Why I think Demonetization was a terrible Idea


I’ve never heard of the term “demonetization” ever in my life before, up until the night of November 8th, last year.

Nobody will ever forget that night. I was watching TV and it was all of a chaos, reading the news about the government withdrawing the legal tender of 500 and 1000 rupees notes. As any common man, all I did was panic. Thinking our government has gone completely crazy. To be fair, it was a bold move by the government, withdrawing majority of the cash back from the economy is not a joke. (By saying that I am nor supporting or against their actions)

Demonetization was a good idea, to curb all the black money and counterfeit notes. It would’ve worked accordingly if India was a small country with only a handful of people, which the authorities could control. (But then again, the question of black money wouldn’t have been raised..) But what went wrong is, the execution not only didn’t go as planned, but it also got backlash severely.


Why I think demonetization went terribly wrong..

First of all, I would like to categorize our PM’s effort into “Worthy Idea Executed Poorly” category. To be honest, our PM has way too many attempts like this, that went down to the gutter because of unsatisfactory executions. I will not try to get into those for now.

There were two departments which determined the success or failure of demonetization.

  1. The Reserve Bank of India, &
  2. The Income Tax Office of India.

To be frank, both of them were terribly prepared for it. I am not sure if it’s appropriate to blame them for not preparing well, since the plan of demonetization was only known to a handful of people before declaration in the upper ministry. If I’m not wrong, even the RBI & ITO officials came to know about it only as soon as we all did.

Role of RBI..

The Role of RBI and other Public & Private sector banks were critical. To re-monetize all the currencies which the legal tenders were cancelled. But not surprisingly, the banks were not a tiny bit of prepared for it.

Before demonetization, the Govt. did not advice the RBI to print more notes of 50’s & 100’s and circulate it. They did not even started printing the new 500s notes until demonetization was declared. (I will explain the justification given for that by the Govt later in this post)

Since the banks were not prepared, that was a quick backlash. The strongest failure of demonetization. In common man’s eye, they don’t care of the corruption and black money that were destroying the economy. They only cared about making their ends meet at the end of the day. But withdrawal of legal tender of old notes came out of blue and destroyed all their plans. Common man uses physical cash more since the transactions are of small price. What a normal household do where their salary is credited to bank is, they will withdraw all the money at once and spend it offline. Heck, most of the people get their salary or wages in hand, they don’t even have a bank account!

The truth is, common man who makes up majority of India’s population was not interested in the course of curbing black money for a price of giving up all the money they kept with them in cash.

To be fair, demonetization wasn’t even targeted on those common man, but unfortunately they were the ones who suffered the most..

The reason why the common man suffered & the targeted group was (kind of) benefited instead of suffering is becuase of our 2nd key department who had to work closely with demonetization. That is our;

2. The Income Tax Department of India

Their role was the most pivotal factor of the entire demonetization process.

In the eyes of common man, demonetization was only a process of exchanging old notes with new notes. But that was only a part of the process. There was a lot of other things underneath which were depending on that procedure.

The aim of our government was to bring back all the unaccounted money back into the economy. When demonetization was declared, those who held money in black, had no other option than depositing it into the bank or literally destroy them. Because since the night of Nov 8, 2016, all those currency has only the value of waste paper.

But just like RBI’s case, our Income Tax Department was also not prepared for it. They were already in tight schedules of assessing the “taxable” incomes which assesses (common man & companies) had already declared during the preceding assessment years. At that time it took almost 5 full months just for an Individual return to be processed. That shows the load on IT offices.

Now. I will try to explain the plan of our Govt roughly. It was like

a> People will deposit black money into the banks,

b> Banks will then intimate such huge deposists to the Income Tax officials.

c> The income tax offices will try and match such deposists with their incomes earlier declared.

d> Identify unaccounted money and take necessary actions.

To be honest, that was a splendid plan! But oh boy, that is way harder than it actually sounds. I’ll try to explain why. The above plan which the govt has aimed is very solid. But the decision of putting that task on the head of Income Tax Department was obviously a bad decision. ITO was already busy with what they were already doing. They were not prepared for it, because they were not advised about demonetization before. That was a failure in our govt’s side. They overestimated our Income Tax Offices’ capacity.

