Hoarders of black money have already found a way to outsmart the demonetisation, targetting poor families and asking them to deposit cash in banks in return for a commission. Forgery is at an all time high too, with citizens being cautioned against handing out identification documents. Meanwhile, the struggle to obtain legal tender continues without respite, reports Shrinivasa M.
Bonanza for staff and their family members!
This may sound strange. According to the sources, in last two days around 2,500 applications for new PAN cards was submitted from a group of vendors of the city in the name of their family members, staff, family members of the staff. According to the sources, several wholesale vendors, hawala operatives of the city who are now finding it extremely difficult to covert the old notes into new have decided to rope in the family members and staff and their family members. ‘Every one is ready to offer upto 50% of the cash to their staff if they could able to covert the cash. As a result, every one is rushing to have PAN cards. Generally these staff families are from economically poor families and this denomination process expected to change their luck,” explained a PAN card and Insurance agent from Mysore Bank circle of the city.
Few colleges in the city have witnessed sharp decline in the attendance as few real estate barons are using them for the conversion of the notes from black to white. All the students are directed to use either their aadhar cards or pan card for these transactions.
PIOs feel the heat!
People of Indian origin, who were returning from foreign countries, faced the brunt of demonetisation move as the cash they had in Rs 500 and Rs 1000 notes was rendered useless. These returning Indians faced a major crisis at the Kempegowda International Airport as they could not use their Rs 500 and Rs 1000 notes for travel as taxi drivers did not accept them. Even those who had the new Rs 2,000 note were in for a shock as most vendors and taxi drivers did not have adequate change!
In one of the corporate chain hospitals of the state, a 90 year old lady who was admitted 15 days back for breathing related problems was forced to wait for more than four hours as her children couldn’t able to adjust money in Rs 100 denominations. Her children had arranged Rs 70,000 hospital fee in old Rs 500 and Rs 1,000 denominations. But hospital didn’t accept it. As a result, all the relatives of the old woman was asked come to come to hospital and swipe their debit cards.
Hoarders target city’s poor
If Prime Minister Narendra Modi had hoped to weed out black money through his surprise cancellation of the old '500 and '1,000 denomination notes, he seems to have reckoned without the innovativeness of those targeted. Many of those left with huge stashes of the old notes are approaching the poor in the city, who have Jan Dhan bank accounts to deposit amounts of about Rs 1 lakh each for a year and earn a “commission” of Rs 20,000 in the process.
A tailor from Malleshwaram, who claims to have been offered the arrangement by a local BBMP engineer , says his family has become richer by Rs 1 lakh in all on account of the “ commissions” earned.
“His offer was Rs 20,000 as commission for each deposit of Rs 1 lakh made by five of us. So we have earned Rs 1 lakh. The engineer assured me we would not have to pay income tax as we were depositing only Rs 1 lakh each,” he explained.
Forgery hits new high
Various documents submitted for phone SIM cards or other services like bus/ railway tickets could land you in trouble. People are reportedly claiming to be representatives of bank account holders by duplicating such documents .
According to officials in the exchange sections of banks, duplicate documents with forged letters are being submitted by people claiming to be representatives of bank account holders to exchange the old denomination notes. Said a bank employee from Malleshwaram, “As per the RBI notification we need to issue the money to authorised representatives. But we get to know that these people have duped us when the original account holders arrive.”
“Even if we take more than two minutes to check the documents those standing in the queue start grumbling. There’s so much pressure. We can’t check every thing,” confessed another bank officer from Malleshwaram.
Losses to the tune of Rs 4000 crore
The state has lost around Rs 4,000 crore with all businesses coming to a standstill over the last six days, with government agencies taking a hit as well. An officer from the commercial tax department says all the key sectors are seeing a huge decline in sales.
“Liquor, vehicle and land registration are the biggest tax spinners for the state government. But all these sectors are in unprecedented gloom. The state government generates around Rs 400 crore in tax from the city alone especially in the form of VAT. But over the last six days, all the businesses establishments have virtually shut down,” he added. Finance department officials, however, say all will be well soon.
- The limit of old and now defunct notes that could be exchanged was to increase from Rs 4000 to Rs 4500. This did not happen.
- Cash withdrawal limits at ATMS, was to go up by Rs 500 to Rs 2,500 per day. This was not the case and ATMs ran out of cash in the first half of the day.
- The weekly limit of Rs 20,000 for withdrawal from bank counters also remains the same, instead of the Rs 24,000 that was to be allowed from Monday.
- Online platforms and cab aggregators like Swiggy and Uber reopened their Cash on Delivery option on Monday.
By now, we have enough data to judge what is going on. The Prime Minister launched what some people called a surgical strike against black money. And there is considerable hope around the country that the intended targets will be hit. After decades of inaction against obvious and wide-spread corruption, people are glad simply to see some action. Any action.
It is equally clear that there is collateral damage, with most people being affected by the shortage of notes in one way or another. To some, this is a necessary and unavoidable part of the initiative. To others, this is an avoidable error, that anyone familiar with the quality of our public administration could have anticipated. The truth probably is a mix of both.
The immediate question before us is, will it work? Can we be confident, come December 31, that we have made a successful raid against black money? The government, like all governments do, will surely claim victory on this front. And since these things are never judged purely by data - but instead also with a large dose of partisanship - we'll have to leave it at that. It could work, to some extent, and maybe that's all we'll ever know about it.
But there are much larger problems to be tackled, and if we turn our attention to those as a result of our experience with demonetisation, then it will have been a worthwhile exercise. There are two goals to be scored, in this context.
First, we must ask what allows the creation of black money? What we surely do not want is for one stash of unaccounted cash to be replaced by another. That would be gross injustice as well, to the many people who are now running from bank to bank to access their own money. Tackling how shady cash gets used is one part of the answer; the bigger part is how it takes birth.
All our evidence tells us that land and gold are the big culprits. These are sectors into which endless amounts of illicit cash has poured for decades, and has seamlessly circulated back into other uses after being suitably washed. If we hope to arrest the creation of black money in the future, it is here that we must take the most important steps.
Every land record must be digitised, and linked to a common database. Thereafter, there must be continuity of the digital records from land to development. This means that all transactions in land, including construction, must be linked to the identities of the buying and selling parties, as well as the identities of the public officials involved in regulating them. And most importantly, all land records must be publicly queriable, except for those with security implications.
Likewise, gold must be unit-traceable, and every transaction in gold must be documented, uniquely numbered, and linked to the identities of all involved parties. And above a low threshold, transacting in cash should simply be banned; there is no reason why people who can afford to put tens of thousands of rupees together can't be expected to do that through a bank,
These things in themselves will not suffice. But they are the minimum we must do, knowing fully well where the real demons of the black economy lie. When we do that, demonetisation will seem like one part of a broad effort to reshape the economy.
Finally, a note on the PM himself. By publicly and repeatedly speaking about his efforts against corruption, he has surely put the issue front and center. It is not clear whether even his own party will support that; after all, it has its skeletons too. But even if he cannot clear that hurdle, he will have set the bar much higher, and that is something in itself.
The writer is an urban expert and former member, ABIDe
