NEW DELHI: I was traveling in an auto to the railways station, and after a long discussion on black money and demonetisation with my driver, by the time his tirade against black money end, my destination arrived. Somewhere during this conversation, he maybe forgot that he had refused to charge me by meter and demanded a higher price.BLACK MONEY ALERT! I got out, gave him the higher price and asked him, “So is this money black or white?” He sheepishly smiled and said, “This is white money!”
What is black money?What is a black money transaction? These are pertinent questions. Who really are the black money hoarders as per the government? Who all are working,living and surviving on this ‘shadow black economy’. Do keep in mind of 53 percent Indians have bank accounts. Let us look at how government of India understands this.
After reading this, a simple headcount revealed, that most Indians, starting from farmers to domestic helps and industrialists are one way or another, all guilty of amassing, profiting and living in this shadow economy.
Most workers in the self organised (informal sector) have almost never reported their taxes or maybe have transgressed one of the five pointers above. Guilty till proven innocent? Till the time one has not filled their taxes, how can you be certain what is the "origin of the money, flow or use of the money".
Working as a journalist in one of India's biggest media houses, I remember we had to work over time each week, with no renumeration from our media business bosses. They illegally profited from our extra hours of work and never bothered to pay us. Whether it be manual scavengers or industrial workers very rarely in India are all safety procedures and time limits being followed by our employers. It is only because that they can mistreat the workers and by-pass the system, are they able to make big profits. But it gets worse, a private chat with any honest charted accountant or industrialist will tell you how companies and individuals are evading and bypassing government laws as a modus operandi. “You cannot be competing in the market if you are not under-cutting and indulging in black ways. For if you aren’t, your competition will and soon your company will be out of business,” was an observation of an anonymous industrialist.
The shadow economy is the base of the economy of India.
So just going by this committee report, most of us have been involved in a black money transactions. Sometimes giving and other times receiving black money. Also after speaking with many other people, we will soon realise that the shadow economy cannot be done away with. It will only change forms, eliminate the lower levels of the economic pyramid, but never die.
So what has really happened? The demonetisation, will not curb black money or the shadow economy but forcefully has first torn a big chunk of the self organised sector and delivered it to the banks. The banks through micro-financing schemes and initiatives had already tried very hard to capture the cash flow of India's self organised sector, but failed miserably. Second, it will make India a plastic economy deeply entwined with the other plastic economies of the world. So that when their Big Bang happens the Indian economy and people burn with the firecracker automatically .
A working economy is a stagnant economy. Goods and services are exchanged for their value. In each successful transaction, Supply=demand and exchange happens directly (barter) or via exchange media (gold, coins, paper money, digital money, or bitcoin etc.) And the medium does not limit the buyer or seller in any way.
If you remove 86 odd percent of the exchange medium, 14% of the money is theoretically doing the work of the economy, the kinetic energy (how fast it moves) of that money has become over 5X. Each unit is doing 5 times the work it was earlier made to do in the same amount of time. Now 5X transactions are waiting for access to the money. The buyer and seller are not in control of the transaction any more, the CPU Central Processing Unit of The Republic is.
Working chunks of the economy have a base, like any numerical system. The economy is made of smaller cogs (or bases). Say for example, a car wash labourer in Mumbai is paid Rs 500 per month, per car. The transfer of Rs 500 from car owner to car washer, With a frequency of once per month, can be described as a transfer of Rs 500/30 per day from car owner to car washer. One could divide further and conquer deeper but for illustration a per day frequency is enough.
So now we have a behaviour, a collection of regular transactions. Car owner sends a message to car washer everyday, the message says Rs 500/30 received by you from me on date.
If car washer takes that message to the paanvalla and asks for a beedi (sends a message saying I would like a beedi). Paanvalla can say either of two things: sure send me a byte of that Rs 500/30 message (of agreeable size), here's the beedi; or he would say "I don't speak fraction, rokda(money) law!" Car washer's message: "buy"- has two outcomes 1) Beedi is smoked, satisfaction obtained, debt paid, transaction completed. 2) Beedi not accessible because Paanman is unable to accept fractions, satisfaction denied, ability to smoke Beedi denied, control Jacked up high (elevated to exclusive floor).Money has no meaning, it assumes the meaning of the transaction, for the duration of the transaction.
So before the nautanki, let Rupee mean Rs. A amount of Rupees were doing the amount of work required by the economy, which in reality was working fine. People had chunks of money they could choose to chew, swallow, or spit out. Now (A Amount)/5 is rushing about with 5X Kinetic Energy, for the same number of transactions in the same limited time, addressed as per proximity to that one fifth.of (A Amount). No surprise who has that money - Petrol, utilities company- water and electricity, communications, tolls, gas all still vaccumming up the cash.
In simple terms, imagine a giant blackhole (banks) created by Modi that is now sucking up all Indian money. This monster has destroyed the value of all money outside its system and exponentially increased the value of the money within it. Then this "uber money" is being given to the modern day Alibaba and forty thieves which include a selective group of banks, utility companies, petrochemical giants, etc.
With all the money with the banks and we see the next step. Reminds anyone of the mortgage crisis or bank bailouts or USA during the 2008 recessions? Well this is all wrapped up in one packet. There are planned loan write-off and new loans were given to the same bankers and corporations that already lost all of the tax-payers money. Overnight people’s pensions and savings disappeared and there was no benefit to the common taxpayer. India has entered a similar phase where Adani’s and other corporations with the help of the government are gambling away taxpayers money and then instead of returning their debts are getting loan waivers. The rigging of India economy is done. Modi government has set up India for 2008 style economic collapse, if not for something worse.