The long-queue pictures and chaotic scenes outside banks in India on this page belie theAcchhe Din that is on the way in the world's largest democracy.
Yes, there is a genuine effort on the part of Prime Minister Narendra Modi to bring in concrete reforms in India and along with it Acchhe Din in India.
While Modi was riding in the Shinkansen bullet train from Tokyo to Kobe, images of long, angry queues of Indians at ATMs that wouldn’t work were juxtaposed with visuals of high currency notes floating down the Ganga in Uttar Pradesh and overflowing in a garbage bin in central Kolkata.
Long queues were seen over the past few days across India as people scrambled to the banks to exchange the demonetised currency notes.
PM Modi recently announced demonetisation of the Rs 500 and Rs 1,000 currency notes to curb black money. The decision came as a big blow to those who earn and stash black money.
The two notes accounted for about 85% of the cash in circulation.
“Black money and corruption are the biggest obstacles in eradicating poverty,” Modi said during his address to the nation.
As a result of demonetisation, there were long, unending queues at almost every ATM and bank across the country, with people having to wait for several hours before they could exchange their old notes. Many had to return disappointed as well.
The government with just a few hours notice announced that Rs 500 and Rs 1,000 notes will become invalid and can be exchanged for newly printed Rs 2,000 and 500 currency notes.
On November 12 Modi warned of the possibility of more measures being introduced by the government against black money after the December-end deadline to deposit the scrapped notes.
Modi, who introduced the demonetisation scheme on November 8, hailed it as the “biggest cleanliness drive” against black money hoarders while addressing a gathering of NRI audience in Kobe.
Modi assured that all the black money that has been looted will be brought back and that the “rules would be same for everyone”.
Modi recognised that people were facing hardships but said that it was in the larger interest of the nation.
He said, “Some people think that after December 30, this all will end. I want to declare this once again that after the end of this scheme, there is no guarantee that something else will not be introduced to get rid of such people.”
The PM laid down the law saying no-one with black money will be spared. “We will check all the records since Independence. If I come across any unaccounted cash, no-one will be spared.”
He said: “I thought long and hard about the possible difficulties, and it was also important to keep it a secret. It had to be done suddenly. But I never thought I will receive blessings for this.”
The PM said he was happy to see how sons and daughters-in-law were depositing money up to Rs 2.5 lakh in their mothers’ accounts staying in old age homes. “After blessings from mothers like these, it is certain to be successful.”
Modi said people were given several chances to come clean. “We had given 50 days to people to show their unaccounted wealth.” Modi claimed the banks received Rs 125 lakh crore after people were asked to declare their unaccounted wealth in September.
The PM lauded the people facing difficulties due to the scheme. He compared the situation in India to how Japan handled the natural disaster. “I salute my countrymen. People stood in line for four hours, six hours but accepted the decision in national interest the way people of Japan tackled the aftermath of the 2011 disaster. I salute each and every Indian. Many families had weddings, their mothers were ailing, they faced inconvenience, but they accepted the decision,” Modi said.
Rs 500 and Rs 1,000 notes can be deposited in banks or post offices till December this year. People could withdraw a maximum of Rs 10,000 a day from the banks and a maximum of Rs 2,000 a day from the ATMs till November 14. The limit for withdrawal from ATM has then been increased to Rs 4,000 per day.
OPERATION BLACK MONEY
On a Thursday two weeks ago, Finance Minister Arun Jaitley met RBI Directors from all the states. During the meeting, he made a presentation to the RBI Directors and asked for their views on banning the Rs 500 and Rs 1,000 currency notes.
Though some RBI representatives opposed the government’s move fearing inconvenience to citizens, they were asked to maintain total secrecy around the discussion.
On Friday evening, Modi met Jaitley to follow up the discussion on the government’s plan. Modi also met Finance Ministry officials to discuss the implications of the decision.
Soon after, the Reserve Bank of India officials received an email from the Finance Ministry regarding the bold move.
On Tuesday morning, a fax was sent from the Finance Ministry to the RBI’s regional offices directing the banks to not accept Rs 500 and Rs 1,000 notes from the next day.
Another fax was sent to the RBI offices in the evening. This fax mentioned PM Modi’s order stating that from midnight Rs 500 and Rs 1,000 notes will not be accepted as legal tender.
The RBI governor then forwarded the email to all the banks and departments concerned.
Jaitley said this decision of the government will help curb corruption, black money and terror funding.
Jaitley assured people that usage of smaller currency denomination won’t be affected. He also suggested that the decision had the potential to change the mood of the nation.
“This will have an effect on the economy in the long term and this bold step will change the mood of the nation,” he said.
He encouraged people to use cheques instead of cash for transactions whenever possible.
The finance minister also came down hard on critics of the scheme suggesting that only those who are corrupt are disturbed by the move.
Delhi Chief Minister Arvind Kejriwal slammed the PM calling for a rollback of the scheme, and alleging that Modi had told his close aides about demonetisation beforehand.
“People are feeling proud of being honest after the decision. Those living honest life are happy with this decision,” Jaitley added.
This is PM Modi’s biggest offensive yet. Most transactions in daily life are in cash and 45% of those are in notes in denominations of 500 rupees and over.
The decision has caught the country completely off guard. The move leaves a lot of uncertainty about the Indian economy at least in the short term.
