Two weeks of cashless in the country

Two weeks after the sudden death of a bulk of Indian currency notes, the most obvious panic seems to be over but the elephant of demonetisation is yet to work its way through the system. The entire process will take months before the python digests the elephant.

Arguments, edits, opeds, conversations, debates and social media are sharply divided on what the currency replacement will achieve. I remain in the ‘it’s good for the country’ side of the debate and want to address some of the arguments against demonetisation.

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Why is the currency ban causing markets to rise?

The sudden shock of the currency ban and an unexpected election result in the US caused markets to open 6% down on 9 November. But a day later, the story has changed—all markets are up. So why are stock markets surging? Why are bond markets happy? Why are real estate magnates walking like zombies? What lies ahead for your money?

Readers of this column are hopefully smug with their financial plans and asset allocation in place and are not wasting time wondering if stocks are a good ‘bet’. But let’s deconstruct why markets are up on Day 2 of the #currencyban. Day 0 was 8 November, when Prime Minister Modi made his #currencyban address to the nation.

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We did say we wanted less corruption

Some of us in India have paid, what I call, the ‘honesty tax’ for decades. Our money is salaried, there is nothing on top, we pay our taxes, keep our accounts clean, pay for large spends by card, do real estate deals in white and become the guys who obey traffic signals while others in bigger cars zoom away with a smirk. We pull out our cards and carry home our small shopping bag. The guy in the next aisle pulls out a brick of cash and thumbs out a lakh in notes to take home the high-value gadget. We drive our Maruti home with the EMI (equated monthly instalment) sitting in the backseat, the luxury SUV guy comes with a sack of cash and scrapes our car out of his way. We wait to buy a house with white money, don’t get the choice set, pay more and end up feeling like losers for being honest.

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As cash comes a cropper, confusion and chaos on the cards

he chaos has begun. The phone calls, email, smses, whatsapp have all begun to ping and ring – average people calling to ask if their currency is useless now.

Rumours are beginning to spread. The reason for the panic is the move by the Narendra Modi government to demonetise the Rs500 and Rs1,000 notes. What this means is that starting midnight 8 November all the currency notes you hold in Rs500 and Rs1000 are worth nothing. But remember that all the currency notes you hold in your bank area still worth the money they denote.

Just that you wont get Rs500 notes from the ATM, but Rs100 and Rs50 notes.

 

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Those stinky rich people

Stinky rich. Filthy rich. Ever wondered where that phrase came from? When did money become so dirty? A Google search tells me that it came from “filthy lucre” in 16th century English writing, where the idea was to separate legit money from money acquired by dishonest means. I think that’s wrong. The term, I think, came out of middle-class angst at those who managed to get there. I have been a part of many middle-India conversations about money. Most of them about the dirty, filthy, no-morals rich, and us middle-class people and values. It is usually a case of sour grapes rather than any real aversion to the rich life. Given half a chance, most people bemoaning the low-life rich would happily swap their chartered buses for chartered flights.

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Money and the luxury of choices

“Yet he was not content. At first he could not say why. He and Akun….could look back upon great achievements: he had led his family on their epic journey from the tundra: he had found warm lands. They hunted well and raised fine families. Both of them were now treated with honour and respect—surely he had done all that it was possible to do. But with each passing season, the feeling of unease and disquiet grew.”Sarum by Edward Rutherfurd. This is a book based on Salisbury that begins from prehistoric times.

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