Tuesday evening, Modi shocked all by announcing that Rs 500 and 1000 denomination notes have ceased to exist as legal tenders. This is being seen as a bold and a historic decision affecting all walks of life and the entire economy. Although the decision will have positive effects in that some black money will be uncovered, which is being presented as its strongest point, however, a close analysis unearths the covert plan that all this is more of a political move to cripple the competitors, rather than being a step towards the stabilisation of the economy. Further, it will recover the hidden money marginally; there won’t be too big impact on unearthing the hidden cash. Moreover, this decision will have impact on general economic conditions, banks and general public. Â No sane man with a slight level of financial and economic sense will undermine this decision. It is indeed a bold and a revolutionary decision. This has come as a blow to those who hold black money in cash form. This class of Black Money holders have been left with no choice except disclosing their money or foregoing with its value and this has created insomnia in them. A considerable portion of such cash held by money launderers will show up. The decision is good in that new currency will come with ultramodern security and detection features installed in it; for example, micro chips that would emit satellite signals if accumulated beyond a certain amount. Similarly, already accumulated cash held for the purpose of some illegal or detrimental plan has been left unusable. The surprise element in the announcement was deliberately put in so that money launderers don’t get any time to make any sort of arrangements to dispose off the cash. However, the decision is not so pro-economic as is being propagated. It will definitely give results, but they would be marginal. Small black money holders who have not converted their cash into buying property or gold as has been done by the clever launderers, will face the brunt. It has come as a double-whammy to them. One, it will leave that money worthless and second, they will be caught if they uncover the money. But, the fact of the matter is that those big guns, who have already put their money in the financial stream in Swiss banks or elsewhere, will face no consequences; they will still be at large. Similarly, one of the most widely used method of money laundering known as ‘Money Mules’ still remains uncurbed. People holding black money will again distribute cash into ignorant gullible people who, in turn, will deposit these small amounts in banks without being caught. This neutralizes the effects of this decision of withdrawing Rs 500 & 1000 notes; it defeats the purpose for which the decision has been taken.
