had sought to restore normalcy in banking would be over.
Going by the increasing difficulties, the ordinary persons face at the banks and sales points as a result of the demonetisation of the old ₹ 500 and ₹ 1000 notes, it looks like the problems being faced would linger on into the next financial year.
This is quiet contrary to Prime Minister Narendra Modi's initial assurance that "the a degree of inconvenience; but this short-term pain will pave way for long-term gains." Finance Minister Arun Jaitley had said the recalibration of ATM machines for the new notes dispensation would take only a month. But that did not happen. Now he says the currency shortage would be over in 2-3 weeks (that is, by Janaury 1st week).
Despite the difficulties, majority of the people standing initiative as a "mahayagna" "against corruption, black money, fake notes and terrorism" that would give the citizens "the India of your dreams".

People also agreed with the prime minister that "It has been a matter of concern for all of us that corruption and black money tend to be accepted as part of life. This type of thinking has afflicted our politics, our administration and our society like an infestation of termites. None of our public institutions is free from these termites".

Urjit Patel The reality on the ground today is that there is no sign of tapering of the long queues at banks and cash machines. Bank branches after serving about a hundred customers a day often report that they have run out of cash for the day. The situation in rural and far flung areas is even worse. It is obvious that the ordinary citizens are facing lot of difficulties because of the inept handling of the d emo n e t i s a t i o n management.
It also belies the central bank governor Urjit Patel's claim that the preparations for the demonetisation and printing of new currency notes had been initiated six months before the note ban. But the arrival of the new notes at the banking points has faulted severely and people are suffering.

Manmohan Singh Both the Opposition and economy monitors have pointed out that inept handling of the monetisation and continuing cash crunch would adversely affect growth in all sectors of the economy. The Reserve Bank itself downgraded the GDP growth prospects for the year by 0.5 per cent. Former Prime minister Manmohan Singh estimates it to go down by two per cent note, said that India's GDP growth rate would likely fall to 6.5 per cent in the third quarter and stay subdued at 7 per cent in the subsequent three months with the cash shortage expected to continue.
Reports are emanating from different parts of the country of huge catches of stashes of the new currency notes from influential people with political clout, pointing to the collusion of bank officials. Many such officials belonging to some private banks have been taken into custody.

Arun Jaitley The government itself is often changing the narratives on the note ban and management of its after effects. It has made several changes to the norms which were first announced on November 8. It points to the government's indecisiveness and gives the impression that the d e m o n e t i s a t i o n decision had been taken with inept planning.
Initially, it was said the note ban is basically to tackle the menace of black money. Then it was said the objective was to introduce minimum currency concept country. Subsequently it was designated to bring in digital transactions.
Finance Minister Jaitley said it is to help make all future transactions substantially digital as India moves towards a less-cash society. He also hinted at lower direct and indirect tax rates in future as demonetisation results in higher tax revenues from unaccounted wealth coming into the system.
When the government initiated the 'Jan Dhan' bank account opening scheme in the beginning, it was stated that the objective was to bring every family into the banking net. But critics say that the initiative covered only half of the households in the country. If note ban and bank payments were in the concept, there should have been a vigorous campaign to bring all into banking network.
Similarly, a campaign to introduce card payment at large number of retail points should have been taken up. It is obvious that the government faulted in making appropriate ground work for all these stated objectives of demonetisation.
The Supreme Court also questioned the government for not doing enough to ease the cash crunch in the country and warned that the situation was getting serious that riots could break out.
After the first month of demonetisation, data point out to the possibility that immediate gains from the drive are unlikely to be anything significant than one had hoped for. This is unless the government comes out with a big number on the amount of unaccounted cash uncovered and taxed to benefit the exchequer. The government itself allowed retaining of black money if half of it is paid as tax.

