Black and Blue

On 8th of November, at 8 PM, our Prime Minister announced that all Rs 500 and Rs 1000 notes would cease to be legal tender from midnight of that day. He made it clear in his telecast to the Nation that the move was aimed at hitting at black or unaccounted money and to curb terrorism that thrives on illegal funding. He also mentioned that our neighbours have been sending counterfeit currency to our country and this is being used to sabotage the economy and also to fund terrorists.

This is a very welcome move. The incidence of black money commenced with corruption of bureaucrats and politicians and took wings with funding provided to terrorists, and their active and tacit supporters in the political class, as well as bureaucrats and policemen on the take.

Let us now see the magnitude of the problem. Most of the currency in India, at least till midnight of the 8th was in the form of high denomination notes. As per the Finance Minister, 88% of the notes in circulation are high denomination notes. These notes are used freely mainly by people unable to convert black to white, or accounted money.  Let us assume that X is a bureaucrat who receives regular bribes in the course of his work. The bribes may be direct or indirect. Similarly, X could well be a politician vested with enormous discretionary powers to make or break a project that a businessman has invested time and money in.

For reasons of convenience, the money has to be paid in high denomination notes. The volume of bribes received by many officials is so huge that they often have no place to store the money. This money either fuels the sale of items such as jewelry, real estate or many things that are part of conspicuous consumption such as high end music systems, cars, crockery and others. These items are invariably purchased in cash and are in the names of third parties, mostly relatives.  I remember that a raid was conducted in the Sub Registrar’s office in Bangalore a few years back. The staff threw their bribes out of the windows so that they would not be caught with tainted money. They were obviously willing to forego their booty for the day, as there would be a never ending supply once the raids were over.

While these events are not likely to stop, their continued presence is a blot on an honest Government. In addition, there are other corrupt people. We have smugglers, black marketers, hoarders and several others who thrive on a tax free cash fueled business.

However, the biggest threat to the safety of our country is terrorism. Terrorists are sent with fake currency from across the border of our Western neighbor, Pakistan. There is also a fake currency industry operating from Malda in West Bengal. It is no coincidence that there is the involvement of a number of Islamists in this racket. Malda is a Muslim majority district close to the Bangladesh border. Here’s what Wikipedia says about Malda: –

“Malda is believed to be a hub of a fake currency racket. It is reported that 90 per cent of the fake currency that enters India from Pakistan via Bangladesh comes in from Malda which borders the neighbouring country.”

We come back to Pakistan as the source of fake currency. So, the fake currency manufactured by Pakistan comes to India through Bangladesh’s porous border with us. It also explains the extreme distress demonetisation has caused to Ms Mamta Banerjee, the honorable Chief Minister of West Bengal. We do know that Ms Banerjee, like those from many ‘secular’ parties is an Islamist appeaser. Unfortunately, her appeasement has gone beyond ‘accepted lines’ as she is now, to all appearances, in cahoots with traitorous elements in her state who have no qualms whatsoever, in debasing the Indian Rupee, by flooding the market with Fake Indian Currency Notes  aka FICN.

Let us see the effect this currency has on our market. If the price of say Sugar is Rs 40 per kg, an infusion of 10% FICN will see the cost jump up by around Rs 4, as per a very rough estimate, assuming that the supply does not change in any way. This is because an additional 10% of rupees would be chasing the same 1 kg of sugar. You and I, dear reader, have earned money the hard way, paid taxes on this amount earned, and buy whatever we need for the household form the tax paid money. However, those who have FICN in their possession have no taxes to pay and could potentially have an unlimited supply of cash.

In addition, those who have acquired money through dubious means by being corrupt, are also chasing the same goods with the huge amount of money in their purse. For such people, price is no object. Don’t be surprised if the same sugar goes up in price to Rs 50, thanks to the corrupt.

Here’s one more scenario that is being played out every day. The corrupt people take bribes in cash and in high denomination notes. They cannot know if they also receive a small part or much of their bribes in FICN. Even if they were able to detect fakes, their lack of integrity would not prevent them from buying goods with the fake currency.

