Demonetization – What next ?

Many have asked what next? Well, I haven’t really spent too much time on that yet but here are some immediate things that come in my mind. Feel free to add your suggestions in the comments section.

I see three kind of groups

1. Government (led by Modi)
2. Opposition political parties (led by nobody but everybody at same time)
3. General Public

Let’s see what each of this group should do….

What should government do?

As everyone expects by now, Modi should not stop with #DeMonetisation, he should continue the clean-up act broadly classified into following categories (in no particular order)

1.      Donation to political parties:

a.   This is the mother of all scams !! All donations to political parties are tax free and PAN card of the donor is not required for donations less than Rs 20,000. Political parties have an avenue to convert their corruption money into white by donating their corrupt money to themselves, albeit in various lots of less than Rs 20,000

b.   Modi should ban ALL cash donations or atleast mandate any donation more than Rs one thousand to be via any of the banking (be online or card or e-wallet or UPI etc.,) channels

c.   Also, donations to all political party need to be taxed at 30%. No discussions or debates on this. There should be no tax exemptions to either the receiver or donor
d. You can sign the following petition if you are interested. https://www.change.org/p/political-parties-of-india-must-accept-donations-only-thru-cheques-or-e-mode-let-s-make-india-cashless?recruiter=636685775&utm_source=share_petition&utm_medium=copylink

2.      Agriculture income:

a.    This is one more large scam ! Entire agriculture income is tax free and this again has been an avenue for politicians and other corrupt leaders to convert their black money into white

b.   How many of you remember the in-famous incident of Amitabh Bachan trying to be a farmer? (http://timesofindia.indiatimes.com/city/lucknow/Amitabh-is-a-big-farmer-in-UP-now/articleshow/6193892.cms).Though it was taken to court and court declared Bachans are not farmers but then this just shows folks are always eager to misuse tax exempt on agriculture income

c.    Modi should bring agriculture income under tax net – say anything less than 10 lakhs per annum should be tax free and anything more than 10 lakhs per annum has to follow existing Income Tax slabs and rules. Don’t worry about the uproar that this will cause, actual poor and needy farmers anyhow do not have a profit of more than 10 lakhs per annum !
d. You can sign the following petition if you are interested. https://www.change.org/p/tax-agriculture-income-exceeding-rs-10-lacs?recruiter=636685775&utm_source=share_petition&utm_medium=copylink

3.      Currency Notes:

a.   Gradually but sooner than later, eliminate all high denomination notes by banning all new 2000 notes completely, do not introduce any new 1000 rupees notes ever and control the amount of new 500 notes in circulation and eventually banning new 500 notes also. I have covered about this in my first blog (http://khadloya.blogspot.in/2016/11/Demonetisation17.html) how this will help. For smaller transactions, lower denomination notes will always be there

4.      Real-estate:

a.   There are lots of be-nami property throughout India. In simple terms, be-nami means owner name and the person financing purchase of the property are two different individuals. This is one of the many sources of corruption and black money. Let’s not get into methodology (social media has been busy for many days on how exactly and precisely can govt address this) but hope that Modi takes action on this without much delay

5.      Other assets like gold and other precious gems:

a.   Again there are many debates on social media on how to address this. It is not easy to un-earth existing gold etc., but is relatively easy to address in future.

b.  Modi can continue to take steps to re-cycle existing gold and introduce measures to ensure only jewelers and associates deal in gold bars, individuals should be banned from buying physical gold (in bar forms) beyond a quantity.

c.   Remember, we are no longer a large producer of gold and lot of money (mostly in US Dollars) goes out of country to import gold.

6.      Cash less economy:

a.   Continue to introduce measure like no transaction charges, more security for online or card transactions, tax and other incentives, etc., to promote an economy which is less dependent on cash.

b.   Introduce tax on withdrawals from banks, say tax on withdrawal of more than Rs 10,000 in a single transaction, tax on withdrawal of more than Rs 25,000 in a week etc., etc.,

c.   Cash of lower denominations will always be there to take care of road side vendors or transactions of (say) value less than Rs 5,000. For anything else, whatever be the reason, mandate non-cash channels

d. Make Akadora, (http://www.businessinsider.in/Akodara-Indias-first-digital-village/articleshow/55414926.cms) as a model. In this village, all transactions above Rs 10/- (yes, all cash transaction above ten rupees) is cashless.

e.   PS: Cashless does NOT mean elimination of ALL currency / coins. Everyone knows this is impossible in India. Cashless mean less and less dependence on cash !

7.      Budget:

a.   It goes without saying that Modi is expected to pass the benefits of demonetization to the common people. He need to lower the taxes at earliest. He need to announce various new schemes to uplift the economy

b.      Also, if Modi is confident on himself that he will take more measures (on lines of what is mentioned above), he should pass more benefits to common man in advance. If not, public will not have anything to continue to trust him and opposition parties will repeat what British did, divide and rule !!

8.      Party workers: Ask your party workers to

a.      not hoard cash

b.      do not go to bank or ATM un-necessarily

c.   help folks in rural India to deal with current crisis, exchange their 2000 notes with small denominations that you can get from petrol bunks, temples, and lot many other places that are affiliated to you (as an individual or party)

d.   conduct camps to educate rural folks on how to reduce dependencies on cash. This is feasible, there are example of entire village (like Akadora in Gujarat) being cashless

9.      Do not worry about election

a.   Modi should not worry about election. He is expected to lose the forthcoming state elections and that’s good. That will either ensure he is grounded and implements things after planning well or that will determine him to do better things. Either way, if he implements all above measure with complete honesty and integrity, he will automatically win in future. Is this (sort of) paradox !!

b.   Even if does not win, implementing the above 8 or 9 things means he is leaving a rich legacy ! This battle against #BlackMoney and #Corruption is not about who wins or loses elections, it is all about a better India.

