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Anti-black money strategy: Why I think restriction on cash withdrawal likely to be there permanently
'Is there any guarantee that there will be no black money generation after this demonetisation process is over?' My friend asked being bit skeptic, 'the withdrawal limit in any case will go after 31st December 2016. Thus people will again start withdrawing cash and the black money generated can again be stored in the form of new currency notes. Won't this demonetisation exercise finally fail?'

'There would still be bribes!' I had to concede, 'but then generation of black money would be next to impossible as people wouldn't have much cash in their hand because I don't think there would be no restriction on cash withdrawal!'

My friend couldn't understand what I mean to say. Also, many others have similar doubts like my friend. Thus let me tell clearly that the restriction to withdraw cash will remain forever.

To understand it, let's understand the basic idea behind demonetisation. The main purpose is to prevent black money generation. Black money generation can only be prevented if cash transaction occurs very less. That means the nation must be headed towards cashless transaction. I think everybody will now recall the mention of future cashless transaction by finance minister, other ministers and even by PM Narendra Modi.

How can you take the country towards cashless transaction? The only way is to absorb all cash in the public and then put restriction on cash withdrawal. Point is simple, most of the transactions have to be through banks and very minimum cash transaction (that too regulated) will able to stop the business of black money. Isn't that happening?

Many would ask, then how the rural economy, small trade and other small transactions requiring cash will be operated. The answer is simple. Many small traders like small hotels, small shops and other traders will start using e-payment system. They are already switching over to e-payment system because they know that they can't afford to lose business till 31st December 2016. Then systems will be made so that the card swipe and online trading etc will be availed at much cheaper rate.

More the use, less would be the charge. If mobiles can reach remote areas, then why can't e-transactions. Don't forget Narendra Modi's digital India program. This program, for which work is in advance stage, will be used for this. Thus the withdrawal limit will always be there and in future I would say that withdrawing even Rs 10000 will be problem. If you say some traders will not opt for e-transaction, I would say that they will lose business and other willing people will replace them.

The people who are considering themselves as smart and started depositing money in to relatives or their servants' 'Jandhan Yojana' account, they will be subjected to heavy shock. Because, they can't retrieve any cash from those accounts. They can get back through Cheque or online transfer but then such amount will be accounted and thus will come to tax net. Thus if some people think that they are able to escape from the present situation, my suggestion is to stay prepared for future shocks.

One would ask me, how I could say so with such a confidence. Well, I have three reasons to believe that there would be permanent restriction on cash withdrawal. First, I follow each and every speech of Narendra Modi and always try to correlate his actions with his speech. Second, I believe Narendra Modi is a meticulous planner of each and every target he sets for himself and for the nation. His persona doesn't say that he will take such a huge risk without having permanent system to block black money generation.

Third and the most important reason is, many retired Reserve Bank governors, officials, many retired senior bank officer including Meera Sanyal (ex SBI chief and AAP member) are of the opinion that replacement of old notes with new notes can't be possible with in fifty days because as per the capacity of RBI's currency printing infrastructure it would take at least one year for printing equal number of new currencies.

The fact that RBI at present is printing mostly 100 rupees notes in place of 1000 rupee note, the delay would be even more than a year. Is Narendra Modi ready for such a long time for the printing of new currencies? The answer is no and that means Government is not planning to print such amount and numbers of currencies.

Most likely their plan is to print one-fourth to one-third new currency which could be possible till 31st December if we consider that such printing would have started in early October. That means the government is not planning to print all the currencies. The conclusion is, the government has the strategy for use of minimum currency and taking forward maximum online transaction/ use of plastic cards or cheques.

He said that he is gradually increasing the doses. Now if you connect dots like 'Jandhan Yojana', digital India, smart city, smart village, e-governance etc, you can conclude how he has planned to fight with black money and what could be his strategies in times to come. I can only say, PM Modi has more strategies planned for future and restriction on cash withdrawal is one of them.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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