Black or Un-Accounted Money.
Black money is a problem to any society, it has a multiplier effect on inequality, and feeds onto itself to support illegal trades and activities.
Here are the hosts of this black money as per conventional beliefs.
Mafias, Drug Traffickers, Bandits.
Historically be it Pablo Escobar the narco-terrorist in Columbia who brought down governments, supreme courts and presidents in his time or Veerrapan in India or for that matter any bandit in hinterlands, a big component of their operations theoretically has depended on cash.
Reality- In the age of heightened surveillance how many such mafias, mobs, bandits we hear about now a days.
Secondly these mafias, drug traffickers or similar- are we sure they deal in plain old cash like old days?
To traffic their produce, they go to any heights with authorities always catching up.
Ever heard of Silk Road, Silk Road2.0, Cryptocurrency? They are not only protecting their money from Government, but from competition.
Civil world is thinking about going cashless, these creatures are already cashless and entrenched deep. Remember
Illegal goods were the first few items transacted over the internet as early as 1970.
Bitcoins and the whole dark-net is built and operating since decades over the concepts PAYTM(or similar) is trying to deploy in the bright world now.
So, to believe that killing cash of certain denomination printed before November 2016 and that too in this globalized world with free exchanges, will make a dent in this- is some serious baloney or ignorance of troubling proportion.
Terrorists and Maoists-
In today’s India, you name Pakistan and everything, every action is legitimate. Yell Pakistan and terrorists in one sentence, and Indians are ready to take any pain, somehow, we have attached our national pride with Pakistan and terrorism.
Do you seriously believe terrorists are roaming blowing themselves for money? These are brainwashed crazies and their leaders motivated by ideologies and geo politics. If we believe they keep hordes of cash, and move a lot of cash God bless you.
Every government in the world knows what part of land under their jurisdiction or borders (without naming any) hosts terrorist.
These areas are always under high guards, law enforcement, intelligence. Boots on the ground are at the maximum and there is a constant war going on and there is a whole different economy, any interaction with this economy and our economy can be traced with lesser efforts.
If you think villagers in certain communities are coming out on streets and throwing stones at armed soldiers for money and taking the consequences, being hit by pallet guns, tear gas?then for humanity sake, do what Buddha did- sit under a tree and think.
Arguments like Stone pelters have their brains fried or are lowly educated brainwashed bums are more valid.
Conclusion – This exercise has virtually no effect on Mafia, Mobs, Terrorists and Stone pelters.
Now let’s move to the other section of society – Indian businesses, including Real Estate.
Going back to the basics, why businesses horded cash and kept them un-accounted?
Well, have you known any business owner in India? I know a few in Western U.P.
See with our countries law and order situation and hyper local way of living and doing business, people know or at least have some idea on who is making money in the community. Having cash and dealing in cash is a hazard if you think from the point of an entrepreneur who wants to run a for profit business.
So why do they keep cash? Well to run your business you need to keep certain people happy that includes politicians and government officials, ever been raided by tax folks? You will get the point.
And do you think entrepreneurs making profits in such a tough Indian business environment have no idea on handling cash?
They are entrepreneurs each connected to another, it’s the collective jugadu(crafty) set of brain available in India with deep inroads into our financial systems and actors who control them. They are way ahead of a regular Joe in financial management, includingdiversifying their assets with the right balance to hedge against all the possible outcomes.
To good credit, India has made dealing in cash very tough in recent past- KYC norms, PAN Card requirements, scrutiny on property transactions and real estate’s construction (VAT accounting), Income Tax systems getting automated and very vigilant on business compliance.
We are in 2016 and believing business keep large part of unaccounted cash buried under somewhere and will come out or get wasted bringing equality etc. is the kind of dream you get when you fill up on a load of sattu(state food of Bihar, where writer comes from) and sleep under mango tree after watching a Bhojpuri flick.
There is cash, but that’s for survival and contingencies and you bet its accounted for knowing the chartered accountants in my country, or will be soon, remember they are the craftiest one our society has and all connected with same goal -survival.
