Saturday, November 12, 2016

Demonetisation without Planning and Execution

I support PM Modi's decision to demonetise 500 and 1000 rupee currency notes. I think this move may not eradicate blak money permanently unless other ancillary steps are taken. At the same time many people, sitting on piles and piles of undisclosed money, will certainly feel the pinch. By some account nearly 300 lac crore of unaccounted money will be wiped out. 

Such a drive that involves 1.2 billion lives need meticulous planning and execution. So far what I have seen, the whole approach lacks in implementation and execution. For two days I stood for two plus hours outside a private bank. I did not get any money. Cash always ran out. I could deposit my 500 rupee notes on the first day. To top the misery, ATM machines were also not functional for first two days. The third day machines started giving cash, but cash finished after 2 - 3 hours. How can cash finish if every person is allowed to withdraw on 2000 rupees each time?

I am surprised how can cash run out when hardly 30 - 60 customers have been served? That too at a measly sum of Rs. 10000 per person, if all customers had gone for withdrawal of their a single day quota. I am sure this was not the case, as many people were there to simply exchange, where they get Rs. 4000 maximum. 

I am well off by Indian standard. I have access to other means of transaction like credit cand, digital money, cheque etc. I may be inconvenienced if I do not get money. But I shall not be helpless altogether. But that may not be the case for many others. They lose work, they lose wage, they stand in line but do not get any money.  My banker friend said it may take 7 - 10 days for system to stabilise. 

As I rue my predicament, I heard congress VP Mr Rahul G ask people standing in queue "do you see any crorepati  industrialist or a person in suit-boot standing in queue?" That is a valid question. When I talk to my bank manager friend about shortage of cash and long queue, he told me "come to my branch, I shall arrange everything." I insisted on standing in queue. May be I shall change my mind if I do not get any cash the third straight day. But it got me thinking. Rich people may have many options:

They may have people in payroll to address this kind of contingency;
Rich may have access to many more transaction options;
Rich may have preferential relationship with bank. Whereby, banks may supply money to their home. May be that is why banks run out of money fast;
I heard on TV, many ministers talk to bank manager and get expedited treament! while common people sweat it out. 


I thin bank must issue tokens to its customers. Bank knows how much money it has. Bank can calculate how many clients they can serve. They can ask rest of the people to go home. If there is any leftover after serving the first batch, bank can start the process of distribution again. This may at least minimise hassle of standing for 2 hours and then come to know that cash has finished. As it appears, execution lacks imagination and planning.

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