Jagdish Bhagwati There is also a growing apprehension whether the government would really succeed in achieving the stated objectives of the demonetisation and targeted currency circulation objective.
Speculations that the government will benefit from a "windfall" gain from RBI when a significant chunk of currency notes do not find their way back to the system, has ended after RBI governor Urjit Patel clarified that there is no plan to give any special dividend to the government.
However, eminent economist Jagdish Bhagwati maintains that the massive deposits with banks post demonetisation may push the government for slight increase in expenditures of various social programmes. "Around 80 per cent of the currency in higher denominations has now been deposited back into bank accounts. Since individual deposits will now be matched with their tax returns and unaccounted deposits will be taxed, this will yield a windfall for the government permitting large increases in social expenditures," he said.
Former UIDAI Chairman Nandan Nilekani hailed the government's demonetisation move and said that it would see a massive activation of digitisation of financial services in the country. He also said that Aadhaar, UPI, USSD and micro ATMs will help India accelerate the roll out of digital financial services. "What would have taken another 3-6 years to get rolled out, Because of the urgency of the matter, it will happen in 3-6 months," Nilekani said.
However, former economic advisor to the government and ex-World Bank chief economist Kaushik Basu said "Demonetisation will cause the economy to run into great difficulties in the future. He said "Even the idea of walking towards a cashless society is a long stretch for India. Currently, close to 98 per cent transactions take place through cash. He said even the US would take 10-12 years to achieve such a goal.
The worse is that the inept handling of the postdemonetisation management has resulted in wash out of the winter session of Parliament which, in turn, would delay the introduction of the Goods and Services Tax (GST).



