DeMonetisation the mystery/ or good for people & GDP etc

#DeMonetisation is a new hastag on Tweeter now days. I had never in my life heard of such word existed in English which I knew/learnt since school days. But for few days in row it seems that whole democracy is at stake. Media is reporting many instances taking place in Delhi and other places. Few leaders are also opposing the move of govt.

I asked the shop owner why you are not accepting 500/1000 rupee notes, she said the bank people have informed that don’t accept these notes. Prodding further she said we have deposit in the bank then they will ask several queries, and you see we also don’t give receipts also so that becomes difficult. Later in the week I asked why don’t you use Paytm? To this said what? Paytm or ATM? What are you saying? One worker was smart he said we don’t use the Paytm.

Same thing I asked the neighbouring shop from where I buy sometimes vegetables, He replied that we don’t use it? We cant? I was bit surprised. Few days back I paid rs 394 using my debit card in the bakery shop from where I buy bread and milk.

On TV just saw how small shop owners are using Paytm? In Patna a stall in front of a girls college used to sell chaat, golguppa. The college girls suggested the stall owner boy as why you don’t use Paytm? He with the help of girls downloaded this Paytm app and now he is using this app and he is happy in this crisis of lack of rupee notes in small denomination.

A fast food stall owner in Uttarakhand started using this Paytm app and now feels happy. Similarly a pandit ji got his fee in a marriage through Paytm. Now it seems lot of people are moving towards cashless transactions. Even it is being called as cashless economy.

As we all know people give all payments of marriages in cash. Most often we buy several things off the counter but do not take proper receipts. However Govt employees particularly take precautions while taking receipts when they buy medicines, text books, traveling tickets. We can guess why?

When we pay cashless then all such money remains unaccounted. Small business units, shops, street vendors, stalls where we eat fast food, golguppa(pani puri), Bhelpuri, Paan, icecream etc.

When we buy vegetables, bangles, or have haircut, or have scooter got repaired, all such transaction remain unaccounted. Then how come all such transactions become part of economy? Have you given a thought? Most often such economic activity is termed as UnOrganised. In India this unorganised sector is very large. No data is available on the transaction done within this unorganised sector. The quantum of this unorganised sector is estimated through the Economic Census by the Govt of India. This Economic Census is conducted all over the country but once in every five years or so. The Sixth Economic Census has just completed during 2014-15 by the Ministry of Statistics and Programme implementation, New Delhi.

Other source is the survey conducted by the NSSO- National Sample Survey Organistation. But the truth is that it is also a sample survey thus cannot tell the correct figure of all such transactions in this sector.

Unorganised means that it is not registered anywhere. Despite of having so many acts rules and registering authorities such unorganised business units thrive in our vast economy.

Economic Census gives a picture of types of economic activities being carried out in any area. It also gives account of the workers engaged in such activities, with the categories like owner, hired workers, or self owned/ economic units with premises or without premises. The exact word is within household or outside household. Since economic activity is carried under these two category. If householder goes out of his house and does economic activity somewhere else then it is called outside household activity. If the members of household do some activity within house then it is called within household activity. Nowhere the actual annual transaction is recorded in this survey. Thus the quantum of the economy is just estimated or an assumption.

Demonetisation has brought this idea to fore i.e. need to have all transactions including that of Unorganised sector to be accounted and Thus to be done online/cashless. All such transactions automatically are brought to account. After this there will be another step so that all such activities will be required to be registered. If any transaction is beyond normal limits or some unusual frequency then such transactions/accounts will come under scanner.

Recently the limit of deposit is Rs 2.5 lakhs in an account. This will be considered as normal. It is highlighted in TV news that agency will presume this as savings of ladies of households.

Why shop owners or small business operators are not using any bank account or online mode of accepting payments? It is all just matter of thinking perception. How they perceive the whole issue of earning money. We don’t get proper receipts on our purchases in shops. In some shops I have found that shop owner tell if you ask for a receipt then you have to pay this amount and if you don’t want it then you pay this amount. I mean we are asked to pay two different amounts. In one shop I got a reply from the shop that if you don’t take whole packing then you can pay less. He opened that pack and gave me all things and kept that packing with him. I am still amazed as to why he did this?

I remember the time when I used to go Azadpur sabji mandi from Delhi University to buy vegetables in bulk for our hostel there I used to pay in cash. In such wholesale markets people do all transactions in cash only. There I don’t think transactions are less than 1000 rupees. But then why they don’t transact online?  Is it a matter of habit or something else?

