Firstly we are happy and hopeful for your joining as RBI Governor, with the motto to “control the inflation and to provide banking” to each and every individual. Further, as read from newspaper that our new government under Sh Narendra Modi’s leadership, is encouraging the bureaucrats, ministers to provide the ideas for revival of our economy. Keeping in view, I also thought “How can I contribute to our nation to revive our economy?”
So, here is the some ideas for reduction in Inflation, Black money and India’s rapid development just in next 2 years.
As rightly suggested by Baba Ramdev that, remove the 500/- and 1000/- denomination notes in the market and fixed the deadline by 31-03-2015.
Now the effect of above solution is as follows:-,
Any politician engaged in corruption/scam, where thousands of crores money is involved, will not be able to carry these huge amount with 100/- denomination notes and even if they try, will have to hire vehicles.
If any politician provides favor to any industrialist for any project, the industrialist will not be able to return the favor in 100/- notes. Even if the industrialist tries to pay through property or gold, then how will he complete the transaction with 100/- denomination notes? He will be forced to buy the property though bank transaction.
Unfortunately every year , we Indian face the problem of terrorism and Naxalism. By removing high denomination notes, their funding can be blocked. They will not be able to purchase the weapons with 100/- denomination notes.
As per Intelligence bureau’s information, neighbors countries are involved in fake currency in India through 500/- and 1000/- notes. When there will be no 500/- and 1000/- notes, then fake currency will be out of market by 31-03-2015. Suppose they use fake currency in 100/- notes, then their risk and cost to transfer the money in India will be higher than the return.
People in India park their black money either in properties or in gold. Suppose I am a builder and I have launched an apartment having 1000 No’s units and each worth Rs. 30 lacs. If anyone gives me sales value in 100/- denomination notes, it will be very difficult to do the transaction. And if this is done, Income tax department will easily be able to trace these notes.
Same applies well with gold. Major contributor to India’s current account deficit is gold. Imagine if a person having black money, tries to buy gold then, how much 100/- denomination notes will be required?. Even Shopkeeper will not accept this huge amount of 100/- notes.
Govt. has recently set up the SIT for repatriation of black money of Indian national parked in foreign banks. I just want to ask one thing, whether the Govt still thinks, that the black money is in foreign bank?. Will they have not yet appropriated their black money, knowing that Govt is serious about it. I feel Govt will not find anything there, as already these money might have been parked in Gold or Properties in India. In that case also, they won’t be able to sell or convert in 100/- denomination notes as no one will able to provide huge amount of 100/- notes.
Recently we have elected the new government. Every political party making allegation on other parties that they are using black money in election. There is also allegation that election in India is influenced by Money and Media houses. Imagine, if no 500/- and 1000/- notes, how much they will be able to make election expenditure with 100/- notes. They will have to hire vehicles to circulate money for election expenses. And then, they will easily come to the notice of Election commission and also the Income tax department and ED. Further in case of paid media, how will they be able to make illegal payments in 100/- notes. They will be forced to pay though bank and in process, will get in the notice. Honest and poor people will be able to contest the election.
Big corporate houses make donation to political parties in crores of rupees. They will not be able to give donations in 100/- notes and they will be forced to pay through bank account, making it more transparent.
Now issue is that, if we remove the 500/- and 1000/- denomination notes from market then there will be currency crisis and the people may face problem. Here is the solution for that:-
Govt has recently launched prepaid card “Rupay”, we have to make wide use of it. Further make use of debit and credit card everywhere in India, even in village. For e.g. when we go to any shopping mall in metros, we don’t carry hard cash, we just use credit and debit card over a swiping machine. Can’t we use them in village or small district also?. Now days we are having banking network in each district and tehsil. Battery operated swipe machine may be made available by Govt in private partnership and can be used even in villages. When there will be no 500/- and 1000/- notes, public will be forced to open bank accounts. Now one problem may occur, that poor people or people below poverty lines, will face problem in using this payment method, but for poor 100/- notes are sufficient for making transactions.
Now each and every household in India, even in villages have mobile phones by the advancement of Mobile technology through telecom companies like BSNL, Airtel, Reliance, Vodafone, Idea etc. Similarly make the best use of software providers of India like TCS, Infosys, Wipro, HCL, Tech Mahindra etc, we can implement this payment method in villages.
When all transactions will be through banking, all black money will be wiped out from market.
In India ironically, only salaried person pay the tax honestly. Supposedly Business Man, Professionals like Doctor, Engineers, CAs, Advocates, Consultants etc, Dealers/Retailers, Shopkeepers do not pay tax honestly. There income tax return is prepared as per bottom line approach. i.e. they decide first that “How much they are willing to pay as tax, and accordingly their income and expenditure are shown. By removing 500/- and 1000/- notes they will be forced to make transactions through bank or swipe machine. You can imagine billion dollar of tax evasion will be prevented.
Through this Govt will also come to know what is the consumer’s consumption preference, and accordingly Govt schemes can be made and problem of disparity of income will come to an end.
Govt does not have money for revival of economy for which it is mulling about FDI. I just want to convey that FDI is not the only solution for revival of economy. Whenever FIIs want, they infuse and withdraw the money in the market, making the market volatile also effect the economy and poor people lost in share market.
Governor Sir, if we seriously think over it, we will get to know that Govt’s revenue will be increased by billions of dollars and we will be able to revive the economy without the help of FDI and hopefully inflation will become the history in India. We Indians have so much of money, which you better knew than me, we just need to channelize and circulate them in the market.