Why is it possible to slip in FICN into the economy? There is a history behind it. We had outsourced printing of notes to overseas European and American companies. A lot of the history is provided in this link. Bottomline is that we have the same supplier of currency paper as Pakistan and there has been a compromise involving the printing equipment and Pakistan is flooding our economy with fake currency.

As can be seen, for various reasons, our currency integrity has been compromised over the years. Hence, the only way we can rid ourselves of fake currency is by going ‘cold turkey’, viz. by a one shot solution that deals a body blow to these fakes.

On the 8th of this month, Narendra Modi, our honourable Prime Minister, dealt this blow by announcing demonetisation of currency notes of value Rs 500 and Rs 1000. Predictably this caused a big furore. As I write this, both houses of Parliament have witnessed raucous scenes. The Opposition that believes it is their job to oppose, may well be within their rights to protest thus, actually have no leg to stand on. This move of Modi has exposed all people who oppose the demonetization as those with a lot of unaccounted money who are scrambling to save their shekels.

To top it all, they invoke their ‘god’, the forgotten common man! Here’s what the people think of Demonetisation.


In some places the immediate reaction was unfavourable, bordering on hostile. Mostly though, the public has borne the change with fortitude and are with the Government on this.

Obviously, this move would have some negative effect on businesses that depend on cash payments. How many of us who carefully pay our bills in stores and restaurants with cards, see some carrying wads of cash and paying for their purchases with it. All this, at least in the near future, would be a thing of the past.

Fallout of the episode has been a big spurt in mobile transfers of funds such as PayTM. Some vegetable vendors have installed Point of Sale (POS) machines to help customer without cash.


Or this one, the video is in Tamil, but the actions will tell it all

Overall, there has been a positive effect on people who feel that the Government has taken the right step for eliminating Black Money. The only people who are ‘blue’ are those with huge piles of useless cash lying in their homes, money that was acquired through loot, corruption or paid for aiding and abetting terrorism. Such people are singing a (unsolicited) dirge for the common people, who, to their intense discomfiture, appear to be perfectly happy with demonetization.

Let us see one more reaction, by a 73 year old gentleman from a posh area of Bengaluru, when asked what he felt like for having to stand in a long queue. Here’s what transpired: –

“A great reply by a senior citizen on the present scenario.

A person was standing in queue in front of kormangala HDFC bank to have his hard earned money deposited.

Then he asked reaction of 73 old senior citizen on how he is feeling about the government who made him to stand in a long queue.

The reply was really simple and amazing..

“If  I can stand in a long queue to have a 1 minute Darshan at Tirupati Balaji Temple and hope that everything in my life will be good after this , although there is no 100% guarantee for that,  why can’t stand now where I know it is definitely going to do good for my Nation INDIA.”

A great motivation for our new generation……Again a lesson coming from our elders …”

Tweet by @Frustitute


Having got all these reactions, there are a few relevant questions that have been asked about black money and demonetization that need to be answered.

  • Will this step remove black money from the system?

Answer: Our PM says this is the first step. (This step has met with a great response from the people, never mind the rudaalis (professional wailers) of the media!) Obviously, much more needs to be done, such as tracking and confiscating property acquired in false names by the corrupt. There is also a huge amount of money that has been remitted abroad to tax havens. This needs to be traced and brought back.

  • What about allegations by some politicians that demonetization was known to some businessmen in advance?

Answer: I will deal with one allegation made by a gentleman (and I use the term advisedly!) who has been called a lot of names and is famous for ‘shoot and scoot’.

This person said that the demonetization move was leaked to Mukesh Ambani, who used black money to fund his ambitious Reliance Jio project. In case you have been living like a hermit in a cave far away from wifi and mobile internet, Jio has provided free wifi to all users till 31st December 2016. Coincidentally, as per this politician, the last date for exchanging old notes is 30th December 2016. Hence, all revenues that accrue to Jio from 2017 would be in ‘white’ as against expenditure in black money.

One could call the politician in question a moron or worse. Fact is that he has a constituency of totally lamebrained followers who hang on to every word he speaks, believing it to be truer than the Gita, the Bible or any other religious text.

