Demonetization: A Positive Negative Outlook

Demonetization Debate on Economics and Money Matters

When it happened, my first reaction was ‘Why?’, and then Narendra Modi told me why. At that point I thought, ‘Hunh… Let’s see if this works”.  That day, the concept of Demonetization and the associated hashtag hadn’t even occurred to me. The media, social and traditional, took over and then tried to educate me on why demonetization is a good thing, or a bad thing, depending on where they stood.

Over the next few days I have been split between opinions regarding the overall benefit or bane of demonetization. I have stood in lines and I have cut down my spending. I feel I have done what’s expected of me. But I am still confused. So I decided to have a talk with myself.

Within me, I created an optimist, and a pessimist. And this is how it went down.

The Optimist

Listen, when was the last time, everyone, the whole country came together for a cause? Barriers have been cleared, friendships rekindled. This is the time to work together as one. You have to believe.

The Pessimist

I didn’t ask for this buddy. I was there minding my own business and here comes the Man with a Plan. Now I can’t access my own money. I have never been angrier with the system. They have royally screwed us all.

The Optimist

So you feel you are screwed? I didn’t realize you had it so good before. I didn’t realize you were fine with the corruption and the black money hoarding just as long as ‘you’ wouldn’t be disturbed. If there is a fire, would you curse the fire brigade because they have blocked the road? Things were screwed before this action was taken. This would only make it better. Just wait and watch.

The Pessimist

Don’t give me the corruption and black money taglines. You can’t do anything you want and then hide behind something that almost everyone agrees is bad. Nobody ever said that corruption shouldn’t be dealt with. But that’s no excuse to make the average Indian suffer. And another thing, this ‘wait and watch’ is a cliché. Why should I wait and watch? I have done nothing wrong, why should I suffer?

The Optimist

We all did, friend, we all did something wrong. We have let this evil of corruption grow right under our noses. We have let it make us so ridiculously apathetical that it’s almost normal for us. That is why we are protesting against an act of decisiveness. Because that evil, is now our way of life.

The Pessimist

Have you seen the lines outside Banks and ATMs? How does that stop corruption? Trade has slowed down; spending has gone down… how do you think all this would affect the economy? When distributors don’t have the money to run their business, they won’t be able to supply essential goods, which would make the price of day to day goods shoot up.

The Optimist

Most of what you say is from the onset of panic. All of these things could be solved, if we work together. People are scared and anxious because they don’t know what is actually happening. The change has them on edge. Nobody likes change, but we can manage it if we plan a little. Distribution might be affected for a few days, but so will everything else. Even if there is a little hike in the prices, it would come down as soon as the market normalizes. This would be done within a week itself.

The Pessimist

I can handle it. But what about those who can’t? What about the people who work on daily wages? What about the elderly who have to stand in lines to get their pensions exchanged? Are they corrupt? Should they suffer?

The Optimist

You raise an excellent point. Now you are moving towards asking constructive questions. They shouldn’t suffer. But tell me, have you given such a person preference in your own line? Change begins you’re your own self. If there are elderly people let them go ahead of everyone. Make it easier for them. Help out those who are unable to help themselves. If an able bodied educated person can vow to help at least three people, we won’t have this mess on our hands. It is easy to blame however it is far easier to solve.

The Pessimist

Fine, maybe we can work together. Maybe we shouldn’t panic. But do you realize the panic that you talk about has the potential to subdue and restrict economic growth. People would be wary to invest in government bonds or holdings. The trust factor would make them invest in options with least risk. This would in turn cut down the incentives for industry growth. How do you tackle this macro-economic after shock?

The Optimist

In a few days, a lot of money would be deposited in banks. These holdings would then help banks invest and reinvest in small businesses. The interest rates for loans may fall down, and the overall purchasing power of the average Indian would eventually increase. The alleged black money, which we all know is not at all alleged, would come back in the system. This might help the administration to fill fiscal deficits. This would in turn, give the administration its own purchasing power which would lead to increased investment in development. The income tax rates might come down for lower income groups. The macro-economic aftershocks have the potential to be very satisfying.

The Pessimist

So you mean you don’t disallow my prediction that the economy would slow down? You just put your own rosy picture on it.

The Optimist

That’s the power of democracy, friend. You have all the right to voice your opinion, and so do I. Let’s just do our part and hope for the best.

 

Moral:

Let’s all encourage debates rather than stupid protests. Then and only then, can we turn into a wonderful nation.

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