The politicisation of swapping of currency note is the current talk of the nation. Who will benefit, which sectors would suffer, whether impact on social groups is even etc are the valid arguments that are being discussed. Some political parties are making hue and cry about the decision itself instead of coming with a constructive suggestions. Few obvious voices crying foul was expected but the people who entered politics with the vow of cleansing the corruption mobilising people in favour of black money is nothing but the pathetic state of mindset we have evolved in our political system.The lines are painful, cash crunch is obvious, and so is the slump in economy. At the same time, Government is consistently reviewing the situation, coming up relief measures and the banking system along with common people are responding positively is also a fact. The fake currency rackets, terror finance networks and black money hoarders are hit badly achieving the key objectives of the revolutionary move. With the passage of time and availability of cash, most of the issues related to confusion and chaos will be sorted out. The real question is what next? How this move is going to impact the structures and processes of economy in the future? There are many long-term gains in the offing, for which one need not be an economic pundit.
The series of measures taken by this Government is going to transform the banking sector once and for all. The credit crunch experienced by the banking sector, thanks to large amount of Non-Performing Asset (NPA), will be sorted out with large amount of reserves available with them. The natural corollary is that banks would be in a better position to play a constructive role of lenders rather than just trustees, as envisaged by none other than Dr Ambedkar. As the many sectors will have better credit line available especially the infrastructure and tech-based industries will get the impetus in near future. Another side effect is, many people in informal sector, whom we have desired to be part of the formal structures would be included in the development process.
The more long-term benefits would be national, improving individual-state relationship for the future. Most of the people evade taxes as they find it disproportionate, leaving many well-earning sections of the society out of tax regime. State being a policeman while citizens are generally thief, is a typical outcome of the socialistic economy which we are continuing with. Once the tax-GDP ratio is improved and number of people under tax regime is increased, the taxation rates also will be lowered. This is also essential for the forthcoming Goods and Services Tax (GST) regime under which trade-tax will have a unified system.
The Government is already mooting the ideas for electoral reforms. Curbing the black money invested in property and gold is another challenge. But the real issue is how the system is going to pump back the money in the market. Announcement of doubling the support price for Rabi crops is a welcome move in this regard. People will be more than willing to pay taxes if they get the quality governance in return. So providing minimum social security nets to the maximum should be the ultimate target of this revolutionary move. Then only we can move from mere growth based economy to happiness based economy.
By Prafulla Ketkar