To answer this, we must say that Ambani must be remarkably prescient to know that Modi would ascend the PM’s seat in 2014 and demonetize high value currency in 2016, because Reliance Jio was conceived more than 5 years ago and work started on the project five years agao, when Modi was still CM of Gujarat, preparing to fight an election to give him a third term of office as CM of Gujarat.

Here’s what my take on demonetization. The reason it was done was only partly to remove black money cash from the system. It was, in my humble opinion, done only to stop funding of terrorists and their supporters in India. A lot of fake Rupees in high denominations has flown in through Bangladesh from Pakistan. The modus operandi is to use diplomatic bags to smuggle FICN to Bangladesh and then send it to India through Malda. This money is used for paying say stone pelters in Kashmir, terrorists coming into India through the Bangladesh border or through Kashmir.  Sometimes this is given to terrorists from Pakistan in that country. Overall, it is a devious plot to weaken India, a country that Pakistan can never compete with in any field of human endeavour.

Hence, demonetization has dealt a death blow to terrorist funding. It also shows that since there are no riots despite long queues in banks for exchange of notes, something that was easy to arrange for scumbag politicians, all disturbances were created using black money or FICN to pay rioters. Note how the entire opposition is in total disarray, unable to pay the crowds that come to their rallies, unable to fund their election expenditure and unable to come to grips with the changed situation.

In one swoop Modi has endeared himself to the people, destroyed black money that funds elections and made crooked businessmen run for cover. In addition, he has already pushed a number of people into the banking system, through Jandhan accounts. Small vendors are now using mobile transactions to get payments from customers. This has been a massive step towards financial inclusion and in due course, more people will have to pay taxes. It is possible to use a banking transaction tax to fund the budget. That’s another story!

For the moment, I am loving it! Seeing crooks being beaten Black and Blue!


14 thoughts on “Black and Blue

  1. A well researched article. Sharing with my friends. But what is troubling is that bureaucrats who have lost money due to demonetisation will take bribes now with vengeance. They will find newer ways to take bribes.

  2. Great article. However, the videos of DDNews are only focussing on the Hindi belt. Makes us
    down south in Tamilnadu feel left out. The channel should have aired views of Citizens all over the country.
    Moreover the shortage of currency for circulation is appalling. Whose decision was it to print Rs.2000 notes and supply to all the banks? This has embarrassed the GOI unnecessarily. Why were Bank Chairmen/Chairwomen taken into confidence only on 8th Nov 2016 especially when several are managing currency chests for Reserve Bank of India and could have given pointers for printing and circulating new currency and favoured denominations? GOI should examine this and plug these loopholes for follow up actions contemplated to curb black money. However,
    that terrorist funding has received a setback is a shot in the arm.
    Retd. Bank Official, Chennai, Tamilnadu, India 21st November 2016

    • Madam, I am also a former SBI AGM and have worked in the banking sector for over 42 years from PO to Senior VP as well as a consultant overseas and in India. This was one operation that had to be carried out in total secrecy and only 3 people knew about it.

  3. Crooks will be always one up and hence find newer ways. The money previously hoarded is lost forever for the corrupt, but then bribe taking/terrorists funding would have started from 9th onwards in new 500 and 2000 notes. This is obvious from the fact that a terrorist who was shot dead had with him old notes of 500 and 1000 and also 2 notes of 2000. PM alone could not achieve 100% success. We, the people have to support him to beat the pseudo secularists and the crocodile tear shedding opposition parties. We knew there was one Pappu. Now after the demonetisation, more Pappus have sprung up all of a sudden. It is a good thing that the public can recognise them now clearly and give them the appropriate treatment..

  4. Excellent Sir. Very detailed. The shameless Opposition has got a measure of the impact this surgical strike on fake and black money would have on the common and poor man. This huge populist action has got them by their balls so to speak and hence come what may, protest throughout the country and Parliament with a clear intent to safeguard their huge tons of hoarded black money. Nation was and never is a priority from these political opposition parties who cry foul at the Prime Minister’s people and poor friendly initiatives. As I write this, Opposition has not let Parliament function for debate over demonitisation raising silly and often incoherent demands. While the nation has to endure this situation of manufactured near anarchy, the people of the country will realize and retaliate in equal if not more resolve. I hope our PM will not cede to pressure and reach out to the people for their mass support.

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