Academy for Market Orientation India (R 4034005)

Will Scrap, Wrap the Crap?

In the last two days I have been hearing ,also experiencing the PM’s Initiative of scrapping the 500 & 1000 Rupees all of a sudden from one night. Like all I too appreciate the courage and intent of our PM who has a vision of taking this nation to the next level .However I have few questions or rather even concerns which I am sure has to be thought about.
Will Scraping 500 /1000 lead to legitimacy in the Economy?
The following are few points one has to think about
·        BPL:
In a country of 1.25 billion population let’s assume roughly BPL category falls close to 50% or forget the percentage of BPL (Though there are different stats)  at least I would say genuinely they are not in the  zone of black money reserves.
·        Middle Class:
The salaried and middle class typically people ,let’s talk about average annual earning of Rs 7 lakhs and above definitely has lesser role to play and let’s assume this contributes to  another 25% (Roughly some stats talk about 240 Million) also reasonably can be claimed not into the black money zone
·        Corrupted Rich (Using the terminology as strong potential Black Money Zone)
The corrupted rich  let’s say whatever it is the percentage has lots of potential to be in the Black Money Zone however the liquid cash in a disposable format for anybody by all common sense shall be reasonably assumed not more than 5 to 10% of the total worth .I am sure rest of the money would have already been converted to the format of properties & other assets and this 5 to 10% may not be a significant loss while looking the below parameters for them within the closed group of corrupted rich.
·        If the money is earned via all corrupted mechanisms losing 5 to 10% may not have any impact as they have already made 90-95% in a shorter span converted into other formats.
·        The Gap between the Middle Class and the Corrupted rich is already huge and even with 10% loss this gap shall still remain in the Socio-Economic Strata.
·        Also if we look at a closed Circle / Group of Corrupted rich within them all of them are likely to lose 10% and hence the Purchasing Power and net worth relative to each other all remain the same and hence this may not be a significant pain to them .
·        None of them according to me shall surrender the money or even disclose keeping in mind all the above and their o Individual Social Image Maintenance.
I would be happy if I had time to attach statistical numbers and made a maths however I would recommend someone to work a maths based on my above logic for research purpose. According to me this sudden initiative would pain only the Middle class and BPL as below
·        BPL citizens who has saved money say over years through hard work may be questioned the source if it exceed limits
·        Unorganized sectors/Example: Kirana/Small shops have to go through liquidity problem in short run.
·        People who traveled outstations shall not have proper disposable currencies for the few days.
·        Market Value of Real Estate shall diminish and it shall come close to Guide line value/even less (Ex Impact: Retired father who has invested in property for a daughter’s marriage would suffer)
·        Salaried and Middle class are made to stand hours for getting their hard earned money and I haven’t seen any super rich standing for 100 rs.
I have few questions:
If the intent is to be aggressive and bold on Black Money evasion why not the below was not thought about ?
·        Identify and Imprison corrupted Bureaucrats /Politicians/Business men/Super Rich the stronger/powerful section of the society irrespective of wherever /whatever party they are. This could have been even more a bold and courageous decision. Isn’t it so?
·        By scrapping the 500 /1000 the affected is only  the weaker section of the society at least in terms of making them loitering here and there to get their hard earned money for few days.
·        May be the ATMs and Banks could have been filled with more of 100 Rupees currencies for  last 2 weeks to 1 month and made more of 100 rupees circulation high in the market and then scrapped this as a surprise also. Why this was not executed in the above manner rather doing all the necessary arrangements after making a surprise move.
·        Initiative and the Intent is really courageous and my doubts still remain will it really give the desired impact however I wish it gives in long run .May be one more feather on PM’S cap for his courage and initiative.
The question still remains unanswered for me at least .
Will this Scrapping of 500/1000 Rupees Wrap up the corrupted Craps of the Society?
Will Scrap Wrap the Crap?
I am waiting for the long term results too …,….

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