Lessons from Demonetization

On the night of 8^th of November 2016, the Indian Prime Minister, Narendra Modi announced the demonetization of Rs. 500 and Rs. 1000 bank notes with immediate effect. The reasons cited by the Indian Government for the surprising announcement were reduction of black money in the Indian economy, reducing the cash-flow in the system and cutting down the number of counterfeits.

The plans for demonetization had been made six to ten months prior to the public announcement. The secrecy maintained was such that even the Cabinet Ministers were briefed about the plan only on the night of announcement². The RBI was told six months prior to boost printing of Rs. 50 and 100 notes in preparation. To ease digital payments and lessen burden on banks, the government rolled out the Bharat Interface for Money (BHIM) app for both Android and iOS devices later that year, based on the Unified Payments Interface (UPI). Restrictions on withdrawal limits were imposed to ensure availability of cash for everyone. Thus, the government had foreseen some of the possible issues and had planned measures to ensure a smooth process for all stakeholders.

One major achievement of the exercise has been a marked increase in the number of cashless transactions, with the number of PoS machines almost doubling from 15 lakhs to 29 lakhs from October 2016 to September 2017 according to RBI data. The number of credit cards also increased drastically to 23 crores from a mere 2.3 crore over the same period. The growth rate of digital transactions also shot up from 25-30 percent prior to demonetization to around 40-70 percent post demonetization⁴. PayTM, India’s largest mobile payments services provider enjoyed an increase in number of customers from 125 million in November 2016 to 285 million in November 2017⁵. This data indicates that India has made a reasonably successful start in its move to a digital economy, with support from government initiatives and improved digital infrastructure.

The government also claimed to possess information on 37000 shell companies that helped hide black money after demonetization. Moreover, licenses of more than 1 lakh companies were canceled and data mining indicated suspect dealings in the books of more than 3 lakh companies⁶. Thus, as a direct fallout of the demonetization exercise, the government got leads to crack down on black money.

In India, 90% of the workforce is in the informal sector. Demonetization aimed at removing 86% of the total cash in circulation, and this was always going to have a huge impact on informal labor, who work without any job security and on daily wages. Taking out such a large amount of currency from the system would result in lesser business opportunities and therefore non-employment of daily wagers. Considering that all this was done just to wage a war against 6% of undeclared wealth (rest in kept in real estate, jewelry, etc.), it is hard to see how the government looked past these numbers⁷.

The original objective of demonetization was to weed out fake currency notes, reduce black money in circulation, and curb terrorism funding. Once the government realized that these problems were not actually being solved and that the policy was back-firing, they decided to change the initial objectives to transforming India to a cashless and digitized economy. This leads one to ponder if the government had done its research well enough.

According to EMIS Intelligence, the GDP decreased from 7.62% in 2016 Q3 to 5.59% in 2017 Q2. These figures indicate a decrease in growth of economy because of demonetization. This decrease can be attributed to various reasons. Small scale traders faced a huge loss in business due to non-availability of liquidity in the market. Many daily wage workers lost their jobs due to non-availability of cash in the market. The hits taken by the Industrial Index of Production and the decline in growth of manufacturing sector post demonetization hit the average daily wager hard. Given these repercussions, it is questionable whether demonetization came at the cost of the layman.

Given India’s population, implementation of such an exercise had to be impeccable. A good policy with bad implementation may have many negative effects, and thus, negate all the positives it aims at. Demonetization which had positive intentions behind its implementation turned out to be a nightmare for the common people of India. Three dozen people died within the first week of implementation⁸. There were reports of people dying due to standing in long snaking queues while others died because of non-availability of valid cash to avail services in hospitals and pharmacy shops⁹. Many people lost their valuable time standing in queues which affected their productivity in workplaces. Banks were also taken by surprise with the announcement of demonetization which affected their working for a long period. They were not equipped with enough manpower to support the logistics requirement for implementation of the policy. Existing ATM’s would also be needed to be recalibrated to accommodate the new ₹2000 note. This task itself took more than 3 weeks, further making things difficult for the general public¹⁰.

When it comes to decisions of such a large scale, pertaining to the economy of the nation, it is imperative to make the process smooth for the citizens. The lack of planning was evident when one looks at the lack of digital infrastructure, the delay in calibrating ATMs and the fact that banks were underprepared to handle such long queues. Irrespective of the nobility of the ends in sight, it does not justify the means undertaken to reach them. It is the responsibility of a good management to consider the consequences of their actions and policies. It is questionable if the Indian government accounted for these possibilities. Another learning from the execution of demonetization was the glaring lack of preparation on the government’s side. The entire process could have been so much smoother if both digital and physical infrastructure had been taken care of before deciding to execute. Moreover, the decision to act was taken by a handful of people with consequences on a country of a billion. It is unfathomable that such few people could take such a big decision involving so many stakeholders. Thus, more thought and preparation would have helped decide better on the need and implementation of the action. This would be the biggest takeaway for any manager analyzing the Indian demonetization episode of 2016.

