As Indians queuing up for cash becomes commonplace, Prabuddha Jagadeb believes the chaos could have been averted by a booth-level exercise nationwide.
Looking at the scramble for cash and serpentine queues outside ATMs and bank branches for the past three days, one wonders if the #Demonetisation of Rs 500 and Rs 1000 notes is going to deliver the corruption-free Utopia we were all promised.
The government seems not to have anticipated the deep repercussions the move will have and in the need for secrecy, forgotten about the public inconvenience that we all witness now.
Facts & Stats
For starters let’s look at few stats:
*Less than 32 percent of Indians have access to banks and post offices
*There is one bank for 9,500 Indians.
*One-third of the 1.38 lakh bank branches are concentrated in 60 cities.
*253 of the 677 districts in India have less than 100 bank branches.
*500/1000 notes form close to 86% of value of the total money in circulation
When we compare the last point with the earlier ones, you realise the Herculean task that the government is staring at to carry out a seamless exchange and introduce new notes into the economy.
And to add to the woes of the inadequate banking system is the non-recalibrated, dysfunctional ATMs. Most of the ATMs are simply not reprogrammed to dispense new currency notes and are running out of cash within few hours. The banks are shirking responsibility saying that ATMs are maintained by third parties.
So the only option is to queue up before the bank branch, fill up a form and pray that the bank doesn’t run out of cash before your turn. Banks in turn are adding cumbersome hurdles like having to produce ID card copy and original, even from withdrawals from your own account!
The pressure on banks come not only from those who need to exchange old currency for new, but also from customers who need cash for everyday sustenance and can’t access the ATMs.
And if the indications are anything to go by, people with black money are trying to recruit people with Jan Dhan accounts to launder money by paying a commission. So expect the banks to be jammed by these commission seekers for the next 50 days!
Where there are no banks
So far there have been media reports mostly from the cities and towns on the cash crunch. The situation is worse in the villages and hinterlands where there are hardly any banks or post offices. People in these villages also need money to buy groceries, milk, commute, to buy medicines and meet health and day-to-day expenses. By not making adequate arrangements for these people, the PM has indeed drawn a great divide between India and Bharat.
Either these illiterate, poor lot trudge miles to the nearest post office or bank or pay a commission to some local agent to get the notes exchanged. And, this move was supposed to curb black money!
There have been already reports of riots at Chhatarpur in MP due to cash shortage. Desperate villagers looted a provisions store without any other go. We may soon see similar ramifications in other places if this cash-shortage isn’t met.
Why it should have been a booth-level exercise
One thing the Government seems to have forgotten in haste is that money is a universal medium of exchange. The spiraling inflation has also meant 500/1000 notes have also become a store of value for every strata of people. Overnight scrapping of these notes will definitely have wider economic, social and geographical ramification. The only thing that ever matches this operation in scale is perhaps the General Elections–and even that is carried out in phases by the Election Commission.
A prudent move would have been to plan the operation in collaboration with the Election Commission and to move paramilitary or military forces to execute it. To open booth-level exchange counters. And after every exchange, mark the beneficiary’s fingers with indelible ink. This would have given the much needed liquid cash to a large part of the populace stuck with old notes.
The way forward
Rather than saying it may take upto two weeks for ATMs to work, the Finance Minister must own up short-sightedness and immediately put in place these measures:
*Set up more exchange counters at booth or panchayat level on an immediate basis, if needed involve paramilitary personnel
*Ask banks to set up rural mobile counters at weekly markets/fairs or heavy footfall locations
*Extend the acceptance of old notes to private hospitals, so that no one is inconvenienced for healthcare
*By involving retired bank personnel/ staff from AG and other offices, make banks work 24×7 for the next 15 days
*Remove any debit/credit card surcharge or ceiling at Points of Sales
Of course, if the situation goes out of hand, the Government could consider a rollback.
For, the ultimate purpose of being a Welfare State in a democracy, is also being humane.
Else, inconveniencing the public has resulted in political rollbacks earlier, as history will tell you. 😉
(This article was first published on the writer’s LinkedIn page. Prabuddha blogs at https://medium.com/@prabuddhaj)