I believe demonetization is an eyewash. It has been exactly a month since demonetization was announced and the govt in the meanwhile has adopted various narratives on this issue,the most prominent among those narratives have been destroying black money, combating terrorism & eradicating corruption. I will separately deal with each one of these narratives in my answer.
- Destroying Black Money : As far as destroying black money is concerned it seems as if the govt is not serious whereas the people who are supporting demonetization do not possess even a rough understanding of black money.
The term black money refers either to the revenue that is generated through illegal practices or to the amount which is supposed to be paid as tax but has not been paid. It also refers to property,stocks and other resources that have been acquired through illegal means such as tax evasions,over invoicing,under statement and other fraudulent practices.
The Data from investigations carried out by the Income tax department between April 1 to October 31 reveals that of the declared 7700 crore rupees worth of ill-gotten wealth stashed by black money holders the cash component stood at only 5% of the declared wealth.
Now does it seem fair enough to demonetize 86 percent value of cash in circulation to render a minuscule proportion of the total available cash entirely useless?
- Eradicating Corruption : Not withstanding the panic and inconvenience it has caused,solely based on their belief that the ruling dispensation is determined to fight corruption there are some people who believe that demonetization was worth the effort. Quite interestingly barely 2 days after demonetization was announced the central government approved changes to the existing anti graft law in order to protect public servants from getting probed by investigation agencies.What it means is that investigation agencies will not be able to investigate a public servant accused of corruption without being granted a prior approval by the government. So my question is can corruption be eradicated by undermining whatsoever autonomy investigation agencies are left with?
Source : Government’s unwillingness to eradicate corruption is apparent from the following observations:
a) Reluctance to legislate provisions that make funding of political parties more transparent through means such as RTI act and electoral reforms.
b ) Diluting Foreign Contribution Regulation Act (FCRA) thus enabling political parties to receive funds from such companies that they were previously barred from receiving.
It would be worthwhile to mention that BJP along with the congress were held guilty by the Delhi HC for accepting funds in violation of FCRA .
- Combating Terrorism : The US dollar is the most counterfeited currency in the world in spite of that there have not been any major terror strikes in the US since 9/11 whereas multiple terror strikes across India have taken place. What must be understood is once fake currency enters into the system it ceases to exist the moment it is identified as fake. This government has quite a penchant for associating almost any kind of dissent with a threat to national security I wonder how come the government doesn’t view participatory notes as a threat to national security. Participatory notes allow foreign investors to buy stocks listed on our exchange without having to identify themselves. Enforcement agencies have repeatedly expressed their concern regarding participatory notes while addressing the issue of money laundering and terror financing.