Demonetization in Venezuela Vs India

 

The Latin American country, Venezuela, has tried to ape India’s nation-wide note ban decision, but it had backfired badly following which President Nicolas Maduro was forced to postpone the entire decision until January 2 next month. The Venezuelan government took the decision last week on December 12, following which 100-bolivar note was ceased to be a legal tender.

But the sudden decision was bound to have violent repercussion in one of the world’s most violent countries. It led to massive protest across the streets of Caracas and other cities messed up further by violent protests and complete chaos. The decision was abruptly taken leaving the entire nation of around 32-million people in a state of complete shock, anger and despair. However, the government had now postponed the decision as of now to prevent further law and order mess in the country.

The Venezuelan President confirmed that 100-Bolivar bills will remain a legal tender as of now. However, the international borders with neighboring Columbia and Brazil would stay closed to prevent hoarding of Venezuelan cash by black money hoarders.

Maduro further alleged that these mafias are in touch with the US to destabilize the country. Currently, Venezuela has the world’s highest inflation rate of around 475% according to the IMF. The 100-bolivar demonetization was planned to curb the high prevailing level of inflation in the nation.

The people of Venezuela stood in long lines at banks for hours together to meet a Friday deadline to exchange their 100-Bolivar currency notes. Even when the deadline was extended, people still queued up at Banks out of fear psychosis and to get rid away from the demonetized currency at the earliest. According to government estimates, a lot of shops and shopping malls were looted and several people injured in violent clashes after the Venezuelan government’s sudden demonetization move.

Demonetization in India & Venezuela: A Comparison Study

Interestingly, in the context of India, common people stood by the government’s decision and demonstrated overwhelming support for Indian Prime Minister Narendra Modi.

  • In India, 500 & 1000 INR notes constitute around 86% of the currency in circulation, but in Venezuela 100-Bolivar note forms just 48 % of the total currency in circulation.
  • The Indian government gave around 50-day time limit to people to get their 500 & 1000 rupees note exchanged at the banks and post office with the amount of same values at different denominations, but Venezuela gave just 10 days for the people to deposit their demonetized 100-Bolivar notes at Banks. However, the entire decision was postponed later.
  • India demonetized notes of higher denomination of 500 & 1000 INR to tackle the problems of corruption and terror funding in Jammu and Kashmir by Pakistan, but Venezuela took the decision to curb the rising problems of international gangs and drug racketeers who hoard Venezuelan currency notes abroad to sell the same at subsidized rates in Columbia and neighboring areas.
  • The Venezuelan government was forced to postpone the decision since people went on a rampage across streets inciting violence, In India, Modi government didn’t backtrack albeit with considerable inconvenience to people. However, the level of violence in India is far lesser as compared to Venezuela after demonetization move.
  • In India, opposition parties and some of the people termed the move as a good decision coupled with bad execution, but in Venezuela, people are extremely furious with so little deadline given to them to get their demonetized notes exchanged at banks.

Cashless Economy: What about these 600 million people

 

600 million Indians don’t have bank accounts in India.

Even before demonetisation, Prime Minister Narendra Modi has laid emphasis on a digital Indian economy. This idea of digital economy has become even more obvious with shifting focus from the problems faced by the poor due to cash crunch to the future that can be through digital economy.

History of cashless economy

The first country to push cashless economy is Denmark along Norway and Sweden. Among others, Australia, UK, South Korea is also pushing for cashless society.

What’s wrong with cashless society?

Today, we live in a world that is highly unequal, especially when it comes to distribution of wealth. A cashless society will further jeopardize this situation for the poor and uneducated who have no access to such knowledge.

In such a scenario, the govt. openly shouting for a cashless society and PM Modi asking party workers to promote this idea seems unrealistic and ill fated when we know that the poor are going to be left behind.

Not only that, BJP has euphemistically ignored the impact of demonetisation on the poor. The deaths that have been caused, the decreasing payment of daily wage labors and loss of livelihoods for many farmers among others has been ignored completely by the ruling political parties.

How can the government that claims to be ‘pro-poor’ talk about a cashless economy when they know that only the literates, affluent and technically learned people will be the true beneficiaries of this idea. While the poor, illiterate, child labours, women labours, daily wage labours and many more will be excluded from its success.

