The Reserve Bank of India has
dismissed as “figments of imagination” rumors that a new series of Rs 2,000
will come with a GPS-chip that will help government track illegal money
transactions.
“Such a technology does not
exist at the moment in the world, then how can we introduce such a feature?”
RBI spokesperson Aplana Killawala told News18.
She said that the RBI website
had detailed the security features of the new note and that there was nothing
else besides what has been officially said, especially any possibly of a
GPS-enabled chip.
Reports of a chip-enabled
series of new currency notes had surfaced immediately after Prime Minister
Narendra Modi announced on Tuesday that the government was scrapping the
existing denominations of Rs 500 and Rs 1000 currency notes.
In a
different era, another prime minister of Gujarati origin had shocked the nation
with a similar and sudden announcement.
Finance
minister-turned-PM Morarji Desai informed the nation on the night of January
16, 1978, about his decision to demonitise Rs 1,000, Rs 5,000 and Rs 10,000
notes.
It was declared that the notes
would cease to be legal tender by the time the banks closed on that day. The
next day, that is January 17, all banks and treasuries of governments were kept
closed, like they are closed today.
In a
different era, another prime minister of Gujarati origin had shocked the nation
with a similar and sudden announcement.
Finance
minister-turned-PM Morarji Desai informed the nation on the night of January
16, 1978, about his decision to demonitise Rs 1,000, Rs 5,000 and Rs 10,000
notes.
It was declared that the notes
would cease to be legal tender by the time the banks closed on that day. The
next day, that is January 17, all banks and treasuries of governments were kept
closed, like they are closed today.
HM Patel, a former finance
secretary and also hailing from Gujarat, was the finance minister that time,
and Desai was heading the newly formed Janata government after defeating the
Congress post Emergency debacle. And he was pretty kicked about curbing black
money though there were whispers that he was taking on the opposition Congress
and other parties by "freezing their secret funds".
Between now and then, however,
there is a huge difference: Desai didn't have the backing of then RBI governor
I G Patel unlike Modi, who is supported by Urijit Patel.
To implement the scheme, the
government brought in the High Denomination Bank Notes (Demonetisation) Act,
1978. This Act banned the transfer and receipt of high denomination bank notes.
Any contravention, such as false declaration by depositors, was made punishable
and could send a person to three years in jail.
Did it work? Not entirely,
because Rs 1000 notes made a comeback before this Act could complete its silver
jubilee. In fact, it was the NDA government that reintroduced them in 1998.
First, a brief look at
Demonetisation drives in 5 points:
High denomination notes, that
is Rs 500 and above, started circulation in India in 1934. The highest
denomination note - Rs 10000 - ever printed by the Reserve Bank of India was in
1938.
The Rs 1000 and Rs 10000
banknotes were demonetized in January 1946. Yes, that was the first time such a
thing was enforced, again for curbing black money.
They made a comeback in 1949.
The second demonetisation, as
mentioned above, was in 1978 by Morarji Desai-led Janata government - Rs 1000,
Rs 5000 and Rs 10000 notes were abolished.
Again, high denomination notes
returned within three decades.
How did it impact the public
in 1978?
The impact was limited. Unlike
today, not many people possessed currency of such high denomination.
"I have never seen a Rs
1,000 note. I am not bothered" - here's how a government employee reacted
to the move in 1978, as per this Telegraph report.
This excerpt from a TOI report
will put the picture in perspective. If you had a Rs 1000 note in 1978, you
could buy 5 sq ft of real estate space in posh south Bombay. Today, a Rs 1000
note won't buy you even a hundredth of a square foot in that area.
It had a palpable effect,
however, on the price of gold and commodity that dropped 5% and 10% within a
week of the announcement.
Did it work?
Not in entirety, say
economists, because high denomination notes returned eventually. And, such
notes, as we know are the basis of corruption and illicit deals related to
unaccounted money.
Abhiroop Sarkar, Professor at
Indian Statistical Institute, says the 1978 move had no effect on the
circulation of black money.
"That's because people
don't stack black money in cash. Rather, they stash it in undisclosed accounts
in Swiss Banks. So demonetisation won't affect the big fish," he explained
to IANS.
Here, it's pertinent to
mention that touts made most of the move in initial days. As people didn't want
to deposit their money in banks fearing tax problems, they fell for the touts
instead. Anil Harish, a senior advocate told TOI, “At places like Crawford
Market and Zaveri Bazar, people were selling Rs 1,000 notes for as little as Rs
300.”
Will it work now?
It can't be ruled out. Because
the fight against black money is a continuous one and not a one-stroke
solution. Also, in today's digital, more transactions are happening through
electronic transfers. Also, far more rural people have bank accounts now than
they ever did.
So for now, it's just wait and
watch.
SOURCE: NEWS18& Schoophoops.com