References:

1. Indian ‘shadow economy’ to shrink to 13.6 per cent of GDP by 2025: ACCA. (2017, July 2) Retrieved August 12, 2018, from http://indianexpress.com/article/business/economy/indian-shadow-economy-to-shrink-to-13-6-per-cent-of-gdp-by-2025-acca-4731993/

2. Roychoudhury, A. (2016, November 10). Demonetisation: In the works for 6 months, 10 people in the loop, including Raghuram Rajan. Business Standard India. Retrieved from https://www.business-standard.com/article/economy-policy/demonetisation-in-the-works-for-6-months-10-people-in-the-loop-including-raghuram-rajan-116111000009_1.html

3. Banks should’ve been given more time to prepare for noteban: Ex-SBI chief Arundhati Bhattacharya - Times of India. (n.d.). Retrieved August 12, 2018, from https://timesofindia.indiatimes.com/business/india-business/banks-shouldve-been-given-more-time-to-prepare-for-noteban-ex-sbi-chief-arundhati-bhattacharya/articleshow/61249220.cms

4. Demonetisation in Figures: All You Wanted to Know - News18. (n.d.). Retrieved August 12, 2018, from https://www.news18.com/news/business/demonetisation-in-figures-all-you-wanted-to-know-1569907.html

5. How Paytm went big on Indian demonetization. (n.d.). Retrieved August 12, 2018, from https://www.euromoney.com/article/b15ts6qpxvj51d/how-paytm-went-big-on-indian-demonetization

6. One Lakh Firms De-Registered; 37,000 Shell Companies Identified: PM Modi. (n.d.). Retrieved August 12, 2018, from https://www.ndtv.com/business/one-lakh-firms-de-registered-37-000-shell-companies-identified-pm-modi-1719383

7. Management lessons from demonetisation: Consequences catastrophic when basics are forgotten - The Financial Express. (n.d.). Retrieved August 12, 2018, from https://www.financialexpress.com/india-news/management-lessons-from-demonetisation-consequences-catastrophic-when-basics-are-forgotten/930256/

8. The ugly face of India’s demonetization: Dozens of deaths. (n.d.). Retrieved August 12, 2018, from https://mashable.com/2016/11/16/india-people-dying-demonetization/#41FY7uM5H8qB

9. Demonetisation: 12 deaths reported so far as India queues up outside banks. (2016, November 14). Retrieved October 2, 2018, from http://indianexpress.com/article/india/india-news-india/demonetisation-cracks-down-on-people-11-deaths-reported-so-far-4374905/

10. Desk, I. (2016, November 12). Recalibration of ATMs will take up to three weeks, says Jaitley. The Hindu. Retrieved from https://www.thehindu.com/news/national/Recalibration-of-ATMs-will-take-up-to-three-weeks-says-Jaitley/article16443730.ece

13B – Horror Continues: A Short Story!

There was one rare residential tower named ‘Ursula’ at Bandra sea side which wasn't hammered down by builders for a reason or two. It was a thirteen storeys building with four flats on each floor and not a single resident was ready to leave despite having some rumors about seeing ghosts on the thirteenth floor. Because there was one retired army officer, Mr Singh, living on the 0th floor who looked after maintenance of the building used to rubbish such rumors. It was obvious to predict that thirteenth floor was human-less. But one day Mr and Mrs D'Souza moved into 13-C with their 7 year old son David on the eve of Christmas. They were Goan Catholics having faith in Jesus and hence they decided to move in once they liked the apartment without giving an ear to the rumors. After all they came through a contact of Mr Singh and he was also looking for one gutsy couple to wash away all the ghost stories. Josh D'Souza was a gentleman. He was a software engineer in Patni Computers with a loving housewife and dreamy son at home. He used to go for a morning jog and enjoyed the company of Mr Singh and soon impressed his ex-army colleagues with his fun loving attitude.