Developed Scandinavian countries, Australia and UK among others can afford such a plan for their small number of population as compare to India and almost 100% literacy. But laying too much emphasis on this plan in India and at the same time failing to educate and improve literacy will definitely push further the increasing gap between the rich and the poor.

Such a plan is not pro poor, but pro rich and middle class, attractive to the bourgeois and mostly effective and feasible in cities. There are only 800 per million card swiping machines in the country. What’s even sadder is the ignorance of media to educate and debate the impact of this intention. The government is hiding behind big bang schemes to hide its malfunctioning and we people are foolishly standing and enjoying as the world changes in front of our eyes and the poor are thrown aside like a garbage bag.

 

Top Rumors on Demonetisation

Did you know that your 2000 rupee notes were capable of getting charged?

 

Don’t worry if you don’t because the day new 2000 rupee notes came into the market, fake news and rumors have spread like wild-fire. Some said that notes can be charged and some said that they can be tracked meters inside the ground.
Here’s a look at the rumors that shocked many and made many others laugh.
1. The 2000 rupee note has a nano chip
Sweta Singh of Aajtak confirms this news below by describing very nicely how your tacked 2000 rupee notes can be tracked. I wonder if she is foolish to have thought about it or its many of us who believed.
https://www.youtube.com/watch?v=E09Ilc7fHIE
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2. That 2000 rupee notes can store solar energy
This was shown by a person who made a prank video lighting a buld with the help of the 2000 rupee note.
Here’s the video link – https://www.youtube.com/watch?v=hNsxrWEnkmQ
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3. 2000 rupee note that sheds colour is fake
Unfortunately, the fact is just the opposite of this rumor. Real notes shed some colour and the government has accepted the problem.
4. The new notes are waterproof
See for yourself, what happened when this guy experimented with 2000 rupee note in water.
https://www.youtube.com/watch?v=lrhWlZ8OwVU
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5. Mahatma Gandhi no more on the new note
Totally false. People saw the back of the note and thought it’s the front where Gandhi’s picture was absent, but the front is where Gandhi is.

 

6. When withdrawing money from the ATM, people will be marked with indelible ink
The truth is that the indelible ink was for people standing in the bank queues where they kept coming again and again to exchange money. So to solve this problem, indelible ink was to be used.

Indian Express Image
Here is what Twitter has to say on rumors about demonetisation
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It is best to not trust what people in your neighborhood, office and family say about the new notes. You better get the facts checked yourself and not be fooled by fake news.

Here is what Twitter has to say on rumors about demonetisation

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It  is best to not trust what people in your neighborhood, office and family say about the new notes. You better get the facts checked yourself and not be fooled by fake news.

Is 2000 INR New Note Usable in Today’s Crunched Economy

new-notee

 

Following the Indian government’s bold step to demonetize the old notes of 500 and 1000 INR, it was expected that the government and concerned authority must have some ready solution to tackle the cash chaos. But even after three weeks of the decision, the situation is still problematic as people still stand in queues and thronging from one ATM to another in search of liquid cash.

Some get succeeded to withdraw money from the machine while some don’t. Amidst the prevailing nationwide cash crunch, the RBI has introduced the new purple colored 2000 INR note on November 10 this year. But people find it extremely difficult to use it for transaction purposes.

Honestly speaking, unless the situation comes to normalcy it’s almost impossible to use the new note at one go. Obviously, the way people are running here and there to withdraw smaller denomination notes like the 100s, 50s, 10s from banks, certainly, there is no taker of Rs. 2000 INR notes now. Even if some of the people accept it they do so with a certain degree of restraint and reluctance.

The basic reason why people don’t want to take such notes of the big denomination is the wide gap in the value of notes of 500 and 2000. The common man might feel it is easier to transact four currency notes of new 500 notes than a single 2000 rupee note in the current chaotic economy. It will surely take time when people will start accepting such notes for their day-to-day transactions.

