Few
years back, I had purchased a Godrej Lock. When I requested for a bill for
purchase, my request was shrugged off and I was handed a small piece of paper
with list of items purchased and the prices. When I enquired about the
guarantee of the lock, the request was shrugged off again. In a few months, the
lock went kaput and I promptly went to the shop with the kaput lock and the
piece of paper. At first, the owner completely refused to take ownership of the
problem. After some pestering, the shop keeper asked me for the bill that he
had never ever given nor had ever agreed to give one. After some more pestering,
the issue was escalated to the manufacturer who promptly agreed to change the
lock gratis.
The episode made me wiser and I pledged to buy
all things with a BILL irrespective of the tax implications. Few months later,
I brought some Jaguar fittings and again the bill was not given. When the
fittings stopped working I went to the shop for the bill and was refused again.
Then, when the service man was called, I was informed that the faulty fittings could
be changed free provided I could show him the bill. Since I did not have the
bill, I again went to the shop. Finally I got the bill and got 4 faulty pieces
worth 4000Rs changed free of cost.
Few months later, I again went to the market
hunting for some door locks. For all the material purchased, two sets were
created – one was tax paid items for which I got a bill and Card payment was
accepted at a 2% markup - and the rest of items for which neither tax was paid,
nor I got a bill nor for which Credit Card was accepted.
So this was India – where the tax paid economy
or the formal economy worked in parallel with black economy or the informal
economy. The formal economy paid income tax, service tax, excise duty and the
likes. And informal economy paid what they wanted to pay. As a salary earner, I
always lamented the fact that all our expenses were done through post tax
income – while for most of the informal sectors, the expenses were part of the cost
and what was left over was offered for tax – if at all these sectors offered their
income for tax. So the salary earners had to continue bearing the burden of the
7th pay commission for higher salary of Government Servants, higher
Minimum Support Prices for farm produce, higher defense budget and all other
social welfare expense. And the informal economy could keep buying bigger cars,
or splurge on other material desires of life.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This
would have continued the way it continued till a man of humble origins by the
name of Narendra Modi decided to wield
the axe – an axe that was to change the very fabric of the nation. The night
the bomb was dropped, we were preparing for our travel to Vaishno Devi the next
morning. And while I was busy packing, my brother came running and telling that
all 500 and 1000Rs notes were banned. I thought “what a joke? It JUST CANNOT
HAPPEN. ”
We opened all websites and all news channels and found the news to be true. Immediately I called the taxi driver at Jammu who was to pick us from airport – whether he would pick us from airport and accept old currency. He told that he knew nothing about demonetization. To make things simpler, my brother ran to nearest ATM and punched multiple requests of 400Rs till he drained the ATM of 100Rs notes. While others in family promptly broke the piggy banks of the kids to pull out all loose change and 100Rs stuff. My mother who hoards 10, 20, 50 and 100Rs notes gave all of us loose change worth few thousand. This ensured our trip was secure. In the next few days in Jammu and Vaishno Devi, the old currencies were accepted without much fuss. Only sore area was the toll plaza where the ensuing ruckus due to lack of change meant that tolls were discontinued till date.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Meanwhile,
that very night when demonetization was announced, we kept on getting messages
from Big Bazaar that all their shops were open till mid-night. I was quite
amused but the import of the step was understood by me very soon. It seemed
that all those with cash hoardings had raided Jewellery shops, Consumer durable
shops, Apple Stores and the likes to convert all their cash into valuables and
something useful.
That they were falling sick and asking doctors
for any possible surgery as government hospitals were accepting old bills. That
they were buying medicine stock for months as pharmacy were accepting old bills.
That they were filling their cars and bikes as the petrol pumps were accepting
old bills. That they were paying all their municipality dues pending since
years with their newly found reserves. And suddenly the municipality coffers
were overflowing with money they had never seen.
Meanwhile, all those who were providing
services found a new way to mint money. An Uber driver told me that a person who
had to travel in emergency and who only had 1000rs notes, paid full 1000Rs for
a trip of 600Rs. It was totally immaterial that the 100Rs notes were neither
banned nor had disappeared – just that no one was willing to give it in
exchange.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In
times of panic, I have made a simple rule “JUST DO NOTHING”- Just think and
wait for the situation to improve. With hordes of credit card at my disposal, I
recharged all my e-wallet accounts like PAYTM, created one for my wife and
charged it too. Going to ATM was just out of question – I hated queues like
hell. In any case, I was a digital person ever since one of my cheques bounced
due to signature mismatch.