It was a foggy morning in Feb when Josh came to jog with a tensed look on his face. He was upset with Mr Singh for an issue and showed his anger publicly. He was saying that some Mr and Mrs Roy moved into his neighboring flat 13-B and Mr Singh didn't bother to inform Josh. He also didn't mind as Mr Singh was a busy person fulfilling his hobbies to taste adventure. But one day Mr Roy broke into Josh’s apartment when he was in office. Josh’s wife, Leena was taking a nap after finishing household work. Mr Roy directly went into the bedroom where Leena was sleeping. She got up when she heard some noise. Mr Roy was removing David’s photos from all the photo frames kept in the showcase at corner. Leena was scared by uncannily striking appearance of Mr Roy in her bedroom. She tried to shout but no one came to help. She was feeling frightened watching Mr Roy laughing continuously at her. She cried for help and requested him not to get into any wrongdoing. She fell asleep dramatically after the moment like someone was controlling her mind and woke up with a sweaty face. First Josh described it as a bad dream but Leena was very sure that it happened and she was considering Jesus as a witness of the wrongdoing. But Mr Singh was a tough person and difficult to melt. He thought that Josh also came to know about ghost stories and rumors and he was also making up stories to run away. He felt unsatisfied once again with the failed attempt to rubbish all the rumors.

Josh never missed once to knock Mr Roy’s door while going out to question him about his inappropriate behavior. But that door was never opened and Josh also forgot about it. But one day Leena went to her childhood friend’s place for a get- together and David was about to wait at home for less than an hour till Josh came back and they had planned to go to an amusement park. But when Josh entered into his hall room he found David sitting on Mr Roy’s lap with a new toy car in his hands. Josh became red from toe to his head. All the anger came back and he got a surety that Leena was speaking the truth. But Mr Roy showed a different personality that day. He listened to each word came out from Josh’s mouth with controlled patience and even apologized twice. He was there to invite Josh and his family for a tea the next evening. Josh too didn't question him more about the incident before and agreed for the tea. Josh, Leena and David went to Mr Roy’s place next day. Mrs Roy was a beautiful lady with blue eyes looking like she was the gifted one. But Josh was felling something fishy in that place all the time. He could smell the polish of the wood which was kept covered for years. He also noticed some white sheets on the furniture. All the frames were dusty and the couple looked same as in photos without a sign of age. Even their cloths were old fashioned like they bought them ten years ago and kept in cupboard packed.  Despite these weird things josh found Mr Roy friendly with a sense of humor. The small tea meeting went so good that they gossiped for two long hours. Mr Roy also invited them at their farmhouse in Lonavala in summers and Josh and his family happily agreed. Their friendship was getting thicker day by day and two months passed in a blink.

It was a sunny Saturday in the month of May when Josh and his family went to Mr Roy’s farmhouse for a weekend trip. The location of the farmhouse was very weird and there were hardly any human beings in nearby area. However, they enjoyed the sightseeing on Saturday and kept Sunday to spend it in bed. But josh heard a knock at the door in night. He checked the time. The Hour arm was just reaching twelve. The sound of the knock increased slowly and it woke up both Leena and David. Josh opened the door to find out what just happened. Mr and Mrs Roy were there with a torch in their hand. They pointed it in Josh’s eyes till he got irritated. He shouted at Mr Roy but he lost his voice in their devil’s laughter. He found it funny but the mad couple didn't even stop to breath. A wave of fear touched Josh’s feet. He looked at Leena. She was already scared and was trying to hide in her blanket. The sounds made by leaves of the trees were contributing their part in increasing fear. She came to remember her very first meeting with Mr Roy in their bedroom in a moment. Josh once again shouted and they stopped within a second. They took chairs and started staring at David with their frozen eyes. They were looking like two statues in chairs. Josh wasn't able to figure out what was happening with them. He saw the phone at side table and tried Mr Singh’s number as he was the most powerful person Josh had ever met. While he turned back he saw David in Mr Roy’s lap. He was going to swear but Mr Singh picked up his call. Josh narrated all the incidents happened in last two months and the current incident which was happening there in Lonavala at a farmhouse far from the city at twelve in midnight. Mr Singh scolded at Josh for disturbing him just for over thinking a rumor. But Josh cried to tell him that it was actually happening. Josh requested to know all the rumors Mr Singh had ever heard about the thirteenth floor.

Ten years ago, Mr and Mrs Roy were living in 13-B in Ursula towers. They were an ideal couple for others like the Wheelers in a Hollywood movie ‘the revolutionary road’. They were friends with everyone and everyone admired them to become a happy couple. But according to their neighbors on the thirteenth floor they had some internal issues and the neighbors heard an exchange of bad words and even a sound of beating by belt. They tried to ask about it but Mrs Roy always ignored such questions smartly. Somehow the residents figured out that Mrs Roy was continuously failing to have a baby and she was having a treatment under the costliest doctor of the city. But one day all things went too far and Mr Roy murdered his wife by accident and then attempted suicide. It was the saddest moment in Ursula. But the trouble started after that when the residents of thirteenth floor started noticing Mr and Mrs Roy in their flat. Some of them who believe in such black world left the building at very next moment. Then the ghost couple tried to kidnap children of other families especially the sons. And not a person touched the thirteenth floor after except Mr Singh who never believed in these stories.

