Cash, a dirty 4-letter word soon

Narendra Modi is the new-age Moses, without a staff though. After ordering a sudden currency exchange programme, he relentlessly shepherds a mass migration from a “sinful” cash economy to the promised land of cashless (no pun intended) economy. We have plunged headlong into turmoil, by choice, taking all risks, in the hope to see light at the end of the promised 50-day long trek.

As black continues to be the villain in India, the fracas among economists and consultants were not unexpected, given the intensified political crossfire. Several celebrated economists were overnight dubbed ‘morons’ and ‘dolts’, while thousands of Indians diligently stood in queues and shared a secret smile over the pains inflicted on the filthy rich. Forget Mallyas and Quattrocchis!

India’s demonetization drive is now turning out to be the biggest banking revolution the republic has ever seen in over six decades. Now, millions of unbanked have to mandatorily open a bank account to exchange whatever little they have squirrelled away in high-value currency notes, as the government has shrunk the exchange limit to Rs 2,000. Opening a bank account is almost binding on every citizen. The fact that nearly one-fourth of India’s population is covered by the banking system, thanks to the recent Jan Dhan Yojana, has given the government a lot of courage to stick its neck out. Surely, the move has kicked up every Indian – ranging from black money hoarders to the corrupt, and the middle-class to the unbanked poor, all in one stroke.

Amid the images of anguish and agony, lies an oasis of quiet, Akodara. The tiny village in Gujarat, around 90 km off Ahmedabad, stands unruffled when the entire nation sweats it out in queues just because every villager, adept in online/mobile banking, is proudly part of the banking system. Unfortunately, we do not see such level of financial literacy in big cities of Mumbai and Delhi, where a large majority still lives on cash.

Similarly, the fully-digitised Kerala, which enjoys substantial financial literacy, should not shy away from going cashless. Probably, the state, having the highest record of digital banking, e-governance and 100% mobile connectivity, is paying for its overdependence on the co-operative banking system, which has consciously stayed away from technology and transparency. The RBI has banned co-operative banks from accepting old currency notes, dealing a heavy blow to farmers and small businesses. The co-operative banks need to be brought to the forefront of the new revolution, rather than dismissing them as dens of black money.

Now, what the country is keenly awaiting from the government is a comprehensive ban on high-value cash transactions, say above Rs 50,000. In the demonetized milieu, such a ban can blow away the last vestiges of black money hoarders. All legal cash transactions – ranging from donation to schools, trusts or political parties, to purchases of car, expensive TV or fridge, and gifting, barring hospital payments, on humanitarian grounds for the time being — should be capped, making every transaction transparent. Once the IT-savvy country hitches on to the online bandwagon, the government can demonetize high-value currency notes once again, and save the country from the counterfeit menace, once and for all.

The writer is editor, DNA Money.
He tweets @AntoJoseph