Personally, I have to continue cautious support to Modi’s initiative. But one probably has to watch and wait for the full process to unfold.
As such, unaccounted money is an evil. It is a continuing process, which makes many of us, unwitting participants in a criminal process. Anyone who has had opportunity to deal with land transactions, selling or buying a house, deal with a contractor for repair of the house, starting a small business, getting through the permit raj to launch a small venture knows. So being a party or a beneficiary of the system in the past may be more out of necessity and force of continued practice than anything else. That doesn’t mean that the support for the move is hypocritical.
If we look at the present scenario, we have a rapidly expanding economy. A very high percentage is in the service sector. You know what- quite prosperous farmers do exist. So do richer than we think small businessmen, household industrial units, service providers like contractors, beauticians, private doctors, lawyers and accountants, who do exclusively cash business and none is taxed. It is not only the big players and the corporate that evade tax.
Black money demoralises people who want to be honest. They feel greatly diminished by comparison, and will drift to the dark side. In fact, it may be impossible to run a business honestly, because they won’t be able to compete with others who deal in receiptless cash.
Lack of production of Black money will lead to deflation. Value of white money will go up. Honest wage earners will be able to afford a house.
Corruption may come down, as one cant park money.
If we want to really curb black money, massive- and quite likely, unpopular follow-up measures are in order.
Very strict monitoring.
A cap on cash transaction per week- say, only 5000 rupees can be transacted as cash with the bank or otherwise. This will force even a rural general practitioner to install a swiping machine in house.
Any less severe measure will, within a matter of months, take us back to where we were.
What will the illiterate masses do? See – if they can learn to deal in cash, they will learn to open an account and swipe. War-like efforts will be needed to facilitate financial literacy, which, whether we like it or not, is more important than learning to read a newspaper.
The amount of black money that is liquidized is a very small percentage, recently kept as cash. It would immediately neutralize all fake currency, of course, but what does the government come up with? A note of higher denomination that doesn’t contain many new security features. Do we think the official establishment in Pakistan are duffers who will be permanently flummoxed by the purple colour? They will be shocked by its ugly effect, for sure, but that will not prevent them from printing it.
Of course, the supporters say that many highly secret moves lie ahead. Maybe.
As for the question, whether these supporters, have not seen or touched black money ever in their lives, I quote Jesus Christ, no less:
“Let those who have not sinned, cast the first stone”
But Jesus Christ was God. God can work in mysterious ways, for an eternity. Modi, despite appearances to the contrary, is not. He can work in mysterious ways, only for some time, before patience of the people wear thin.