Demonetisation: Can a crisis be converted into an opportunity?

There has been a deep debate in the country about the inconvenience caused to common people, unfortunate death of those elderly in queue who should have been treated better, and many others. It is acknowledged that a large number of poor people have lost jobs because those who employed them have lost orders due to depressed demand or lack of cash. At the same time, repeated seizure of new currency in crores shows that there are some taps through which even new currency is leaking. Naturally, such taps are situated only in places where new currency is issued by RBI. Marriages, health, and sowing of rabi crop, procurement of kharif crop, are all affected.

Let us accept that Indian society, particularly common people have paid a huge price for cleaning up the system of fake currency, funding to terrorists in different parts of the country, ill-gotten wealth likely to be used in elections, and so on. It is also true that generation of black money will require far more serious steps than what have been taken. If elections are to be fought the way these are, if transaction costs of getting land or change in land use registered, or making payment for buildings and real estate, cash payment for health check-ups etc., and numerous other activities lack transparency, black money will continue to get generated. We have not started attacking the roots of those trees which bloom due to black money and don’t let grass of honest enterprises flourish underneath.

What could be we do: let all workers, small farmers, and petty traders who don’t have bank account be enabled to have one with the help of voluntary force of students and other staff.

A colleague mentioned that if the country can manage polio vaccination program, fair elections every now so often, census and other activities in such an orderly manner, why could not this also be managed likewise. Perhaps, there is a grain of truth in it. Even now it is not too late. Those who have not changed the currency include those: a)  who don’t want to,  lest they are exposed, b) those who have not managed to find accounts to deposit their ill gotten money in Jan Dhan Yojana, zero balance ac or other ways of converting it;  and c) those who could not change genuine cash saved to manage life, or even payments to their employees or lack of cash in banks etc.

Each of this kind of problem needs a different solution. Treating all alike will cause injustice to genuine savers and poor people. Given all the uncertainties of life, Indian tendency to be cautious, saving ratio in our economy has always been very high. But it had been falling and shifting from cash to assets like land and building. Can we give a new impetus to that by making all investment in health insurance tax free for a year not only for one self but also for employees? Thus if any employer wants all employees to be covered by health insurance say for next five years, let them do it whichever currency. The advantage is that health coverage net of our country will widen. It is well known that whenever an adverse health episode takes place, savings of several years are wiped out for poor or middle class person. India has one of the poorest community health, much worse than of course, Cuba and even Mexico.

Likewise, can we mobilise students and other volunteers, after closing colleges for one week and expand coverage of aadhar/bank account /credit card with fingerprint authentication for poor people universally.

There is a strong need for infrastructural stimulus in the country. Let all the profit of RBI, say around 4-5 lakh crore rupees (currency not changed) be used for strengthening rural and urban drainage, irrigation, watershed , sanitation (definitely not through uniform 15 litre flush water per toilet use), vaccination, mapping of biodiversity, associated traditional knowledge and cultural creativity, etc.

Let this crisis mean complete overhaul of MNGREA and at least 20 per cent of the days be used for knowledge mapping, education of cultural/folk artistic skills in schools and beautifying walls of public buildings by fold artists/sculptors, recording of performances and a lot more. We will stem the cultural heritage and at the same time provide new opportunities for children to develop an authentic aesthetic sense.

Notwithstanding all the pain the common people have gone through, seeds for next season, public work on private lands, and other radical measures are needed to bring workers and employers together in national reconstruction effort. The economy will pick up and pain will be lessened if not forgotten altogether.

Hard working India needs to get rid of the scourge of black money.

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