India: Will Government’s Withdrawing Rs.2000 Banknotes Root Out Corruption? – OpEd
After demonetisation in 2016, cash circulation in India by value came down significantly. However, subsequently, for whatever reasons, the cash circulation was gradually increased by the Government of India by printing more currency notes of various denominations. As a result, the present currency circulation in the country by value is as high as Rs.32 lakh crore.
It is well known that all corrupt dealings take place by cash transactions and black money in cash which is generated by tax evasion. Such cash in the form of black money is used for several corrupt and nefarious practices, resulting in the development and growth of parallel economy.
The Government of India under Prime Minister Modi has been taking special efforts to promote digitalisation and direct transfer of funds through electronic media. It is gratifying that in the last four years or so, the digitalisation of economy have forged ahead at an impressive rate and by and large , people have responded to such digitalisation exercise favourably. These days, it is seen that even small traders and even street vendors accept payment electronically by what is popularly known as Google pay or payment by card.
In such conditions, Government of India has done well to take steps to withdraw Rs.2000 currency notes, amounting to more than Rs.3 lakh crore from circulation with the deadline being 30 September 2023. This positive move will certainly bring out the hoarded money by politicians and businessmen or others and dilute the black money circulation in the country to a considerable extent.
What is very important now is that having taken steps to withdraw Rs.2000 notes amounting to the value of more than Rs.3 lakh crore, Government of India should not undo the benefit by replacing the withdrawn Rs.2000 currency by printing lower denomination notes. This will undo the benefit of withdrawing the Rs.2000 currency notes.
India has to move steadily towards cash less economy which is a gradual process and it is showing healthy signs of happening now. The emergence of cashless economy is the ultimate strategy to root out political and administrative corruption in India, which lead to business corruption.
The lower amount of cash in currency circulation will inevitably force or persuade people to resort to money transaction for business , trade or personal purposes by digital mode.
Of course, with the withdrawal of Rs.2000 currency notes, some critics may find fault with the move ,by stating that there would be shortage of notes of lesser denomination to be exchanged for Rs.2000 currency notes, when submitted by the people to the bank. This complaint would be largely made by the black money holders with concealed cash bundles , as they would not like to use the option of depositing the Rs.2000 currency notes in their bank account.
It is necessary that Government of India should be careful in explaining the merits of the present move to withdraw Rs.2000 currency notes, so that the gullible people would not be misled by false and motivated criticisms. It is also necessary that enlightened and knowledgeable economists should voice their views in various forums, so that a heathy and forward looking national discussions on the subject can take place, that will contribute to prepare mindset of the people in favour of cashless economy.