Demonetisation: The new colour of money

Demonetisation: The new colour of money: The government had announced that the Rs.500 and Rs.1,000 notes in circulation till the midnight of November 8 will no longer count as legal tender. Demonetisation is a standard tool in any government...

Money matters
Pulapre Balakrishnan’s article “The new colour of money”(The Hindu, November 11) puts together cogently in one place several aspects and dimensions of the somewhat drastic measure of demonetizing more than 80 per cent(in terms of value) of notes in circulation in the county announced by Government of India and RBI on November 8, 2016. Some of the implications lucidly explained in the article were not known to the common man, and, one is not sure, whether even policy makers had taken serious note of these, while taking the decision. These are issues which, hopefully, will be deliberated during the weeks ahead.
Let us accept that the concerns and anxieties expressed by the Prime Minister on November 8, while announcing demonetization of Rs 500 and Rs 1000 notes, which included misuse and abuse of high denomination currency notes for purposes other than those for which ‘currency’ was issued, by themselves prepared a genuine ground for the tough option that was exercised.
The follow up measures suggested in the article, namely those relating to regulating transactions in gold and property by making mandatory provisions to route them through banks are significant and sooner the political leadership (as different from the government) comes to a consensus on these measures, the better for the country. A couple of issues, which even scholars like Prof: Balakrishnan avoid mentioning but will have long term beneficial impact for the country’s economic growth and India’s image among developing/developed nations, remain still in the backburner. They are handling the taxation of agricultural income and mapping the assets including gold and jewelry lying unaccounted in various pockets. Government could start with making it mandatory to report periodically the value of assets above a pre-decided threshold level, held by individuals and registered institutions.
M G Warrier, Mumbai


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