But first time Mr Singh felt different after listening Josh’s story and it was actually happening that time. He took the address of the farmhouse and left Ursula at that moment. Mr and Mrs Roy were still there with David on their lap. Now Josh and Leena came to know that they were on a wrong way and they were actually friends with ghosts. The scariest fact was that the Roy couple wanted their son David. Mr Roy announced in between that Josh could try to call anyone but no one would find a road to that farmhouse. Josh lost his confidence at that moment. He called his uncle who was a priest in Goa. His uncle reduced his tension. He asked Josh to remember Jesus and suggested some verses from the Bible to tackle the ghosts. Josh did the same. He gained some confidence by the name of god and he jumped on Mr Roy. He was really a ghost. He escaped with the speed of light but Josh got a hold on David’s hand. Luckily Mrs Roy also disappeared. Josh figured out it a good sign and they ran away from that farmhouse. They moved into their car and did a mistake to keep David at the back seat. Because Mr Roy came from nowhere and again he got hold on David. This time Josh requested him to leave. But Mr Roy said that they wanted to raise David. They wanted to have all the happiness of having a son like other parents. Josh found it foolish to give their son in the hands of ghosts and he scared them to take their car in an accident and attempt suicide to end all the drama. But it took a dreadful turn when Mr Roy escaped with David in the other car which was being driven by Mrs Roy. But the couple was again in Josh’s car next moment and David was alone in the running car. Josh lost his faith in possibility of survival at that time. Leena was expressionless as the ghost couple were able to control her mind but couldn't capture Josh’s as he was reciting the verses. They made a deal that they could keep David alive if they sacrificed him to grow with the ghosts. Josh was about to lose his control when he saw a ray of hope, a policeman was checking the vehicles on the way. Josh smiled first time in that terrible night. But he soon realized that he wasn't able to see David’s car and Roy couple too disappeared with Leena. He ran away to police and described the situation in short. Police felt that they became successful to register one more case of drunken driver but they thought of catching a psychopath that time. They agreed to search for his lost wife and son when Josh fell to their feet. They kept Josh in Police station and sent a search party. But they failed to search anyone. Josh woke up the next day and the night was still alive in his mind. He headed for Ursula and told everything to Mr Singh. Mr Roy was right about the farmhouse as Mr Singh couldn't find it on the given address and then he lodged a complaint in police station. They directly went to 13-B to solve the mystery and find Josh’s family. All the photo frames in that flat were empty this time. Josh thought that ghosts had taken his wife and son forever but Mr Singh still didn't believe it and he was searching for a way to find Leena. And Josh’s phone rang at that time. It was Leena. Josh took a deep breath. Leena told him that ghosts of Roy couple kidnapped them and they went into unconsciousness. Later they found themselves on Pune railway station and they saw a train to Goa and had reached to Leena’s parents. She even had been to church to pray. Josh felt a moment of joy.

A month had passed to the incident. Josh left the Ursula and was living with a friend. Leena and David were still in Goa. One day when Mr Singh was leaving for a morning jog, he saw Leena and David coming to Ursula. He found it surprising and went to ask about their health. He expressed his concerns for the incident. But Leena wasn't able to understand what he was saying. Mr Singh caught her uneasiness and asked her if she knew about any farmhouse in Lonavala and she said that Josh’s friend was having one and they were even planning to go but never succeeded in their busy lives. Mr Singh was shocked and he again confirmed whether she was there in that farmhouse in the last month. But she simply replied that she went to her mother’s two months ago when David’s summer vacation started. She even remembered him that David said a goodbye to him when they were leaving. He gave them a smile and went. Leena still didn't understand what he was trying to say and she stood there thinking for a second. Mr Singh shouted from far away “Come for a tea with Josh one day. I think he needs a doctor!”

The Hidden Thing – A '68 words' short story

My learned friend’s naïve suggestion was to find that thing which is always hidden. I took all the necessary things – rope, stick and water. After hunting for hours in a jungle I reached to a house with broken windows. I could find only messes in all the rooms. Then there was a dark room. Inside I found the thing hanging to a rope, injured and crying – my soul.

P.S.: The above underlined part was the given starting line in a competition in my college and the word limit was 69 words.