Demonetisation: An important first step to curb the black money menace?

Despite India being among the strongest emerging economies, corruption has acted as a scourge, destroying its prospects, creating a situation of inequitable distribution of wealth and undermining the country’s true potential. The nature of the malaise has been such that it has greatly impacted governance and various aspects that delivery growth such as; financial stability, investment, human capital formation productivity. Consequentially, it can lead to public apathy and a mistrust in government and an eventual descent into dystopia.

Thus, the recent demonetisation was initially received as a good move. However, long winding ques, public grievances owing to demonetisation and the impact on commercial activities has not been calculated. The question remains if demonetisation alone would resolve the problem of black money and if the government has more such measures planned ahead.

Kshitij Kotak, CEO, Fortune Grecells Private Limited & Chief Innovation Officer BLACKBOX DATA SAFE, observes, “ “Solve the problem of black money? Not possible to do so with demonetization alone but neither does the government believe that this single step will completely eradicate black money. If you observe though, they have been a series of steps, in logical and determined sequence, including giving an opportunity window to the black money hoarders to come clean with voluntary disclosure scheme. Demonetization has also served to clean up significant amount of black money in politics that was in cash form isthe reason why politicians are opposing the move.”

Even the commoners seem to understand the need for stringent measures. Thus despite long winding quest outside ATMs and Banks, the Narendra Modi has received an astounding 90 percent support from members of the general populace, in stark contrast to media reports about civil discord.

“It was indeed the path breaking step taken by our PM Narendra Modi to curb black money by creating a ban on 500 and 1000 rupee notes. It was a much needed step to be taken in order to create a balanced economy which is free from corruption. But in short run, it will surely create some impact on all kinds of business industries as there is disruption in the current liquidity. Generally shares of smaller companies could come under pressure. Most consumption activities in the country happen through cash, which could impact their business. On the other hand in the long term though, these measures to curb unaccounted wealth will increase transparency and credibility in the business sector.”

However, demonetisation is only the first step and it shall have to be supported by other long term measures including that of an emphasis on digital banking transactions that would bring in more transparency in the system.