The acceptance of cards at Superstores, Uber, local
canteen and the likes did not allow me to miss my cash too much. All daily vendors
for milk & newspapers, were promptly asked to accept old cash or digital
money. Tremendous support to e-wallet like Paytm meant that digital currency had
trickled down to the lowest level including the street hawkers.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
But
dire situations create dire responses. There was one person whose wife was
pregnant and quite ill. He had borrowed large sums of cash from his friends and
relatives – which now appeared to be dead money. Many visits to ATM and banks
to withdraw new currency failed. Then there was that feeling that who shall look
after his ailing wife while he went around hunting for money – and what shall
happen to borrowed money. So he solved the problem by simply killing himself –
as if after this step, there was more money and someone to look after her even
sicker wife.
Then there was this story where a government
clerk with negligible salary who had amassed crores of money from bribes and
corruption and who was completely confused about what to do next.
Then there were reports of panic
attacks in people who had tons of such money – and there were queues of people
at psychiatry departments seeking such treatment.
Then there were reports of people
dying out of exhaustion by standing in long queues. And there were reports of Samaritan
doctors looking after such people while they were standing in queue – or some
NGO offering tea and biscuits to these people. And if this was not enough
charity, overnight startups were formed like bookmychotu.com who could offer
you people (or chotu) at hourly rates who could stand in ATM queue for you.
Then there were reports of how
people owning 6 shops in a wholesale market like Chawri Bazaar had most of his
shops closed due to lack of business and currency. And how some other shops
were closed as the sales tax officials were after their lives to declare the
sales book status before the demonetization kicked in.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The
effects of demonetization are still being speculated. Some feel that out of 15
Lakh Crore in these high currency notes, about 3-4 Lakh Crores shall never come
back to RBI. And the government shall be richer by that amount. Before becoming
PM, Modi had promised to bring lakhs of crores of black money stashed abroad
and distribute among the poor. While no significant sums have come from abroad,
this windfall gain may imply that about 5000-25000Rs may get into over 25crore
Jan Dhan bank accounts opened for the poor. Others feel that interest rates
shall fall, economic activity shall rise & considerable part of informal
economy shall go into formal economy thereby further boosting tax collections.
Overall, this shall lead to lower tax rates that in turn may trigger higher compliances.
Some others feel that GDP shall take a big hit
and country may go into recession.
What eventually happens remains to be seen but personally
I am quite happy with this step. The salaried class had carried the burden of the
government for too long – it was time the other economy or the informal economy
shared this burden. Time they also contributed to the government coffers.
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
While
the effects of demonetization was trickling in, I went to a jewelry store to
buy some small stuff only two days back. And I was promptly given a formal bill
without even asking. When I asked the reason, I was told that there was
complete tallying of cash in hand vis-à-vis actual sales that happen and the sales
receipts.
Someone from Sweden said few months back, “I don’t use cash any more, for anything. “You
just don’t need it. Shops don’t want it; lots of banks don’t even have it. Even
for a candy bar or a paper, you use a card or phone. Swedish buses have not
taken cash for years, it is impossible to buy a ticket on the Stockholm metro
with cash, retailers are legally entitled to refuse coins and notes, and street
vendors – and even churches – increasingly prefer card or phone payments.”
India is not Sweden, but India is surely changing – or at least has leap frogged in the cashless journey by a step or two. Modiji ki Jai!
~~~~~~~~~~~~~~~~~~~~~~~~***~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Chachu,
29th
Nov, 2016
-----------------
Edited Comments on Chachu's Column Chachu's
Column #43: Chachu in Poland
--------------------------------------------------------------------------------------------------------------
1.
After a
looong time. Like it. (Courtesy Manju Banka)
2. I liked the Poland history you covered in the article; it was quite informative; I also liked the small details you mentioned about snow and other things. Overall the article is quite informative and written in a good manner; it engaged me to the end. Thanks Chachu for writing your experiences. (Courtesy Rajesh)
2. I liked the Poland history you covered in the article; it was quite informative; I also liked the small details you mentioned about snow and other things. Overall the article is quite informative and written in a good manner; it engaged me to the end. Thanks Chachu for writing your experiences. (Courtesy Rajesh)
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