The above plan would’ve worked if demonetization was declared without immediate effect. What happened is, people all over the country who had white (legal money) as well as black money came together & deposited it into the bank all of a sudden. That was enormous amount of transaction which was practically not possible to be matched with the declared incomes all of a sudden for the ITOs. Such huge amount of transaction would require lots of calculations and reconciliation which was obviously not feasible for the Income Tax Department at that time.

Another failure was our govt underestimating our big bosses. Those who held black money had already found different ways to convert that money into white.

Demonetization was actually misused as an opportunity for those who held large sum of black money to covert it into white!

Because, Before demonetization, if someone try to deposit a large sum of money into a bank account, that would trigger the Income Tax wing accordingly. But then again, not many made those mistakes. With the help of other’s bank accounts, also known as benamies, they will launder their money into different bank accounts opened in the name of their close relatives/those who worked for them. But before demonetization, there was a possibility of the benami to get caught since a substantial deposit would trigger the Income Tax wings. Such uncertainty was actually removed by demonetization. Big bosses laundered their black money into different accounts of their benami and while government was busy chasing the big deposits which were most probably legal transactions, they considered small deposits as immaterial.

Because of demonetization, even common people who held legit savings had to deposit it into the bank. Which made the Income Tax Department almost impossible to trance the benami accounts from the legit transactions. Like I mentioned earlier, it was easier for the ITO to find benami before demonetization. But that probability was also washed away because of demonetization which led it to a massive failure.

Our Income Tax Departments have been trying to send notices to all those who had substantial amount deposited into the bank, but they are grounded when they realise those money were the results of “cash-in-hand” declared in their books of accounts of individuals & companies which came into the bank. While that time, the black money was already being laundered into different channels.

The Big B’s used benamies who were under the taxable threshold to deposit their black money claiming it’s their retained earnings. It was impossible for the ITO to question and verify that as well.



How they could’ve made the entire process more efficient??

This is my personal suggestion & I could be very wrong.

From the light of the failure of our Govt’s attempt, we have learned a few things. In my opinion this is how they could’ve executed it.

Lack of transparency was the main dilemma here. The government made the decision highly confidential without even intimating those who had to work for it until they finally declared the same. Yes, I meant the RBI & ITO. If the Govt wanted those department to work closely, they should’ve at least told them to prepare for it. So, they banks could’ve acquired sufficient new currency to remonitize and the ITO could’ve made proper planning & deploy dedicated personnel to carry out the assessing and reconciliation works. But NO! The Govt thought if they were advised about it before, then the news would be spread like wildfire (which obviously will) and that would lead for the black money holders to launder the money. But seriously, what happened now? That attempt was not only a failure, but it also helped the targeted group.

To avoid the initial chaos, the govt could’ve declared the legal withdrawal on a future date instead of immediate effect. That would’ve reduced the initial rush to the banks and also the large deposits would only come slower which the ITO’s can closely monitor. The result would’ve been much better than the what actually happened.

The government had already given many windows to those who had black money to convert it into white money without any legal obligation by paying a hefty tax/penalty of 50% under the Income Disclosure Scheme. Not many people had used that opportunity to convert the cash into clean money. IDS helped the economy as well as the government by grabbing huge taxes. But our government was not satisfied with the response. They wanted our economy to be the cleanest.. /s. So, they declared the legendary demonetization. At least, that’s what I think. Demonetization was like a punishment for those who didn’t use the IDS window. But in reality it was like a blessing for them otherwise they would had to pay an enormous tax.

Since the response from the black money holder failed and when the government realized money has been laundered. Shamelessly our government even declared another IDS window in December to stop the money laundering and get tax. It was such a pathetic move by our government. It completely nullified our government’s aim of demonetization.

Well, there was one objective of demonetization which was a success, that was to eliminate the counterfeit notes. Obviously it was almost a success. (yeah, again, almost!) But that also got backlash when counterfeit of the new notes emerged quicker than ever in the market. Since not many people had seen the “new & different” currency, it was easier for them to circulate the new counterfeit into the market since it will not be identifiable or get caught with bare eyes.

There is still a chance for the government to make this operation a little better. They should appoint a separate wing for assessing, matching & reconcile the deposits. A department whose sole purpose is to do this work. If they take the initiative to work hard, then it would open the possibility to identify the black money out of benami accounts.


With that said I’m concluding my rant and let’s celebrate the one year historical anniversary of the failure, “demonetization” !

