Fighting Black Money - A small mite from my side

Hi!

Had sometime back written to all major newschannels/newspapers this article ...guess the mainstream media were too  busy

Dear Editor

　

As a concerned citizen of the country would like to bring to your notice the menace of counterfeit currency & its links with spread of terrorism. While no one knows for sure the extent of this menace but some estimates(Naik Committee) have put a number of 1,69,000 Cr or 33% of the total currency in circulation in the country till year 2000. This is a mind-boggling number & can also be the cause of runaway inflation & the scarcity of essential resources seen in recent years. Biggest worry is  this enemies of our country are using counterfeit currency as means to fund their real-war against us. I would like to bring to your notice that the problem is so acute that in border areas people are showing higher acceptance for foreign currency compared to Indian-currency (true in areas bordering Bangladesh/Nepal/Bhutan/Myanmar etc)

While RBI & banks have been taking measures to tackle this menace but the measures taken by them is only reactionary & will not dissuade the real perpetrators from continuing their activities. While continuing with the preventive measures would request government to look towards the following measures to weed out this problem from root.

I) Dissuade the counterfeiters by abolishing currencies of bigger denomination - We can consider abolishing currencies of denomination Rs 1000 & Rs 500 immediately (we may look at abolishing Rs 100 denomination too at a later stage).

There are multiple benefits in abolishing bigger denomination. Counterfeiters would need to print more notes to inflict same amount of damage as earlier. They would also need to carry/smuggle large number of notes which would be easier for authorities to target. With 1000 Rs note, you need only one bundle to carry Rs One lakh where as you would need to carry twenty such bundles if they had option of Rs 50 only. Basically you are decreasing the efficiency of counterfeiters by introducing this move. Remember the bigger the denomination bigger the aid to counterfeiters

II) This would also curb/reduce large number of transactions which happens across the markets(especially wholesale) in the country - in cash. A lower denomination would reduce the capacity of people to carry large volume of transactions & would push them towards cash-less transactions for want of any other efficient mechanism

III) Long term solution would be to push cash-less transactions in a big way. Currently huge number of cash transactions happen which are beyond the purview of any regulation & consequently government loses a big chunk of its review in form of forgone taxes. There needs to be a massive push towards cheque, card-based & internet based payments.   With advent of cashless transaction a portion of such transaction would leave an audit trail & would make tax/duty evasions difficult. To implement this a system of incentives & disincentives would  need to be introduced to push cashless payment mechanisms.  As a first step on can target organised sector to avoid cash in their transactions. For eg All salaries mandatorily need to be credited in bank accounts, all merchants need to install POS systems to facilitate payments & a floor % can be kept as the value of transactions which is routed through payment mode.        

　

Thanks & Regards,

H Mani