I distinctly remember on my route back home late evening on November 8, 2016, when I noticed a long line at a bank ATM (I had not heard the news yet and was driving back home after a long evening conference call). My first thought was, ‘Is there a run on this bank again?’ (a particular bank I had noted was generally more susceptible to the rumor of a run, going by past instances).

As I stepped into my home my dad exclaimed, ‘Anand, Modi has scrapped all Rs. 1,000 and Rs. 500 notes!’. Now, I could get the reason for the line at the ATM – people were trying to get cash!!! My dad was for sure (hyper-)excited. For the next two hours whilst I grabbed dinner, I was watching various general and business news channels. My initial thoughts were, well, that this was a bold move, no doubt. One thing that has stood out as regards the recent dispensation at the center is/was the ability to take risks, at least in recent times.  In one stroke, 85% of money supply sucked out!

My initial reaction was, ‘Appa (Dad), this is a one-time house clean-up. This does not solve any problem or its recurrence. It is a spring clean-up at best; an experiment, at worst. We need to wait and see’. Those who have black money are for sure not going to let it rest at home inside their sacks. They would have invested in gold, real estate, and the more sophisticated would have used hawala channels, Promissory Notes (PN), tax havens, benamis, trusts, other corporate structures…and the options are endless. The black and white economy are inter-twined at many, many places.

The next day morning, this had led to a raging debate at home. I stayed out of it – as I had more hand to mouth affairs of the world to attend to.  My dad had managed to exchange the demonetized notes he had, and bought some money to keep his positon ‘liquid’. My wife and I had ZERO such notes. I had not had time to visit the ATM the last few days as I was busy, and in certain cases had forgotten my wallet. Subsequently, we visited the bank and withdrew some cash.

For the next two weeks, I noticed lines – long lines – at ATMs and banks – lines of about 40 to 100 people. Of course, not as long and lengthy as reported by news channels. Nevertheless, this was a sight to behold. My thoughts went to those economies where hyperinflation had stuck resulting in similar lines.

Again, for those two weeks, I was least touched, almost indifferent to the demonetization. All I was doing was going to office and coming back home. I used food cards and credit cards for whatever little I needed (just food at the food courts).

This was bound to change sooner or later — I had an upcoming trip to Bangalore to visit a very close family friend, and that’s when I sought my wife’s help to withdraw some more cash (lines at mall and work site ATMs were still long even after two weeks!).

I used a cab-aggregator app, but never had pre-loaded money in the past (why should others make money at someone else’s expense?). For my use in Bangalore, I pre-loaded money this time – my first pre-load for cab hailing.

I got down at KSR / Bangalore Majestic…it’s now about 3 weeks of demonetization. The cabbie I had pre-booked had cancelled the booking. I looked at my phone – No internet signal even with the so called 4G connection! I rebooted twice and no luck. Twenty minutes of standing at the railway platform had passed due to repeated connectivity issues. I booked an auto using the app again and called the driver. He told me he is ‘busy’ – oota time (lunch). I proceeded to cancel the auto, and tried re-booking – no luck with the 4G. I took a ‘regular’ auto and someone was happy to collect the meter fare (thank God).

This was my first brush with demonetization.

I kept noting some day to day experiences. My own experience was – four attempts with the online cab aggregator transport. Two successes, and two failures (a combination of no network and driver rejects, and add waiting for 10 / 15 minutes each time).

I spoke to a tender coconut guy who sells his wares from him two-wheeler cycle, and asked him how he was managing. He said, ‘Sir, I have a bank account in Andhra. I am selling coconuts in Chennai. Very difficult to change the notes sir and exchange at bank’.

I noticed another auto-wallah during one of the rides had recently switched to a mobile based payment platform as an additional channel to accept payments. Great ! – Are we seeing the buds of ‘Digital India’ blossoming?? I heard that my neighborhood vegetable shop (the road side guy not the ‘hi-fi’ mall veggie guy) had put in place a card machine! Again, great!

Then…on the other hand, let’s see what some ‘others’ are doing – A large, larger than life wedding, public servants caught with cash at home, running into tens of crores to low hundreds or crores, some complicit bank employees, and a few such daily reports in the press. Indeed, the underlying system is very enterprising, from benami Jan Dhan account spikes, spike in gold sales and back-dated invoicing, esp. on Nov 8, informal money changers….etc. How do those who are caught have wads of new Rs. 2,000 notes when such long lines exist outside for ‘PLU’ (people like us)? Obviously, we have a well-greased, ‘jugaad-driven’, innovative system which can fend for itself.

I guess the cash component of the black money is about a few % points, say 5% to 10% of all black money is cash, as is with any other ‘actively managed’ investment portfolio. Rest of the black money would be earning returns in some other avatar. And who talks about the unbelievably low tax base (2%, 3% of population as regards countries like US? Tax to GDP ratio?).

My view still remains – this is a one-time house clean-up – probably not even a house-clean-up…it is a half of a single room clean-up at the max. The underlying disease of black money generation remains, and so do parasitic (or should I say symbiotic) institutions which support it. No doubt, the demonetization is a bold trial.  We need more – process driven and system driven changes (like the way filing IT returns has changed or the way rail booking has changed – the same must happen in land and property registration and approvals, public works, transport agencies, business approvals, and blah blah…talk of the transparency index or ease of doing business rankings). We also need deep analytics to capture trends (a la ‘Minority Report’), and many more core and support mechanisms to defeat black money, beyond ‘surgical strikes’. A swipe at a mosquito is definitely a good start, but what we need is a process, even if gradual, to clean the whole swamp.

As regards, Digital India. I am all for it. But, I still wonder why the 4G is never a seamless 4G. As I write this blog post – two small incidents worth recalling, yet truly telling though. The power went off briefly, and though I have an inverter back-up, the fiber optic stopped working, till the service guy put up a temporary fix near the junction box. It trips frequently whenever the power trips – so no wi-fi, no Digital – it actually held up posting this blog! I went to my road-side veggie seller and asked if he would accept the card. He said, ‘Saar, patthu nimushamma network illa saar’ (no network last ten minutes). So much for Digital India in India’s fourth largest metro….Let’s fix the last mile connectivity issues first!

BTW, some interesting articles – http://timesofindia.indiatimes.com/city/kolkata/Only-6-10-of-the-black-money-is-kept-in-cash-Suman-Ghosh/articleshow/55651286.cms, http://blogs.timesofindia.indiatimes.com/toi-edit-page/revenge-no-development-strategy-populist-nationalism-cannot-paper-over-economic-chaos-unleashed-by-demonetisation-drive/, http://economictimes.indiatimes.com/markets/commodities/demonetisation-effect-15-tonnes-of-gold-sold-on-november-8-9/articleshow/55862400.cms

In summary, my 2 cents…fix the black money root causes and sources and put in place necessary preventive and detective controls, and on a related note, encourage last mile digital connectivity (Digital PPPs anyone?).

Life floats on hope….Let’s hope this demonetization and the recent talk of ‘Digital India’ is a small seed which will eventually grow into a large banyan tree! Let’s also not confuse the black money agenda with the ‘Digital India’ agenda.

On that note, let’s close with a picture of hope (photo courtesy, ‘The Hindu’, December 11, 2016)