Indian Economy: Know How Demonetization Is a Curse For the Middle Class

Cartoon Courtesy: Satish Acharya via Twitter

“The best way to destroy the capitalist system is to debauch the currency” ~ Vladimir Lenin

The Single largest step  taken by any government after the imposition of Emergency is the Demonetization Step. De-Monetization is suddenly the most trending word after “Intolerance” but the move comes with its share of pros as well as cons in Indian economy, and the cons outweigh far more than pros for the Middle Class.

Sand Art on Demonetization by Sudarsan Pattnaik

The Lady of the House, by far the Finance Ministry of every household is not only troubled but deeply saddened and agnostic towards the draconian move. The step is being hailed as a good move by the Salaried group of people but the Professional and Small Businessmen/Traders/Stockists have termed it as disastrous, to say the least.

I, for one, was very happy after the announcement of the Hon’ble Prime Minister, a historic announcement, indeed. At the stroke of midnight hour the bigger currency will no more remain a legal tender he said, but unfortunately few days down the line it has made me skeptical about the future of this country.

The poor are unaffected as always except for standing in long queues, eventually, this too shall pass but the aftereffects shall be felt once the deadline passes and the Indian economy will be restored to normalcy.

The Middle-Class household who works day in and day out and save every penny by cutting on their expenses are the most affected by it. Someone had saved money for the new house they were dreaming about, some for their kids’ marriage and some had kept it for emergency funds. In a single stroke, it is all Go Goa Gone.

My mother, for instance, had kept all her desires and ambitions ‘in check’ for so many years so that she could save enough for the lavish wedding of her children that she was planning for, but now it all remains a distant dream. Besides, the new house she had planned for her old age is now a smoke in the air.  

Also Read: Demonetization in India: Know How Real Estate Sector Price Will Fall By 60% or More  

Every move of the government hits the middle class hard but this one has just shattered the dreams of millions.  The repercussions are more far reaching and will be of such magnitude proportions that the economy will reel under its pressure for years to come.

Cartoon Courtesy: Satish Acharya via Twitter
Cartoon Courtesy: Satish Acharya via Twitter

In my little experience and wisdom, the following aftereffects are inevitable for Indian Economy post Demonetization:

The Deposit rates will fall:

Since the Banks have surplus cash now the lending rate will fall and soon following thereafter Deposit rates will also fall. So bye bye interest on FD’s and Bonds and sorry to all the retired people who used to meet out their daily expenses with Interest money.

Unemployment will reach enormous proportions:

Yes, contrary to popular belief people who think Black money hoarders will now be brought to book, now businessmen will keep the staff to the minimum for the simple reason he has no surplus cash to distribute their salaries.

Household Expenses will fall leading to a Dip in Sales:

Once, every money is accounted for, I for one will keep my expenses in check and will surely curtail my expenses. After all the money in my pocket is only after tax deduction and every penny counts. Certainly, Sorry Long drives, Lavish Dinners and Expensive Bars you are a story of the past.

The Dollar will Fall and Rupee will strengthen:

Since the Indian economy has bolstered and there is surplus cash flowing in the Banking pipeline, the rupee will strengthen leading to the strengthening of Rupee and Dollar will fall (basic economics). Which sector is hurt most, Yes our I.T guys and B.P.O guys are hurt the most, the single largest sector of Foreign exchange earner, salaries will fall, fresh hiring will fall. Hurray, Trump has one less thing on his mind now that Indian Government has made his job a tad bit easy.

Rich are getting richer and Middle Class is bleeding :

The schemes of 70:30, 80:20 floating in the markets is heard everywhere. The schemes are being floated by people who can fudge their books of accounts and are duping the hard earned money of the Middle class to save them from the tax brackets. The rich are getting richer and middle class is left poorer.

Also Read: Surgical Strike against Black money: India against Corruption or Commoners?  

The list is not exhaustive but only illustrative in nature, the ramifications, and the debate shall continue till the final results are declared in the budget and thereafter.

To add fuel to the fire, the government through P.M and F.M is sending threatening messages to the public at large creating an atmosphere of fear and anxiety.

Dear P.M and Hon’ble F.M there is a distinction between “Black Money” and “Unaccounted money”, the former is the money on which the taxpayer has not disclosed but the latter is money begotten from Illegal activities like drugs, arms, Human Trafficking.

Had you taken steps to curb the mischief Black Money, I would have been your greatest admirer but taxing the Poor Middle Class is not only wrong but a fraud on the people.

The Goldsmith of my society is laughing his way to the bank but the middle-class person is crying his way to the Bank, had there been a Moratorium given to genuine Middle Class families, the step of Demonetization would have been applauded by one and all, but the sudden surgical strike is fatal and has crashed the dreams of millions of Middle Class.

The ramifications of this move will be felt later but if the ramification is on the negative side then Dear Mr. Modi you will be the fallen Hero and certainly the Fallen Hero of the Middle Class. I pinned my hopes on you to bring this country to order but never anticipated you will strike below the belt of the Middle Class.

Also Read: Demonetization of Rs. 500 and Rs. 1000 Is Anti-People & Witless 

This country has suffered deeply for 200 years under the British, the Middle Class was its pride and honor and you have dismissed them as Black Money hoarders. We have paid enough taxes to fill the coffers of the Treasury but the previous governments have hoarded it for their own gains and that is why I refused to pay taxes.

The road in my neighborhood is patchy and the basic facilities available to a common man are deplorable. The Indian economy is going down and the Middle Class will bear the brunt of it for years together.      

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About Sanchit Garg 11 Articles
The writer is an Advocate regularly practicing in Supreme Court of India and Delhi High Court on civil, criminal and constitutional side.