Period of Crisis

November 24, 2016 0 Comments EDITORIAL 234 Views
Period of Crisis

The sudden decision by prime minister Narendra Modi led BJP government to withdraw currency has left cash in short supply, retail sales stumbling and wholesale markets in turmoil across India. That’s just the immediate fallout from Modi’s surprise effort to stamp out corruption by making cash hoards in large denomination bills worthless. But what lies ahead could be even worse, some analysts say. While for Kashmir the demonetization had very less impact because of the ongoing uprising and most importantly the extra-smart work done by the prominent Jammu and Kashmir Bank during the current times. While one remains stationed in Delhi, the impact is very much prevalent. One could see serpentine lines queuing up the ATMs and other bank offices and there is so much of chaos all around. “Basically, the government has really created chaos. According to experts, India is a cash economy. It’s not like Europe or the U.S. where everyone is running around with a credit card. That’s not the world of India. It doesn’t look like this thing was thought through at all. Every day or so, soothing assurances about India’s overnight currency reform spill from the offices of top government officials. While the government officials at the centre claim that there is enough cash is available, the roads and streets paint a different picture. Economic Affairs Secretary Shaktikanta Das had said during a press conference that millions of people waited in hours-long lines. A few days earlier, the finance minister urged patience with what he called “a period of inconvenience.” It is indeed a quite striking to note that the sudden and rather poorly-planned demonetization exercise did not assume the kind of crisis proportions in Jammu & Kashmir as it did in rest of Indian states. There have been no long queues of people at banks for currency exchange. ATM machines are being used like in normal circumstances. There has been no panic dumping of the old currency for the new one. Seemingly, there have been no indications to suggest that a parallel blank market for currency had emerged in this state, as had happened in the rest of India. While this situation goes to underline the intrinsic strength and reach of the banking sector in the state, it also serves to debunk several negative myths usually propagated about Kashmir. The first and the foremost myth that is debunked is that Jammu & Kashmir is a ‘tax-free haven.’ The state’s easy embrace of demonetization clearly establishes that the state’s economy is highly reliant on formal banking transactions rather than cash transactions. That goes to establish that the state’s economy is well aligned with the overall tax architecture.

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