More downs than ups

The editorial, “Big bang failure” (September 1), ended with the verdict, “Demonetisation was a blunder, poorly thought through and badly executed.”
 

Demonetisation as a tool to flush out black money was a noble idea, but the execution left a lot to be desired. Before announcing demonetisation, the government should have introduced the Rs 2,000 and the new Rs 500 notes. ATMs should have been recaliberated in phases to stock the new notes. Once, around 50 per cent of ATMs had been recaliberated, the announcement to withdraw Rs 1,000 and old Rs 500 notes from circulation could have been made. After the announcement, the rest of the ATMs could have been recaliberated on an urgent basis. This would have eased the pressure on the common man. The Rs 200 notes could also have been introduced before demonetisation.
 

The process for exchange of demonetised currency notes in bank branches was not carried out systematically. Indians’ penchant for juggad to circumvent a problem should have been envisaged and checkmated in advance. What we saw were frequent changes and new rules being framed almost daily. This added to the confusion.
 

If a sizeable quantity of new Rs 2,000, Rs 500 and Rs 200 notes were in circulation during demonetisation, frantic attempts to exchange notes at bank branches could have been avoided. Customers could have been asked to deposit their old notes directly into their accounts. This would have negated the nefarious designs of unscrupulous people using “cash coolies” to launder their money. 

Due to the need for secrecy, the demonetisation decision seems to have been taken without anticipating the pitfalls. If discreet advance feedback or suggestions had been sought from people with experience in bank branch work, much of the angst among the public and staff of banks could have been quelled.
 

While demonetisation has not been a big success, it has put the fear of god into cash hoarders. The authorities would be probing Rs 1.75 lakh crore of suspicious deposits that flowed into the banking system post demonetisation. A sizeable chunk of this could lead to positive action against the depositors. This could boost tax collections and lead to penal action, which would be a positive result of demonetisation.

K V Premraj, Mumbai

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