While the news world of India is hit by a tsunami of news related to common man standing in queues, what is more important is to understand is when will this situation improve and what is the impact on people in short and long term.
While the man in mission mode Honourable PM Narendra Modi has asked for a 50 day support from the country men some sections of politicians and media are trying to portray situation like an Economic Emergency! But it is far from truth. People have shown support on ground and situation is easing out day by day by the run time measures being applied by the Govt.
Many challenge why they were not planned ahead but they conveniently miss the bigger question of secrecy to be involved in this operation without which it would have been a futile exercise. Let us now look at how and when situation will normalize in upcoming days. As far as ATM queue is concerned a typical ATM can carry only 2 lakh 100 rs notes.
We have around 2 lakh ATMs in country and around 3000 ATM engineers who need to upgrade the cash cassettes to enable 500 & 2000 notes loading in the ATMs. This process is already begun in metros and is expected to complete nationwide including rural areas in next 10 days. They are currently doing it at a peak rate of approximately 20000 ATMs per day. This will enhance the cash serviceability of the ATM to 8 hrs. from current 2 hrs with 100 rs notes alone. The queues at bank which were swollen due to people on rent to exchange money has started shrinking with Govts. rule of reduced cap of exchange from 4000 to 2000 coupled with usage of indelible ink reducing the attempt of hired labour for money exchange to a non-profitable solution for black money hoarders. What we also need to look at is what lies beyond this exercise once situation is normalized. People are already witnessing a rise in crackdown on black money hoarders through raids conducted by income tax, police, anti-corruption bureau and railway police at various places in country on daily basis; this is only going to increase with more agencies being deployed every day in various parts of country. There are around 16 different enforcement agencies available with central Govt. like Directorate of Revenue Intelligence, Serious Fraud Investigation Office, financial investigation unit, Economic intelligence council, central economic intelligence bureau,National Crime Records Bureau etc who are responsible for monitoring , catching and deterring the financial crimes and black economy.
The Govt. has set up a mega exercise where such agencies are working in close coordination with RBI,CBI,NIA and other Law enforcement agencies to track each and every attempt to convert black money during this demonetization scheme. The special mechanism is going to be enforced in a weeks time from now and not a single attempt to convert black to white will go amiss from Government’s eyes ! This is currently being coordinated & executed under the central monitoring of FIU India which provides financial intelligence for safeguarding the financial system from the abuses of money laundering, terrorism financing and other economic offences. Another rigorous exercise Income tax dept. is set to do is scrutinize transactions of organizations and individuals dated before 8th Nov versus after 8th Nov to identify change in patterns and drill down to establish the source of possible attempts to convert black to white. Those thinking they have outsmarted the law are going to have sleepless nights in coming days! As our PM already hinted that next target is “Benami property transactions”. This statement is again backed by strong ground work against this black money hiding practice which has crippled the real state sector of India. What is going to enable this crack down is the game changer 3 pronged approach of – digitalisation of land records, Adhaar seeding in land records and Benami Transactions (Prohibition) Amendment Act, 2016.
There are a large number of benami dealings in land transactions. Data on such transactions is difficult to come by, and we expect the amendment to have an impact here. It is well-known that land transactions in India take an average of 1 to 2 years to complete. With outright purchase of land no longer viable for most developers, they adopt the joint-venture route. And sometimes, after prolonged discussions on revenue share and complicated interpretations of permissible floor space index (FSI), they find out that the land title was not clear. Clear ownership titles will hopefully see the light of day with the new amendments. These will help developers to quickly conclude joint venture transactions, which would open up land parcels for residential development. Exits by participating funds in these projects will also become quicker. This above measure is going to not only going to rationalise the residential prices but also make an positive Impact on supply of residential apartments in long term. The list of positives does not end here for the honest common man of India.
With banks NPA strengthening each day under demonetization process and GST all set to get applicable, govt has decided to deliver the budget in feb 2017.
A lot of the funds of the newly cash rich govt. is expected to be diverted heavily into job creation, infrastructure development, defence up gradation and Tax reforms. There are strong indications of reduction in lending rates leading to cheaper home loans and smaller EMIs. Many economic experts have suggested in past that demonetization and tax reforms always happen in pair, so honest taxpayers can expect a reward in the upcoming budget in form of tax reforms. The development saga has just begun; the country is on the fast lane. All the citizens need to do now is fasten the seat belt and enjoy the journey!
– Kirti Bhushan
Kirti Bhushan tweets as @KIRTI82. He is software professional from investment banking domain, a social media activist & a travel enthusiast