ഒരു പ്രണയ കവിത കൂടി …


ഒരു പ്രണയ കവിത കൂടി

വിരഹനൊംബരം ഏതു കോണിലും
സ്നേഹമാക്കുന്നി പ്രണയം
മധുര നൊമ്പരം അലഞ്ഞു ചേർന്നൊരു
മധുരക്കനിയാണ് പ്രണയം
ഏതുകാലത്തും എത്രെ ദൂരത്തും
സുഖം പകരുന്നി പ്രണയം
നീയെനിക്ക് തന്നൊരാത്മ-
സ്നേഹമാണ് പ്രണയം

രാത്രി മഴയ്ക്കും തൂമഞ്ഞിനും
പ്രക്യതി ഒരുക്കിയ പ്രണയം
ആമ്പൽപ്പൂവിനും രാത്രി ചന്ദ്രനും
അലഞ്ഞു ചേരാനി പ്രണയം
നിന്നിൽ ലയിച്ചൊരു പൂന്തോട്ടത്തിൽ
പൂവിൻ കിനാവാണ് പ്രണയം…



Disclaimer: ഒരു സ്മാൾ അടിച്ചിട്ട് എഴുതിയതാണ്, തെറി വിളിക്കരുത്!

A Street Cat Named Bob

I don’t know who suggested it or how I found this movie. But I totally loved it. I just finished it and the feeling the movie gave me was overwhelming.

Maybe because I’m an Ailurophile, this goes straight to my list of favorite movies.

I didn’t knew any backstory about the movie before I started watched it, nor I don’t think I’ve seen any trailer either. But maybe some things are like that, it will come find you if you are totally into it.

I only realized the movie was based on a true story at the end. And that was like a cherry-on-top to my happiness!

Definitely gonna re-watch it whenever I can.

OK, so if you’re still reading this and have no clue about what I’m talking about;

A Street Cat Named Bob is a British movie (http://www.imdb.com/title/tt3606888/) based on the book named the same. A homeless and drug addict guy gets a cat and his life turns upside-down for the good.

Just a simple google search bring about James Bowen (the cat guy) has written more books about Bob (the cat!). I think I know what I’m gonna do this weekend!

[LYRICS] Enthavo – Job Kurian

എന്നാലും നീ മറഞ്ഞല്ലോ
എൻ കണ്ണീരിൽ പിറന്നല്ലോ
എങ്ങെല്ലാമേ തിരഞ്ഞല്ലോ
നീ എങ്ങോ പോയ് എന്താവോ

ഓരോരോ വെണ്ണിലാവത്തു
ഏതേതോ പൊൻ കിനാവാത്തു
എൻ നെഞ്ചത്തോന്നണഞ്ഞാൽ
മൺചിരാതായ് നീ തെളിഞ്ഞാലോ

എന്താവോ എന്താവോ എന്താവോ
എന്താവോ എന്താവോ എന്താവോ

എൻ പാട്ടിൽ നിൻ നിഴൽത്തേരോട്ടം
മാട്ടം കൺ കനൽ തിരനോട്ടം ചൂടും
ഞാനറിഞ്ഞോ എന്താവോ

എൻ പാട്ടിൽ നിൻ നിഴൽത്തേരോട്ടം
മാട്ടം കൺ കനൽ തിരനോട്ടം ചൂടും
ഞാനറിഞ്ഞോ എന്താവോ

ലോകം ഈ കണ്മുന്നിൽ എന്താണിത്
മായം മാറിമായങ്ങൾ എങ്ങോട്ടിത്
കണ്ണേറോ കാവേറോ കണ്ടറിഞ്ഞ കാലം മുതൽ

മോഹങ്ങൾ ചായങ്ങൾ എന്താണിത്
താൻ താനേ നേടുന്നതെന്താണിത്
കണ്ണീരോ വെണ്ണീരോ പണ്ടറിഞ്ഞ കാലം കാണാം

ആനന്ദമാടും വരെ
നേരാട്ടം നേടുംവരെ
എന്നാലാവും തന്നാലാവും വരമാകുമോ

എന്താവോ എന്താവോ എന്താവോ
എന്താവോ എന്താവോ എന്താവോ
എന്താവോ എന്താവോ എന്താവോ
എന്താവോ എന്താവോ എന്താവോ


Singer & Composed by – Job Kurian
Lyrics by – Engandiyoor Chandrasekharan

Official Video –