Modi’s tearful defence of his war against the parallel black money economy is both an admission that the war is tougher and will last much longer than he expected, besides the frustrating fact that his initiatives are well-received abroad more than at home. Resultantly, Economic Affairs Secretary Shaktikanta Das told reporters that by 5 pm on Sunday evening, banks had netted $44 billion in 180 million transactions. However, some say if secrecy was the key in the banning of the high currency notes, the government should have anticipated and worked overtime to alleviate people's troubles. PM Modi was elected to take big, transformational decisions. He hasn’t exactly lived up to expectations in the past two and half years – but with the surgical strikes on terror camps on the border and this demonetisation scheme he showed that he was certainly capable of them. The demonetisation decision has a certain economic logic to it. The absence of large-denomination notes will surely make it harder for people to keep black money in hand. Another perspective is – the demonetisation decision is also a kind of making a statement that the PM is capable of doing something – of strong leadership.
Modi came to power in 2014 on anti-corruption plank, with promises to end black money economy. And so the black money issue was one of the most vulnerable for Modi. And that’s the reason for the sudden and swift decision to ban Rs 500 and Rs 1,000 notes. Every voter is affected by this move. And they know it is meant to keep a check on black money. Although they know it will put them in some inconvenience, at least they know the PM’s intention is right and he is doing something about black money or trying to keep his promise. To say the least, it has demonstrated Modi's India is committed to reforms and positive change.
However, like the surgical strikes, this move too is not without risks. Not only does demonetization entail economic costs, it could potentially spiral into an administrative nightmare as people scramble to offload their stock of soon to be worthless banknotes.
Also, the move comes at a time when BJP is in the middle of its preparations for elections to the state assemblies of Uttar Pradesh, Punjab, Goa, Uttarakhand.
Modi is one of the most risk-friendly PMs India had. His way comes from an incredible self-belief and a calculation that the benefits would outweigh the costs.
The whole idea in demonetising is to break the unholy nexus of corruption, black money and terrorism, as it has acquired scary proportions, threatening the very fabric of India, which was highlighted by Modi in his address to the nation.
Yes, there will be some initial chaos, but the implicit calculation is that the honest will be unharmed.
It is clear that this move has been a well-thought-out decision. It began with a massive push to universalise access to bank accounts, big fillip to the use of Aadhaar in transactions and the push to a cashless economy.
This was followed up with two offers for those with black money to come clean—the latest scheme closing on 30 September.
Finally, Modi is good at hitting two birds with one stone.
Demonetising these two currency notes (16.5 billion Rs 500 notes and 6.7 billion Rs 1,000 notes are presently in circulation) will not only help in clean governance but also help him in building his image as a strong leader.
Needless to say, he is also eyeing the 2019 General Elections. This is the beginning of Narendra Modi’s re-election campaign –a potential game changing moment something to cash in on.
Deal on the rails
India is on the right track, and that’s because Prime Minister Narendra Modi hasn’t gone off the rails. His visit to Japan has done India a power of good and set the balls rolling for development.
The visit can be termed historic, with India signing two major deals with the economically powerful South-east Asian country.
India will have its first high speed bullet train in operation by 2023. Japan, which is building the Mumbai-Ahmedabad high-speed train corridor, has assured that the work will begin in 2018 and get over in 5 years' time. The rail line will stretch approximately 530km between Mumbai and Ahmedabad.
Like the proof of the pudding is in the eating, the proof of bullet train’s efficiency is in the ride.
Modi travelled by Shinkansen from Tokyo to Kobe. Japanese Prime Minister Shinzo Abe accompanied the Indian Prime Minister in the Shinkansen train journey.
Abe said the project symbolises a new dimension in the special relations between the two countries and hoped that introduction of the rapid train network will boost further economic growth in India as he recalled that a similar thing had happened in Japan when high speed rail system 'Shinkansen' was introduced in 1964.
At a joint press conference, Japanese PM Abe said the Consultancy work on the project will start in December 2016 and the construction will begin by the end of 2018. The ground breaking ceremony will happen in 2017 and the line will become operational in 2023. A task force for transfer of technology and ‘Make in india’ will also be established. It will have representatives from the two countries.
Shinkansen train has an undisputable safety and unmatched reliability record in the world. Japan’s bullet trains can travel at speeds in excess of 300kph.
The two leaders emphasised the critical importance of human resource development in high speed rail technology, operation and maintenance in a planned manner, including the start of preliminary work on setting up of HSR Institute and development of its training programme. Modi said he is “focused on making strong progress on the Mumbai-Ahmedabad high-speed rail project. Our engagement and agreement on cooperation in the financial sector will help us in accessing greater resources for infrastructure development.”
The ties between India and Japan have grown in the economic sphere over the past decade. The signing of the India-Japan Comprehensive Economic Partnership Agreement (CEPA) has certainly boosted economic ties between the two countries.
Bilateral trade between both countries in 2015-16 stood at nearly $15 billion, while Japanese investments in India are pegged at $2.6 billion. Japanese PM Shinzo Abe had committed investments worth $35 billion in 2014.
The Japan International Corporation Agency (JICA), which provided assistance for the Delhi Metro, will also be giving a loan of nearly Rs 80,000 crore over a period of 15 years for the ambitious Mumbai-Ahmedabad bullet train. The interest rate is a just 0.1 per cent.
The project will cost around Rs 1 lakh crore. The cost is officially said to be Rs 97,636 crore, but reports say a Rs 10,000 crore additional cost may be incurred.
The two leaders attended a signing ceremony where the Hyogo Prefectural Government and officials from Gujarat exchanged memorandums on business and culture.
Hyogo’s local government provided support to Gujarat following the 2001 earthquake. Since then exchanges between Hyogo and Gujarat have continued, with Modi visiting the prefecture twice while he was the state’s chief minister.
Indian Railways carries 23 million people daily on age-old tracks. Modi plans to spend 8.5 trillion rupees through 2020 on new tracks, including bullet trains and modern stations, as he looks to spur a manufacturing boom.
