India Inc. Demonetisation 2016 – An impeccable vision executed haphazardly.

Nearly a week after the high denomination notes ceased to be a legal tender, there is enough ambiguity amongst the public and bureaucracy alike.

Take the case of exchange of (Old High Denomination )OHD notes, our honorable Prime Minister mentioned that PAN and Aadhar could be used for such exchange, but the communication lacked clarity whether the exchange limit of Rs.4000 was per account holder per day and can be done for each bank account he or she holds, or per PAN once a day or per PAN only once. There are instances where people have exchanged the OHD notes at bank with even their driving license. 

For drawing an analogy, let us consider Rs.500 and Rs. 1000 as two high profile most sought after corporate employees who have been fired by the management with little or no notice. Before any layoff the higher management brainstorms and come up with a transition and backup plan. A committee or change control board evaluates the pros and cons of the action. A risk mitigation plan is well documented and finally the pink slip is given. Unfortunately India Inc. introduced the pink note and fired Mr.500 and Mr.1000 without enough thought to such processes. Either it was hurriedly done since the stakeholders found that grapevines has percolated the news to the lower rings and they could not contain or control it or it is that the bureaucrats did not do a good job of creating a process and executing as per plan. There is no doubt that a change of this magnitude in the economic system will cause inconvenience to good and bad elements in the society. But the scope and planning of the change should have taken all attributes and parameters to enable such a change with little discomfort to the good elements in the society.

Was this process of exchange of OHD notes documented before execution? Was such a document issued as a circular by the RBI to notify all the banks and their branches? If at all it was documented, was there enough effort from a committee who prepared the draft, reviewed the same and finally approved it in order to ensure that loopholes are plugged and ambiguity in such notification does not conveniently allow each individual to interpret it according to his / her whims and fancies?

There are people who interpreted that Rs.4000 was a limit per PAN per day and there are others who thought it is per bank account that they hold. To circumvent each of these limits, people hopped from one bank to another and got their notes exchanged. The panic button has been hit and many started hoarding the lower denomination currency. It took only two days for a person who has an above average income of Rs.40000 per month to go from one bank to another with PAN and exchange the currency and hoard 400 numbers of  Rs.100 notes. It is his / her hard earned money and has all right to do so too, but what this caused is inconvenience to probably 40 people who did not get their ration of Rs.100 notes.

A revised circular stated that exchange of Rs.4500 was once in a lifetime opportunity for an individual. It is not clear how RBI will keep track of such an exchange. Is there a software system in place which links post offices and all banks where each exchange is tracked on real time basis on Aadhar and PAN? How many of urban tech savvy population has the PAN and Aadhar linked? How many Indians have atleast one of these ID proof?

Next let’s consider the freezing of all transactions of Co-operative banks. Though enough time, drive and effort to mobilize and educate citizens were imparted for starting JAN DHAN accounts, it was not enough to break the trust that people had on parallel banking institutions for generations together. What is worse is that even RTGS and NEFT from these accouts has also been put on hold which left many bewildered. The higher rate of interest, the familiarity with the older system of visiting a branch and depositing and withdrawing cash or may be the simple fact that the convenience and trust that such institutions have managed to build among their customers have all been shattered  and rendered worthless overnight.

The first step here should have been mandating a cap or threshold beyond which an individual or corporate have to mandatory transfer fund to a nationalized bank and withdraw cash from such linked nationalised bank accounts. This would have saved many a common man or cattle class ;) (Courtesy Mr.Tharoor) from the trauma of demonetisation. Many who barely have less than Rs.10000 in his co-operative bank accounts will not be impacted when the taxmen set sail to catch the big fish. 

To conclude I am of the opinion that the visionary keen on policy making is not to be blamed but the executioners of the policy are the cause for creating the confusion. Blaming the PM and FM for the present situation in the country is synonymous to blaming Pierre and Marie Curie for the sufferings of Hiroshima-Nagasaki .