If everything mentioned above (and many more such measures that government or you can suggest) is implemented with complete honesty and integrity, then there is nothing left for anyone else to do J . Alas, world is not fair and things are not so straight forward. Modi is not perfect and hence there is a strong role for opposition and public in a democracy to ensure government is accountable and does not falter !

What should opposition / political parties do?

I can’t ask political parties to stop playing politics on this because they will never stop doing that J. No matter who says what, politicians (again does not matter who is in ruling and who is opposition) will continue to spread rumors, will continue to divide society, will continue to spread negativity for selfish reasons and will continue to create hurdle.

Opposition parties know demonetization and other measures will yield results, their fear comes from following.

1. Irrespective of how good they are to tackle their black money, they will have to devise new methodology to generate and spend black money in future.
2. They are afraid that if Modi goes whole nine yards, their future is in danger. We covered this also in my first blog. (http://khadloya.blogspot.in/2016/11/Demonetisation17.html)
3. Not getting credit. Our opposition is famous for snatching credit for any good work that happens and here only Modi is getting credit (or beatings, however you want to see), mainly because opposition themselves are not seen doing anything on helping the cause.

I think opposition can do two things

1. Stop dividing the country. In their zeal to find chink in government’s armor, everyone is just shooting from their mouth. If this continues, there will be further polarization in the country!!
2. Modi is definitely not a saint, he has his own scars and opposition should ensure Modi do not become a bigger scamster. For that, opposition need to ensure above (and many more such) measures are taken properly and effectively. Do not just keep shouting and yelling and screaming. Question is, do they have the guts to do same ?

What should an individual do ?

There are many kinds of individuals, I’m focusing on following three kind of individuals

1.      Business folks, who are not necessarily corrupt but the system forced them to avoid tax.

a. We have already covered this in detail my one of my previous  blog (http://khadloya.blogspot.com/2016/12/Isevadingtaxcorrpution.html). These folks have lot to gain if Modi really delivers. These folks should focus on how to get these things done.

b.      Following is what they can do immediately

1. Stop going to banks and ATMs un-necessarily
2. Reduce dependency on cash - leverage online banking, UPI, e-wallets etc.,
3. Stop worrying and stop hoarding cash
4. Start spending, your money is safe in bank. There are current challenges in withdrawing from bank but your money in bank will not disappear
5. Do not get swayed by false negativity. Think on your own and act accordingly. There is no one solution fits all. Most of you are smart and have already managed the crisis J
6. Start adapting to the changes, if you do not adapt you will become nobody
7. Start petitioning (via social media, RTIs, online and offline petitions etc.,) or follow any way that you are confident and believe in, to ensure government implement your suggestions, including the measures listed in the top of this blog.
8.  Do not underestimate the power of social media !!

2.      Professionals, many of  who are honest tax payer

a.   Just because your tax (TDS) was deduced even before you getting salary does not mean that everything is OK. If you do nothing, who will stop spread of corruption? Political parties will not because there is no concept of clean politics and clean politician!!

b.   Wake up and start petitioning (via social media, RTIs, online and offline petitions etc.,) or follow any way that you are confident and believe in, to ensure government implement your suggestions, including the measures listed in the top of this blog.

3.      Rest of the genuine individuals who need money but cannot take out of bank

a.   Modi has not thought through and messed up the implementation. Corrupt individuals added to the woes by converting old notes to new for a commission, there by diverting new notes to other influential people. Hold on for few more days, things should stabilize soon. 

b.   Beyond all this, ensure your voice is heard so that no such un-planned activities are taken up in future. Eve if you are not able to get hold of your own money because corrupt bank officials and others are directing it elsewhere, continue to make noise so that such loopholes are plugged in future schemes. Do not lose hope though, pile up the pressure on Modi to deliver on all fronts

If you intend to use online / social media tools, following links are of some help. Don’t get bogged down telling this is waste, they will not listen etc., etc., . They might listen… they might not listen… but still go ahead and log in your suggestions. It does not take much effort and time, you can do it while sitting on a cosy sofa / char or wherever you are. J Remember, it was mainly social media (along with public dissatisfactions with other parties, which is true everywhere) that made a newbie CM of Delhi !!

https://www.mygov.in/group-issue/suggestions-invited-union-budget-2017/

https://www.change.org/p/political-parties-of-india-must-accept-donations-only-thru-cheques-or-e-mode-let-s-make-india-cashless?recruiter=636685775&utm_source=share_petition&utm_medium=copylink

https://www.change.org/p/tax-agriculture-income-exceeding-rs-10-lacs?recruiter=636685775&utm_source=share_petition&utm_medium=copylink

https://www.mygov.in/

If you are up for game, go ahead and start your own petition at https://www.change.org/. You might like to search whether such a petition already exists before starting a new one.

PS: Even though demonetization is not making as much news/noise as earlier, there are many more questions that have been asked to me on demonetization and I intend to answer them at my own pace. Watch out for few more updates

Conclusion:

Either join the movement and do (or continue to do) something to make a difference or stop blaming government after government for failures. If you do not grab the current opportunity, sooner or later, we will start again hearing scams after scams every day…..

Modi is not necessarily a saint but he has dared to do something different. He failed the implementation big time and it is upto us (the janata, the public, the comman man) to ensure Modi continues to take more measures and remain accountable. Constructive public involvement is key to keep a democracy healthy and accountable.