“EVERYTHING THAT IS CASH, IS NOT A BLACK MONEY, – Dr JAI NARAYAN VYAS dissects and bisects DEMONETIZATION for DATELINE GUJARAT, EXCLUSIVELY

AHMEDABAD | RAJKOT – As a policy matter DATELINE GUJARAT decided of not to utter a word over a demonetization issue, unless and until the timeline of December 30, 2016 as prescribed by the India Prime Minister Narendra Modi, a 50 days timeline to attain the goals of curbing terrorism and black money, from Indian economy. However, with social media over-flooded and spammed with pro and anti-views over demonetization, DATELINE GUJARAT decided to talk to someone who can sensibly interpret this move and proclaim future safe harbor statement over the move of demonetization and the fact, if the move fails to attain its desired goal, it would be a ‘DISASTER’.

This interview has been deliberately shot in natural light in a closed room with no artificial light on the face of the speaker to symbolize the blurred clarity over the ‘much-kept secret of demonetization’ and with a background noise of vehicles to give a feel of the buzzing economy which today stands on a 50:50 notion, on whether the move of demonetization will be successful or not?

Dr Jai Narayan Vyas, statesman, thinker, economist, ex-bureaucrat, ex-minister, ex-spokesperson for state government EXCLUSIVELY speaks to DATELINE GUJARAT, where he dissects and bisects the monstrous puzzle of Demonetization, answering 15 question interview in 33 minutes of which the video is also available for you to listen to him and see.

Dr Vyas who has written number of books and articles on the subjects ranging from Industrial Policy and Procedures, NRI Investments, Foreign Collaborations, Stocks, Finance, Import – Export Policies, Small Scale Industries etc. – dissects and bisects the whole process of demonetization terming it as a well-thought move by the government with objectives behind the act, ‘well in place’, but not all cash is black money especially in an economy which is a cash transaction driven economy due to majority of occupation engagement coming from informal sector.

Also, Dr Vyas highlights the global average of Cash GDP ratio which stands at 3-4% wherein Cash GDP ratio of India is as high as 12% among the global economies due to majority of cash transaction surfacing from informal occupational engagements and equally ensures that parallel black economy is much under control in India in range of 26-28%, as compared to global average of the 38-40%.

Talking on making India as a cashless economy Dr Vyas terms a timeline of not less than next few years as the banking infrastructure yet needs to be made to reach the remotest place and with fragmentation of land happening fast in India is making almost 99% farmers marginal or small farmers, who have least capability to deal with formal set of dealings.

With above narrative Dr Vyas firmly believes that India as a nation definitely needs to worry to combat external and internal forces, but the move of demonetization would immediately curb terrorism is too far a statement. Yes – removal of bad tender from economy replacing it with good tender, will definitely help in attaining this goals in future.

China depreciating its currency hitting global markets and India banning its currency hitting its local economy, is this following footsteps of China going to help India, to which Dr Vyas clearly denies to draw the comparisons stating of China having 18.5% share in global trade for them devaluating their currency means increasing exports phenomenally and competing in exports market fiercely, which may not be advantageous to India which has less than 2% share in global market because of a huge market at home which is the single largest free market in the world and such move will not help. However, Dr Vyas warns that it will take atleast another 3-5 years engaging best of the best talent, economic brains and political determination to drive Indian economy to safe shores.

With GST likely to see the daylight, prices are expected to go up, but economy may shrink and enter recession mode for next 2-3 years further warning to get ready and prepared for tough life, as the GDP may not grow beyond 4-5%, during this time.

Automobile sector, consumer durable sector may see some impact but would revive if monsoon remains good and may sustain the stroke of recession. Demographic dividends may continue playing pivotal role in sustenance of economy with per capita savings ratio at higher bar triggering a slow & steady consumption and demand pattern, Vyas says.

However, the demonetization move will continue fuelling the frictions in Indian political arena and political outburst will see its avalanche as five states will go for polls in 2017, where Indian economy on lines of US and UK has now become an important political tool to fight the power battles, which will have its own impact and outcome, Dr Vyas indicates.

The answer of ‘house for all’ as dreamt by India Prime Minister Narendra Modi lies in two probabilities, one of prices of properties shrinking due to lesser demand and another due to lesser liquidity. Lower interest rate regime is not far and will have substantial impact on the fixed income class (especially the pensioners), but this move of demonetization though seen making favorable impact on the overall living and lifestyle of average Indian, if it does not meet the desired goals, than it will be a disaster, warns Vyas.


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