On Tv we heard that now onwards those who are registered with the declared notified markets can withdraw Rs 50K. Similarly there are various entities requiring registration. There are various registering authorities as defined under various acts/rules. Farmers can purchase seeds from the govt shops. There too seed shops are ought to be registered with concerning authorities.

If Farmers require fertilizers then also they should buy from registered shops. When we all try to move towards cashless transactions then there will be a direct need of proper registration of enterprises. That will be required, if taxation agencies will be vigil enough to scan such transactions beyond normal limits.

Now most of people are aware of PAN that is a unique number allotted to an individual. After 8^th November 2016 now everybody knows that to purchase gold of more than 2 lakhs PAN is required to be quoted. I doubt if the limit is 50K or 2 lakhs. But those transactions on purchase of gold beyond 2 lakhs in any jewellery shop will be monitored. All the jewellery shops are required to keep records of such transactions. If they have done in cashless form then it will be easy to monitor.

By this Demonetisation there will be a revolution kind of thing in every sector. Today saw one news on TV about workers in Tea plantation. The owners are giving Rs 2k to a batch of 4 people. They were told to distribute among themselves. How troubling is this news. Another surprising thing I came to know that the minimum wage of workers in tea plantation is about Rs 126 in Assam. Is it true? In MGNREGA I thought the minimum wage is Rs 190. But in some places the minimum wage is more than Rs 200. In those places people do not go for work under MGNREGA as the wage is less than minimum wage. I think minimum wages vary from place to place, state to state. Similarly the BPL limits also vary accordingly in each state. In recent SECC- Socio Economic Caste Census 2011 lots of parameters were collected but while going through the literature on this, I found that states were already deciding earlier the limits of BPL on the basis of parameters collected through earlier surveys.

News from Arunachal Pradesh informs that people are coping with this cash crunch crisis by adopting barter system. That was prevalent centuries ago.

People who are involved in estimation of GDP know better how and what data is important. How that data comes and from where? Most of the data is taken from surveys and estimated also (as far as I know). Since many times data is not available. How we can know the quantum of revenue earned by the Private transports. Do all private transporters provide correct data on their revenues?

In manufacturing sector how we can collect data? Do we have online data of all transaction done by the manufacturing units? Do we have online data of all tourists guide? Or do we have online data of revenue earned from all tourism related activities? This comes under trade sector? How many transactions are done online in all restaurants? Hotels?

Traders in many places keep godown/warehouses and pay rents. But most of cases we don’t have correct data on the workers hired by traders? How much they pay to these workers? Neither labour department know nor does any survey collect such data correctly. As most often surveys records data based on response only. But if registration is done mandatory and payments are done online then the correct data may emerge? Shops and commercial establishment act and other labour laws under which insurance/compensations to then workers are done, can provide data, provided all transaction are done ONLINE.

Middle men who procure agricultural produce from farmers are hit the most in present crisis. They pay to farmers in cash(may be?) but I know that these middle men do not pay proper cost? And on the other hand they sell these produce in wholesale markets or retailers also at huge prices, which included their profits? On TV the operators at wholesale market were saying this crisis has hit/affected them badly. But they do not think that earlier they were earning huge profits from selling at high prices. Common people were the effected the most as we have to shell out more money to buy vegetables for our household needs. Many times we think whether the farmers are getting their due cost/price?

I was buying vegetables at the Kalyanpur market near IIT Kanpur. Suddenly, a news came about riots in Kanpur city. In the shop we were buying the onions, on inquiring about prices he told Rs 20/Kg. same person was selling onions at the rate of Rs 7/Kg. it was impact of a news back then in 1991.

In present crisis also some genuine cases are difficult to be addressed as many frauds are coming to light. People are hoarding the Rs 100 notes, few are big shops, business operators. But in some news on TV many Bank officials are said to be involved black marketing the new notes. I think it would have been better if Army or forces would have been used to exchange the notes in every village, So that each and every citizen would have got money? Just like rationing.

Army can be called as this is national crisis. I think it is better if we all move towards a cashless society. Then only the true GDP can emerge. Present crisis has highlighted that there existed so called parallel economy which was never accounted into the GDP. With this move Demonetisation if all such money or economy(as we can call it) comes into account then only it will give a proper picture of real GDP.

Until and unless we the people do not participate in this exercise by paying proper tax, asking proper receipt of every purchase, by not paying in cash(as far as possible), pay our fees, bills in time using online mode, keeping our bank account utilised, forcing every enterprise to follow proper guidelines  we cannot become a good economy.