[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]W[/dropcap]hy Namonitization did not succeed despite the best intentions of PM Modi? How come 80% of the Rs 15.4 lakh crores ($227 billion) of outlawed Rs 500 and Rs 1000 notes are back in their new avatar? And we still have a few days to go for the December 31 deadline. It is because Modi did not reckon with those bank managers who were smarter than him. They converted Namonitization into a massive money-making opportunity. In tandem with those with unaccounted money they replaced thousands of crores of unaccounted money with the new notes. The modus operandi was simple.
They collected crores of rupees of unaccounted money from vested interests, replaced them with new notes by stealing the identities of lakhs of depositors for a hefty commission of at least 30%. For every crore ($147,000) of illegal money they have made Rs 30 lakhs ($44,000). Mind you many of those who queued up outside banks across the country in the first few weeks of notebandi were fronting for powerful vested interests for a fee. Apart from this, many bankers have accepted deposits from cadres of political parties and other entities at the rate of Rs 2.50 lakhs ($4,000) per head again for a hefty commission with the clear understanding that new currency will be issued to them on April 1. Also, Jan Dhan accounts have been majorly misused. These officials couldn’t have executed the mega scam without the collaboration of corrupt clerical staff. In any case, one couldn’t have expected anything else from a banking system which has sanctioned dubious loans of thousands of crores against kickbacks. Little wonder the NPAs of all the banks put together is a massive Rs 5,94,929 crores ($88 billion) at end of March 2016 with a huge jump of Rs 2,00,000 crores ($29.5 billion) in just one quarter. At the end of the December-end quarter 2016 NPAs stood at Rs 4,00,000 crores ($59 billion).
The failure of Namonitization will give a body blow to the BJP in general and to Modi in particular. BJP chief Amit Shah’s exhortation to his party M.P.s to “go to the people the benefits of Demonetization” was almost laughable even though Modi’s was not without its spin off benefits. The push towards digitised money is a case in point. But, the overall political damage to the BJP has been colossal.
The situation can be salvaged if Modi does three things:
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Replaces Arun Jaitley with a more hands-on economist as the FM
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Announces sizable reduction in income and other taxes without waiting for the budget or the GST regime to fall in place. The reduction will incentivize greater compliance with law and generate more monies for the exchequer and
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Order massive raids against the bank officials who have taken him for a long ride. He should ensure that these crooks do not go laughing all the way to the bank. Unless corrective steps are taken now Modi will find himself isolated within his own party and this will have serious political implications for himself, the BJP and the nation.
Note:
1. The conversion rate used in this article is 1 USD = 67.84 Rupees.
2. Text in Blue points to additional data on the topic.
3. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.
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Surprisingly, no finger raised at RBI. A bank branch with 15-30 crore of deposit will have something like 5000-15000 accounts, depending on the place, per capita income of the people there etc. There have been cases where Bank Managers and other staff members have been involved in such corrupt practices, but this is the story in some banks and bigger amounts have been exchanged in Pvt Banks only. Why is it that RBI supplied more cash to Pvt Banks when there customer base is lower and Rs 24000/- was fixed as the weekly withdrawal limit. For Example, in Kanpur, from 9 nov to 30 nov SBI was given 150 crores, Allahabad Bank 20 crores, PNB 25 crores and Axis 80 crores, HDFC 70 crores. No Pvt Bank opens a branch in remote areas where a small branch with deposit of say 10 crores will have 6000-10000 accounts. Why have the Finance Ministry officials and RBI not plugged the simple gaps like large deposit being made in Dormant and Jan DHAN accounts. If they could have a fore-sight regarding this, then their wisdom is under serious questioning. Be realistic and comprehensive is putting the blame.
BTW how does a journo stringer like Barkha uott have a balance of 7 Crores in just 1 bank account?
Moral of story;
Be a jouno, be anti national, support Jihadi terror, make money!
“Khao Piyo Karo anand, **** maraye paramanand!”
Nothing in the article that was unexpected.
Mr. Modi and his team have brought about a structural change in Hindustan’s fabric.
That the move is good for our nation is undeniable.
Digitalization of economy has received a huge jolt forward.
It was not an election ploy.
The move hurt the BJP core constituency, Traders, small and large businessmen, property markets.
Only a visionary, principled and strong leadership could make this selfless move.
As for lowering taxes:
ABSOLUTELY !
Along with that we need to exterminate corruption- Digital economy and strict enforcement will do that.
Congress Mukth Bharat!
Basically you are trying to say- Why Swami should be made FM?
A single line would suffice instead of this long story
Some crooked bank men might have helped to launder some dirty money, I agree. But they were allowed to exchange only Rs 4000 over the counter and just checking the amount distributed over the counter on a daily basis can reveal the foul play. There is a limit to such foul play.Suppose a thousand crores converted this way .Even a thousand crore is just 0.06% of the 15 Lakh crores exchanged.This is negligible in the big picture.
It is the lack of preparation on the part of the government and RBI caused this disaster. Ordinary bank employee is working day and night without leave for the last 40 days. Please do not blame the bankers for the failure. They only made the Jandhan, LPG subsidy, DBT and insurance schemes of this government a success .
Can’t you see that errant bank officials are being caught. Banks are mandated to keep a record of every Specified Bank Note that is received at their end. Be rest assured that the culprits won’t go unpunished.