Demonitisation has no doubt created panic in common man’s life across the country. Question being many time asked are the manner of imposing Demonitisation and happening of currency crisis the nation is facing since few days.
Technology has brought the civilization into a level where we can really now to be prepared for the cashless economy and this is the need of the hour. Although India in specific as a nation need yet to well prepare her billions of citizens for adopting the technology based economy, right kind of infrastructure, security and education need to be provided to the masses in war speed. Thanks to penetration of Mobile services which will trigger the way economy is to be governed transparently.
When we analyse the manner of imposing Demonitisation and its resultant, it is signifying a future which most of us need struggle to survive.
• Abolition of public debt
• Monopolistic power centres
• Capitalistic economy
• Enforcement of law
We as a world have reached the significant level of Inflation and the Rich-Poor gap has reached already the peak. Reason: High Consumption pattern. Where as rich create consumption, poor are forced to consume. Society being pushed by corporate advertisement. The level of inflation is not further sustainable because resources across the world are scarce and depleting. Many Global Exits are happening and countries are turning Rightist Mode which is Protection for own causes. Hence, Deflation is the necessity of the hour to save the economy from turning into a catastrophe. But any sudden break on Inflation shall create boomerang effect as majority of the nations across world are unable to bear the shock of sudden Deflation. Governments across the world needs to take adequate precaution when they are imposing Deflation by import restrictions and currency strengthening etc.
Abolition of public debt:
Due to high consumption, fiscal deficits are at staggering level and Nations finding difficulties in service of huge Foreign and Domestic Debt. Interestingly, Forced abolition of Domestic Debt is easier than out crying retirement of Foreign Debt. Domestic Debt includes currency under circulation. Domestic Debt can be retired planned / sudden manner by Demonitisation and imposing the high tax rate with highest penalty on Black Money. Rippling effects are many when sudden decisions are taken. Hence, planned and phased out policies needed that citizens are not snatched away the Promissory Notes (i.e., currencies under circulation and government securities) issued by the Government in rightful manner. Abolition of Public Domestic Debt is an unintended action but aimed to serve effectively the Foreign Debt for maintaining security of the country and stability internationally. Hence, many countries will in future seize domestic black money, demonetize only to need afloat their economy intact.
Example: Can USA deny to pay billions of Debts in USD owed to China arised because of huge trade deficit? NO. What is the recourses left?
Monopolistic power centres:
Monopoly here means certain corporates / privileged class in the society commanding leading decision making position and guiding the economic decisions of the society. Yes, for Corporates who can visualize the global challenges can do it. Hence, the enterprises who can’t visualize the changed dynamics after many Global Exits and the remaining working class shall be under control of monopolistic power centres.
Capital flow being channelized in digital platform shall create more transparency and more regulated capital markets. Stock / Commodity Exchanges therefore shall play pivotal role and certain successful enterprises shall influence Government Policies. Social Security measures shall be diluted more and available funds shall be more focused in building up of Capitalistic Economy.
Enforcement of law:
Enforcement of Law shall be needed to curb activities of extra shroud people / organisations who shall go out of the way to defraud the system.
When we do analysis of these five elements, we see nations across the world are going to follow the similar trend of governances in near future. Are these the only way to remain afloat in the twenty first century? Intellectuals and Economists need to do heavy brainstorming in this regard.
The million dollar question being: what a common man should do?
A common man need to list down his essential needs, basic needs and luxury. Essential and Basic needs to be provided for and rest to be saved for future. Savings are the Power. Be law abiding and pay your taxes as per law of the land in time and get relaxed always. Politics, Governance, Economy are difficult words to understand, but charting down our own life style and consumption is always in our hand. In some countries; even if you pay for full dish in hotels, throwing away the surplus food is attracted fine even if paid from your own money legally earned by hard work. You have right to earn. But no right to waste scarce resources of the world. Save it for the needy of present and rest for the future generation.
CURRENT DEMONETIZATION CRISIS :
If it is legally earned money, don’t hesitate in depositing all banned notes in bank account. There may be enquiries from tax officials. But you can always tell them the sources and it can be taxed as per available beneficial provision of the Income Tax Act and not necessarily at highest tax with penalty. Tax laws provide many exemptions as well