Why People Don’t Accepting the New 2000 INR Notes

  • The current situation doesn’t let a person withdraw more than Rs. 2000/- per day from ATMs per card. They find it more convenient to withdraw money in 100 rupees notes than a single 2000 rupees note.
  • Grocery and vegetable sellers carry their day to day business with very limited cash. It’s definitely impossible to imagine that a vegetable seller will exchange your Rs. 2000 note for a limited purchase worth Rs. 100 or 200.
  • Many people won’t accept the new 2000 note for the single reason that it will be highly difficult for them to get the same exchanged when they need.
  • The current psyche of the people is to hold as much cash as possible in hand. So they won’t take your Rs. 2000 note until the restriction limit on cash withdrawal is revoked.
  • To meet our daily small transactions such as medicine bills, vegetable and fruit expenses and conveyance by way of rikshaw or bus, what we really need are the smaller notes of 100s, 50s and 10s and not the 2000 INR note.
  • If more and more people get enlightened about the new digital payment systems such as e-wallets, paytm, Bank transfer, chque payment and NEFT, then sooner or later the quantum of cash transactions with denominations of 2000 and 500 will reduce to a large extent.

In order to instill faith of the people in transacting with the new 2000 rupees note, there is an urgent need for the government to enhance the supply of paper currency of smaller denominations such 500/100/50. Meanwhile, also people need to give away their habit of cash holding practice in smaller denominations or preference to hold cash for liquidity purposes.

However, people can still use the new 2000 notes where sizable expenditure is required such as the medical charges for surgery or to buy costly house appliances or IT products. Another way to use such notes is when you pay a big sum of money to your landlord as rent.

Business down by 40% – Transportation Afflicted by Demonetisation

currency-946932_960_720

 

Raja Angam (68) has been an auto driver since 1978. “After years of hard-hitting savings I brought an auto in 2010, but because of Ola and Uber I could hardly earn Rs. 500 and now that the government has demonetised Rs. 500 and Rs. 1000 notes, I have to drive for 16 hours to earn as low as Rs. 300,” he told dismally.

The decision of demonetisation in a speech by PM Narendra Modi on 8th November has afflicted Raja Angam and many alike. From auto rickshaws to pick-up vehicles, demonetization has comprehensively taken a toll on the transportation business.

Looking sporadically at a group of women standing at Institute of Mathematical Sciences (IMSc) gate, Angam said, “You see the women standing there? I asked them if they want an auto and they said that their cab is coming.”

Angam explains that people don’t have change to travel by auto and he too can’t help that. “So they are opting for cheaper options like share cabs and auto.” But he is unaware of the fact that cab drivers too are reeling for the same reason.

Shivaji, an Ola cab driver, was depressed by Modi’s decision. “Modi has no children to feed, so it’s easy for him to take such a decision, it is us who have to suffer.”

For Shivaji, business was good as he was conveniently making 2000 rupees per day, “But today, making Rs. 1000 has become a daunting task.” He pointed out, “It’s 3 pm already and I have made only Rs. 300 since 8 am. Young people who used my cab for movies and nightouts have no cash. Every time I stood near IIT, I was flooded with cab requests, but now it takes about an hour before I find a passenger.”

“The problem is that there is no money for rotation and moreover Tamil Nadu hasn’t yet received its new 500 rupee notes.”

He was cynical about the government’s claim of a crackdown on black money. “As long as we have rich politicians, black money is going nowhere,” said the 53 year old with a smirk.

His thoughts were reiterated by Purushotamman, a 41 year old Bolero Maxi truck driver. “Money is already running at the high level, but people like me are suffering even though corruption is happening. Look at what happened in Gujarat,” he said while talking about the government employees arrested by the Gujarat police for accepting Rs. 4 lakh bribe in Rs. 2000 notes.

Purushottamman is still being paid in old notes of Rs. 500 and Rs. 1000. “The contract engineer pays me in old notes and I have to go to the bank to deposit. I went to the bank on Wednesday and stood in line for 6 hours and then the bank said that there was no cash. I was helpless and had to revisit the next day. The day I go to the bank is the day I make no money,” he said showing his Rs. 1000 note.

“Petrol pumps are unwilling to put fuel below 500. So although my truck tank is full, I don’t have money to run the house,” said Purushottamman, a father to a school going girl and two college boys.

Even though many are sad about Modi’s demonetization step, not everyone is skeptical about its impact. “I am being paid in old notes and there is no problem with that because the petrol pumps are exchanging my money. The cash crunch problem is only for a few months and then it will be back to normal,” said Raja, looking at the travelers exiting the Chennai domestic airport, with a hope of getting a customer for his black and white taxi.