		EDITOR'S MAIL MATTERS OF PUBLIC POLICY NOTEBANDI DRAMA NOTEBANDI DRAMA FRANKLY SPEAKING POLL 2017 TAMIL NADU POLITICS TAMIL NADU POLITICS REALPOLITIK POLITICAL RESERVATION KASHMIR WATCH A HOLLOW RITUALRY ENVIRONMENTAL FALLOUT BABY TRAFFICKING AVIATION NOTE HITS & MISSES SPORT NOTEBOOK NEW PAK ARMY CHIEF PAGE FROM HISTORY MIDDLE EAST SCENE US WATCH NEW WHITE HOUSE INDO-VIETNAMESE TIES BOOK BAZAAR BOOK BAZAAR GENDER VIOLENCE SIGNS OF THE TIMES YOGA IN DAILY LIFE-IX ART OF LIVING Issue:January' 2017 Subscribe Now	NOTEBANDI DRAMA Inept handling By the time this issue of the Power Politics comes out, the 50-days 'forbearance time' that Prime Minister Narendra Modi had sought to restore normalcy in banking would be over. Going by the increasing difficulties, the ordinary persons face at the banks and sales points as a result of the demonetisation of the old ₹ 500 and ₹ 1000 notes, it looks like the problems being faced would linger on into the next financial year. This is quiet contrary to Prime Minister Narendra Modi's initial assurance that "the a degree of inconvenience; but this short-term pain will pave way for long-term gains." Finance Minister Arun Jaitley had said the recalibration of ATM machines for the new notes dispensation would take only a month. But that did not happen. Now he says the currency shortage would be over in 2-3 weeks (that is, by Janaury 1st week). Despite the difficulties, majority of the people standing initiative as a "mahayagna" "against corruption, black money, fake notes and terrorism" that would give the citizens "the India of your dreams". People also agreed with the prime minister that "It has been a matter of concern for all of us that corruption and black money tend to be accepted as part of life. This type of thinking has afflicted our politics, our administration and our society like an infestation of termites. None of our public institutions is free from these termites". Urjit Patel The reality on the ground today is that there is no sign of tapering of the long queues at banks and cash machines. Bank branches after serving about a hundred customers a day often report that they have run out of cash for the day. The situation in rural and far flung areas is even worse. It is obvious that the ordinary citizens are facing lot of difficulties because of the inept handling of the d emo n e t i s a t i o n management. It also belies the central bank governor Urjit Patel's claim that the preparations for the demonetisation and printing of new currency notes had been initiated six months before the note ban. But the arrival of the new notes at the banking points has faulted severely and people are suffering. Manmohan Singh Both the Opposition and economy monitors have pointed out that inept handling of the monetisation and continuing cash crunch would adversely affect growth in all sectors of the economy. The Reserve Bank itself downgraded the GDP growth prospects for the year by 0.5 per cent. Former Prime minister Manmohan Singh estimates it to go down by two per cent note, said that India's GDP growth rate would likely fall to 6.5 per cent in the third quarter and stay subdued at 7 per cent in the subsequent three months with the cash shortage expected to continue. Reports are emanating from different parts of the country of huge catches of stashes of the new currency notes from influential people with political clout, pointing to the collusion of bank officials. Many such officials belonging to some private banks have been taken into custody. Arun Jaitley The government itself is often changing the narratives on the note ban and management of its after effects. It has made several changes to the norms which were first announced on November 8. It points to the government's indecisiveness and gives the impression that the d e m o n e t i s a t i o n decision had been taken with inept planning. Initially, it was said the note ban is basically to tackle the menace of black money. Then it was said the objective was to introduce minimum currency concept country. Subsequently it was designated to bring in digital transactions. Finance Minister Jaitley said it is to help make all future transactions substantially digital as India moves towards a less-cash society. He also hinted at lower direct and indirect tax rates in future as demonetisation results in higher tax revenues from unaccounted wealth coming into the system. When the government initiated the 'Jan Dhan' bank account opening scheme in the beginning, it was stated that the objective was to bring every family into the banking net. But critics say that the initiative covered only half of the households in the country. If note ban and bank payments were in the concept, there should have been a vigorous campaign to bring all into banking network. Similarly, a campaign to introduce card payment at large number of retail points should have been taken up. It is obvious that the government faulted in making appropriate ground work for all these stated objectives of demonetisation. The Supreme Court also questioned the government for not doing enough to ease the cash crunch in the country and warned that the situation was getting serious that riots could break out. After the first month of demonetisation, data point out to the possibility that immediate gains from the drive are unlikely to be anything significant than one had hoped for. This is unless the government comes out with a big number on the amount of unaccounted cash uncovered and taxed to benefit the exchequer. The government itself allowed retaining of black money if half of it is paid as tax. Jagdish Bhagwati There is also a growing apprehension whether the government would really succeed in achieving the stated objectives of the demonetisation and targeted currency circulation objective. Speculations that the government will benefit from a "windfall" gain from RBI when a significant chunk of currency notes do not find their way back to the system, has ended after RBI governor Urjit Patel clarified that there is no plan to give any special dividend to the government. However, eminent economist Jagdish Bhagwati maintains that the massive deposits with banks post demonetisation may push the government for slight increase in expenditures of various social programmes. "Around 80 per cent of the currency in higher denominations has now been deposited back into bank accounts. Since individual deposits will now be matched with their tax returns and unaccounted deposits will be taxed, this will yield a windfall for the government permitting large increases in social expenditures," he said. Former UIDAI Chairman Nandan Nilekani hailed the government's demonetisation move and said that it would see a massive activation of digitisation of financial services in the country. He also said that Aadhaar, UPI, USSD and micro ATMs will help India accelerate the roll out of digital financial services. "What would have taken another 3-6 years to get rolled out, Because of the urgency of the matter, it will happen in 3-6 months," Nilekani said. However, former economic advisor to the government and ex-World Bank chief economist Kaushik Basu said "Demonetisation will cause the economy to run into great difficulties in the future. He said "Even the idea of walking towards a cashless society is a long stretch for India. Currently, close to 98 per cent transactions take place through cash. He said even the US would take 10-12 years to achieve such a goal. The worse is that the inept handling of the postdemonetisation management has resulted in wash out of the winter session of Parliament which, in turn, would delay the introduction of the Goods and Services Tax (GST).