Opinion: Fortnight later, jury is still out on demonetisation issue

Let’s begin with the super big picture. The BJP began with the statement (electoral of course) that it would drop Rs 15 lakh into every Indian’s bank account if and when it brings back the black money stacked abroad. With India’s population at 120 crore, this translates into 1,800 lakh crore. At May 2014 exchange rate of Rs 58, that works to $31trillion. Benchmark it against the global GDP of $72 trillion, and you see some staggering number. 

Let’s narrow the picture. Assuming for a moment the BJP was wrong by half; we are talking about 900 lakhcrore which is a phenomenal amount of money. The strike on black cash money, by comparison, is miniscule. By now everyone knows that old high denomination note is Rs 15 lakh crore and about 20% is unlikely to come back. So the strike on cash black money is Rs 3 lakh crore and is small in comparison to the size of black money.

Don’t get me wrong. I am not saying we should not strike on black money. I am merely pointing out the size. Among experts, the jury is still out on whether de-monetisation is fine. What the announcement has done is to push the onus from the government to the public and in the process increase the awareness. Is this going to hit the big guns or the cattle class is the question. Will it clean up the high-stake robbers or just put the fear of God into the pickpockets? 

As a first step towards cleaning the Augean stable, it is welcome. But one has to move beyond the first stage.

The logical second step would be to hit at where black money is in fact stashed: real estate for starters. There is an overwhelming belief that given the phenomenal work done by Nandan Nilekani on Aadhaar and that number now being as ubiquitous as the mobile phone, it would be time to link property in the country to specific Aadhaar numbers. Since everyone would or should have an Aadhaar, this should strike at one of the roots of the problem. Better still, everyone owning a property should have the Aadhaar identification. Over time, there would be the distinct possibility that this licence will become mandatory right at birth. 

The third step would be to hit at another area where black money is stashed: gold. Will the government next declare that everyone who has gold should declare how much gold he has and get it attested by a bank or otherwise? 

All of these would move towards hitting out at black money in India. But then the bulk of the black money is outside. That is a more difficult exercise. That would require diplomacy and putting pressure. Does the government have it in it to do that? If it has, and if it does, and if it brings that money back as well, it would have done something phenomenally outstanding. It doesn’t matter if it takes another five years to do that so long as there are signs of it happening.