Even though Raja’s business has been hit hardly, he is optimistic over the government’s move. “I am hardly making Rs. 2000 now as compared to Rs. 4000. I go to the bank everyday in the morning and get back to work by 12. This takes up a lot of my time, but I feel that this is a good step.”

Demonetisation has diverted passengers from autos and taxis to buses and trains. C. Venugopal, who runs a saree shop in Sowcarpet, used to travel by cab everyday from Velachery, but now does so by MRTS. “Even after the ban, I commuted by cab because I thought it would all be normal in a few days, but it didn’t happen. Then I decided to MRTS to save money because I can’t go to the bank every day.”

Ravi, who gives ticket at the Indira Nagar ticket counter said that demonetisation hasn’t affected the MRTS. “MRTS tickets cost just Rs. 5 or Rs. 10. Currency notes of lower denomination are usually exchanged and therefore the crisis has not directly affected the transport system. However, not many have applied for a season ticket in the past one week. Let alone 500 and 1000, People who comes with 100 rupee notes are a problem for other passengers at the ticket counter,” he said.

On the other hand, MTC buses have seen a significant surge in the number of passengers. Raja Panti (28), a bus conductor pointed out, “Generally we have 600 passengers in an eight hour shift, but now we get more than 700 passengers. Even though today (Sunday) is a holiday, we have had 500 passengers already.” This was at 2.15 in the afternoon today.

Panti said that there is not much of an exchange problem in MTC. “We get only 100s, 50s, 20s and 10s from passengers and even if they are giving Rs. 2ooo notes, we exchange them.”

The story of Ola, an Indian cab service giant, is way different than the negative impact on the traditional transportation system. Especially because the company has used the cash hungry India economy to build up its digital payment solution.

A report carried by the Indian Express on November 9 said that Ola Money, part of taxi aggregator Ola, Wednesday reported over 1500 per cent increase in recharges across 102 cities of its operation in past 15 hours after government withdrew circulation denominations of Rs 500 and Rs 1,000 currency notes in a major move against black money and graft. The surge in recharges was seen between 8:30 PM till midnight.

Recently the company also launched a new ad campaign that was showcased on all platforms with the tagline, “Nahi rukega India, cashless chalega India.” The tagline translates to ‘India won’t stop, India will ride cashless.”

How far will the likes of Ola will suffocate the likes of Raja Angam, is a wait and watch story. Until the government comes out to protect their livelihoods, the future generation will unfortunately not know what it meant to shout ‘auto’.

Another Elderly Man Dies after Standing in Que for Money

bank

 

A 70 year old man from Eastern Uttar Pradesh district of Azamgarh, died of a heart attack after standing in a queue outside a bank in Maharajganj area.

The old man Ishteyak Ahmad, a retired teacher was standing in a queue when he fell unconscious standing in the queue. Although he was immediately taken to the hospital, he could not be saved.

Only a few days back, a 73 year old man Vishwanath Vartak had collapsed due to a heart attack in Mulund, Mumbai while standing in a queue outside SBI branch. Others in the queue admitted Vartak to the hospital, but unfortunately he could not be saved.

People have rushed to exchange 500 and 1000 rupee notes through banks after the government of India initiated a ban on 500 and 1000 rupee notes. People have been asked to exchange their notes until December 2016 after which the currencies will not be taken and circulated.

Modi’s shocking announcement has got ordinary citizens at a fix who are running up and down to tackle the shortage of new currency and dealing with long queues at banks and ATMs.

The notes of 500 and 1000 account for roughly 87% of all notes in circulation across India that runs on cash. As per 2015 Tufts University study, less than 10% Indians had made payments without using cash. The report also said that the value of notes and coins as compare to India’s economic output, or GDP, was about 12%, which is significantly higher than the likes of Brazil and South Africa, where it is under 4%.

Modi government argues that the step to demonetize will have a good impact on Indian economy in the long run and said that the problem faced by the people is temporary.

Manohar Parrikar, Union defense minister said that ‘demonetization ended stone pelting in Kashmir’, to which Congress President Farooq Abdulla responded by saying that it is a misconception that demonetization and board exams would end the unrest in Kashmir Valley. He also said that the “storm” would rise again.