India’s De/Re-Monetisation and Me
By Shanta Acharya
On 8th November 2016 the Government of India took the unprecedented step of banning the use of ₹500 and ₹1000 notes. The announcement was made in the evening and these specified bank notes (SBNs) were deemed ‘illegal’ after midnight. Holders of such notes would be able to convert them into legal tender by handing them in at any Indian bank; this facility was available till 30th December 2016. Alternative provisions were made for those not resident in the country during that period. There was wide support in India to curb black money and ‘terror financing’ by Pakistan. It seemed like a bold and shrewd move, consumer sentiment even rose as a result.
Though I could not figure out how such drastic action would resolve issues that have been plaguing India for ages, I acknowledged the need to reduce corruption, collect more taxes, improve productivity etc. Moving away from a cash-based economy to a cashless, digital one would help in addressing some of these issues, though in reality it is never quite simple as that. I reasoned one has to start somewhere. Born and brought up in India, considering myself as practically ‘made in India’, I felt obliged to go along with this drive to get rid of black money. While the ban of the ₹500 notes (equivalent to £6) seemed over the top, I reminded myself that the UK too had plans to replenish various notes and currencies of its own of even lower denominations.
As I had some of these banned Indian notes in my possession, I knew that not all holders of such notes were corrupt fraudsters. I contacted the Reserve Bank of India (RBI) in Mumbai regarding what facilities existed for the conversion of these notes. I was reassured by a senior RBI officer that I would have ‘no trouble exchanging up to ₹30,000 in person at the RBI branch in Bhubaneswar till 31st March 2017’. I had less than this amount and was due to arrive in India long before the cut-off date, so there was nothing to worry about.
A word about myself, I was born in Cuttack, Odisha, and travel every year to India from London, where I now live, to visit my family in Bhubaneswar. This is something I have been doing since 1979 when I won a scholarship to study at Oxford. By 8th November 2016 my return ticket to India had already been booked. As I had been reassured I could convert the SBNs by 31st March 2017, I did not think there was any need to change my travel plans.
When I arrived in Bhubaneswar I learnt I should have declared the SBNs at Indian Customs when I entered the country. Had I done so I could have exchanged it at any of the RBI branches in Delhi, Mumbai, Kolkata, Chennai or Nagpur, though not in Bhubaneswar. This information was not available to me before I left the airport in Delhi. There was no information provided by Air India (my chosen carrier from London to Delhi) regarding the matter, nor was any such information made available to passengers on arrival in India at the international airport in Delhi. I could easily have done so had I known of such a requirement. Having checked the RBI website in November, and been reassured by a senior RBI officer in Mumbai, it never occurred to me that my trust may have been misplaced.
I went to the RBI office in Bhubaneswar on 19th Jan 2017 to clarify the matter, and was informed by another senior officer that as a PIO I would be treated at par with NRIs. I was told I would have been able to exchange up to ₹25,000 of SBNs if only I had acquired a certificate issued by Indian Customs on arrival. This genial RBI officer even suggested I should return to London and come back to India before end-June (the date for conversion had been extended for NRIs) with the necessary certificate. I pointed out it would not make economic sense to do so.
Fed up with all the misinformation, I checked the RBI website only to learn that PIOs or OCIs (Overseas Citizens of India) had no means of converting any SBNs in their possession after 30th December 2016, when anyone could have done so. It remains inexplicable to me why PIOs and OCIs are excluded, not treated at par with NRIs. It is one of life’s many ironies that those you help, be they people or countries, forget you. I had initiated talks between the State Bank of India and Morgan Stanley to create among the first country funds for India for Foreign Institutional Investors (FIIs) before India started liberalizing in 1991. My book, Investing in India, remains a reference book. I facilitated significant FII investment in Indian companies. It was during this time that I accepted British citizenship. My Indian passport meant every time I had to travel, which I had to a lot those days, I had to spend an enormous amount of time at various embassies getting my travel visas. As India does not allow dual citizenship, I lost my Indian nationality – something I found outrageous then as I do now. If the UK government was generous enough to admit me as one of its own, why did India (where I was born and brought up) feel the need to strip me of my citizenship? Yet Indians talk endlessly of discrimination in the UK, ignoring in the same breath the repeated violation of human rights of their own citizens!
Now that India has enough foreign exchange reserves, NRIs, PIOs, OCIs no longer count. What aggrieves me further is the notes in my possession were mostly small gifts from my family given to me during my visit to India in January 2016. There was no question of fraud, corruption or tax evasion or anything that could be vaguely suspect. I fail to understand how not allowing PIOs or OCIs to convert small amounts of SBNs will enable the Indian government or the RBI to get rid of fraud and corruption.
Governments should not forget they exist to serve the people and not the other way round. Needless to mention de/re-monetisation has been extraordinarily mismanaged. There has been no announcement of the amount of black money unearthed. Is it because the RBI did not receive any or was the amount so small it was not worth reporting? Yet many families struggled to buy basic provisions for weeks. There were reports of people dying. Was there any tangible gain? A few new bank accounts were opened. Could that not have been achieved without all that pain? The Indian government needs to examine why people do not pay taxes in a country where tax rates are among the lowest in the world. Or is it that people are indeed paying more than their fair share, but their ‘taxes’ (bribe money) are not ending up in the coffers of the government, nor are they being invested judiciously for the benefit of the people?
After all these years, it grieves me that India continues to promise, not deliver. I am not referring only to the de/re-monetisation fiasco. With so much corruption, pollution, higher costs, poor quality services, dilution of standards across the board, rise in intolerance, sexual violence against women, curbs on free speech, indifference and arrogance of those who should know better, how will those with genuine talent honestly make their mark in ‘Incredible India’? It is not just India’s loss but a tragedy for Indians who deserve so much more.
28 Feb 2017
Shanta Acharya won a scholarship to Oxford, where she was among the first batch of women admitted to Worcester College in 1979. She was awarded the Doctor of Philosophy and after a Visiting Fellowship at Harvard, she moved to London and worked in the City. The author of eleven books, her publications range from poetry, literary criticism and fiction to finance. Her latest, Imagine: New and Selected Poems, is published by HarperCollins, India. www.shantaacharya.com