Vol. 8, Issue : 12
December 2016
Demonitisation that Burdens the People
NarendraModi’s decision to demonitise Rs.500
and Rs 1000 currency notes came as a bolt from
the blue for common man. It disrupted their life as
84 per cent of the total value of currency in
circulation was withdrawn. Daily wage-earners lost
their income standing in queues; they cut down on
milk and vegetables; the cardless poor are turned
out from hospitals; petty job works stopped for want
of cash; small businesses and trade disrupted.
The impact on rural India is devastating. The
demonitisation move came in the middle of hectic
agrarian activity – that too after two consecutive
years of drought – with farmers either wrapping up
kharif harvests or sowing rabi crops. Rural India
left cashless as 90 per cent villages are unbanked.
The peasants are left with no option than go to
usurious money lenders. The government after
much dithering raised the withdrawal limit for
farmers to Rs.25,000, allowed 16-day grace period
to pay crop insurance premium and to use old
currency noted to buy seeds. But these measures
are too little too late to alleviate the rural distress.
The NDA government claimed that the
demonitisation is aimed at curbing black money,
fake notes, corruption and finances to terrorists.
Demonitisation will have little effect on the black
economy is a well-known fact. It is obvious that most
of the illegal wealth is not held in the form of currency
notes. It will not exceed 5 per cent of the currency,
which already found ingenuous means t turn into
white.
Black money is generated mainly and mainly
out of three major types of transactions (i)
commodity trading which includes high sea sales
– the domestic and international norms to check
quality of material and adequacy of pricing is almost
impossible to arrest the leakage. These
transactions are highly prone to “over-invoicing “
and “under-invoicing “ , especially considering
counterfeit documents, shell company shipments,
easy financial structured available ; (ii) Nonauthentication of Capital deployment – this ensures
hiking capital cost of heavy equipment and projects
where capital can be flown to a contractor abroad
conveniently ; (iii) tax evasion – hushing up financial
transactions and evading excise, sales and income
tax is another major source of black money. And,
none of these can be controlled by “demonetisation “.
In the run up 2014 LokSabha elections, Modi
had repeatedly claimed that if elected his
government would bring back black money from
abroad to distribute a sum of Rs. 15 lakh to each
and every poor Indian family. Without taking any
measure to seal off these loopholes in the system
that generates black money, the talk about curbing
black money will be nothing more than theatrics.
Definitely NarendraModi aims to gain political
mileage in the coming assembly elections.
As the costs imposed on the economy
becoming evident and as the people are becoming
restive with the inability of the government to provide
them with cash which they legitimately own, The
propaganda machinery of the of the government,
BJP and RSS swung into action propagating that
there will be more benefits, some immediate and
contd. in page 3
Organ of the Central Committee of CPI(ML)