Do you know in 2014 Forbes reported a collective wealth of about $346 Billion among top 100 richest individuals in India? It comes to be Rs. 20778 Billion. With a very conservative capital gain of about 10% income from this wealth should be somewhere around Rs. 207780 Crore.
Do you know the declared income of top 354 earners in India?
A measly Rs. 17390.22 Crore which comes at about 8% of what a very conservative estimate should lead to. Every economist knows more money you have the rate of return goes high, since you have the financial resources and managers at disposal.
And it’s all in the plain sight, have no effect from any demonetization.
Conclusion - The exercise has virtually no benefits coming out of businesses. Losses? Keep reading.
Now let’s talk about the unaccounted cash with politicians and political parties.
In 1990s I had a friend with a politician uncle working with a state level political party in U.P. One day I found him sitting with a few others with a voters list in hand and a lot of receipts. They were going over the list and signing names sometime with right or left hand, sometime thumb impressions, filling in arbitrary amounts in the receipts.
Any guesses what they were doing?
Well his politician uncle could find financiers (a couple of businesses) who were ready to pay the price tag of Rs. 10, 00000 for him for a seat in working committee of the state political party. And they were converting that cash into small donations for party funds. Phew that was in 1990s.
World has evolved a lot since then and politicians have the power and are privy of anything that might come their way of smooth operation of clout and strength.
Amid the tyranny of demonetization, a ruling party leader just concluded a Rs. 500 Crore daughter’s wedding. Weddings costing over 100 Crore in politician families, or attended by politicians are common in India and are widely covered, with no eyebrows, who matter, raised.
Is this money legitimate? From moral point of view no, from legal and accounting point of view yes, give your best shot to even make a F**ing dent.
Politicians in hinterlands need cash money just to keep alive from rivals, everyone in this close-knit community knows where money resides, where it comes from and what are the “Silk Roads” to spend them.
Political parties small or big are part of a system, competing may be, they all have their infrastructure and unique channels. In an unlikely case of one state fully owned by a competing system, there is another state which will have their friendly system in place to make the money kosher.
A small shock of course, when some of these “out of power” giants will scramble to minimize the losses.
But if you think any money will come to the system from these mega giants sitting on mountain of cash (accounted, unaccounted, legit, illegal) you really need a crash course in Politics before you vote next time.
Money might move from one political system to another, smaller and weaker will merge with bigger systems, and political brokers will make hay.
Another thing worth noting is – In this age of Consent manufacturing why deal in petty cash to bribe voters, when you can have mega accounted budget and future business cash flow going into new and old media lords?
It is much easier to work out an affiliation with major media house, or silicon valley lords sitting on foreign shores and operate propaganda cells. It is much less risky and cheaper than distributing cash and TV to regular Joe on street, especially when election commission has evolved a lot.
You can always distribute laptops, phones, cash, jobs, projects later with tax payer’s money.
Conclusion – Nothing will come out from political parties. No one will cower and shake in fear and leave his own disingenuous ways in the fear of a “masterstroke”.
Now let’s take on the argument about counterfeit money.
In Absolute terms Rs. 400 Crore in India vs. Rs. 500 Crore (Dollars in Rupee term) in USA.
USA’s reaction “Meah, we will destroy as we see them, will do surveillance, have a department, print currency as we need them” Its same as installing a traffic light, or any business as usual activity.
Read the writing on the wall - Notes will be counterfeited, and there would be always a small amount of such currency in circulation. In India, even a small vegetable seller sitting in local mandi, or a hawker on street checks the note under a light before accepting it.
Every bank has money counting and processing machines which can catch these with a decent precision. The situation can improve with more surveillance, remember every counterfeit note is a lead to its source, all it needs is some effort.
Now if someone says let’s burn 87.6% of all the currency in circulation to destroy this 0.025% of currency notes with them - Can lead to loss of faith in any wisdom left in the collective humanity of earth.
If as per Government own submissions these 0.025% currency notes are all coming from high flying, sophisticated printing presses in Pakistan run by ISI and are a major part of their operations in India building a ring of terror around all of us. Aren’t they changing their dye and already on the way to print the next shipment of terror reigning currency notes on us. As I write this paragraph.