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Daijiworld Media Network - Mangaluru
Mangaluru, Dec 14: It has been over a month since Prime Minister Narendra Modi announced the drastic demonetisation of Rs 500 and Rs 1,000 currency notes. With just another fortnight remaining for the promised ''50-day'' time frame and ATMs still running dry, it seems that the situation would take much longer to normalise.
According to the Prime Minister, the very purpose or goal was to fight ''black money''. In its true definition, black money refers to hard cash accumulated by tax evasion and corruption. He also hoped that the counterfeit notes reportedly printed by Pakistan to fuel terrorism against India could be devalued. Goal posts have changed often in the past month, and now demonetisation is being projected as a move towards making India a cashless economy.
However, it has not been easy for the common man. Besides creating severe economic disruption, the sudden demonetisation created massive chaos and confusion throughout the country. Long lines at banks and ATMs, with their strict (and repeatedly changing) withdrawal guidelines, became a common sight, and even though the queues have become shorter with passing days, most ATMs are still either out of cash or non-functional. Adding to the incovenience was the initial problem with the design of the new Rs 2,000 denomination note, because of which existing ATMs across the country had to be recalibrated. Moreover, there was the problem of change - with shortage of the new Rs 500 note, people have been scurrying around desperately in search of notes of smaller denominations.
The situation is no different in Mangaluru. Apart from a few handful of ATMs, most remain out of cash or with their shutters down. Moreover, the few ATMs that are functional only dispense Rs 2,000 notes with withdrawal limit of Rs 2,000 per day.
Worse, the new Rs 500 note is yet to see light of day in the ATMs in the city. The banned Rs 500 note will not be acceptable anywhere except banks from Friday December 16. A guard at one of the ATMs in the city said that the ATM has had no cash for the past 20 days. Its shutters have remained half open, with the remaining half proclaiming ''No Cash''. The same is the case with a number of other ATMs in the city.
In banks, though the withdraw limit has been set at Rs 24,000, not many are lucky enough to withdraw this amount due to shortage of currency.
According to a report by IANS, it will be August 2017, or at least April 2017, by the time the economy is reinfused with adequate currency. If the government wants to introduce Rs 9 lac crore ($135 billion) - or 35 per cent less money than it pulled out - it will take up to May 2017, and if it wants to reintroduce the entire Rs 14 lac crore ($210 billion) that it withdrew, that could take up to August 2017.
"The crux of the problem is change, specifically the Rs 500 note, which India''s presses cannot, currently, print in adequate numbers," IANS reported.
Speaking to daijiworld, chartered accountant S S Nayak was optimistic about the move. "People, under the apprehension of scarcity, are trying to accumulate currency which is choking the circulation. In a growing economy like India currency will not be any scarcity. Before demotisation, about Rs 15 lac crore worth of Rs 500 and Rs 1,000 notes were in circulation, out of which Rs 12.5 lac crore has already been deposited in banks. Another Rs 50,000 crore would be deposited in the next few days. The RBI would then profit by Rs 2 lac crore which the government would use for welfare of the country.
"The major objective of demonetisation is to take the country towards cashless economy. If more cash is introduced into the economy then the very purpose of demonetisation, which is creating a parallel system of cashless economy, will not be fulfilled. Demonetisation is a good decision which will help in generating more tax and allow less scope for evasion. Now all the payments should done online. Swipe machines should be introduced in all the outlets," Nayak said.
He also felt the withdrawal cap for businesses should be increased. "For general public the current cap of Rs 24,000 withdrawal per week is absolutely fine. But for business enterprises, the current account withdrawal limit of Rs 50,000 is not enough and needs to be increased. The decision of demonetisation is of short term pain and long term gain. In the next 3 to 6 months the situation would normalize."