Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Tuesday, 12 April 2016

Election Season is Rumour Season



You may also call it a season for cash-distribution !

Business Line ( 06 April ) quotes RBI Governor Raghuram Rajan as follows :


"  Money in people's hands has gone up by over Rs 60,000 crore which is not normal and needs to be looked into

Around election time , cash with the public does normally increase ... You can guess as to reasons why ; we can also guess

You see some ( spike ) not just in the State going to elections , but also in the neighbouring states . There is something..We need to understand it better  "


According to the latest data released by the RBI, there was a 48 % increase in the currency in circulation at Rs 2 lakh crore for the fortnight ended March 18

Now Times of India ( 08 April ) talks of a report released by the State Bank of India , which says :


"  It is rumours of demonetization of Rs 500 and Rs 1000 notes that is possibly driving people to withdraw cash in order to deploy them in safe assets

There are suggestions in public domain and even analysis that are suggesting that higher denomination notes may be replaced

Demonetizing Rs 500 and Rs 1000 currency notes will bring a huge amount of funds kept in these denominations into the banking channels and will facilitate a reduction in domestic black money transactions

But this would also be a headache when it comes to logistics  "


MY  TAKE :

*  It is much better to have a headache than a heart attack  !

*  You can have the pie and eat it too , if , instead of  outright 
   " Demonetization ", we just replace the existing paper notes ( of Rs 500
   and Rs 1000 ) , with PLASTIC notes of same denomination , but embedded
   with RFID micro-sensors ( 50th of a hair thickness ) , which can be tracked
   through a GPS enabled technology platform ( consisting of a Mobile App )


*  Any accumulation of Rs 10 lakh worth of such notes , within an area of
   ONE square meter , will show up on a Google Map on the mobile app !

*  This will not only allow people the convenience to continue using Rs 500 /
    Rs 1000 plastic notes for their daily usage / purchases but it will, at same
    time ensure that goods / services valued at a few thousands of rupees ,
    will always get paid thru banking channels , since no seller of goods or
    service would want an accumulation of even 1000 note of Rs 1000 , in his
    table drawer / bank locker  !

*   And which candidate contesting any election would want his brief-case or
     car trunk to show up on the Mobile App of ACB / ED / IT , as a red
     balloon , with caption, " Find Five Crore Here "  ?

What do experts have to say about CASH ?

*   Mark Barnett, the boss of MasterCard ( UK ), believes that in five years cash will be practically extinct in Britain . At the Money 2020 conference in Copenhagen last week , he said :

"  By the time we get to another generation , 30 years down the track, will there be any cash ? I very much doubt it . It will seem as antediluvian as carrying a pouch full of gold "

Marching towards the goal of a " less cash " society , yesterday , Shri Raghuram Rajan launched United Payment Interface ( UPI ) , which is independent of any payment platform ,bank or telecom service provider

One can use mobile based ( just one click ) UPI app for :

*  Paying for delivery of goods from online shopping web sites

*  Paying of utility bills

*  Over the counter payments

*  Bar code based payments

*  Donations / School fees

*  Any type of payment  !  All without revealing your bank details !

   
 But if Shri Raghuram Rajan wants UPI to catch like wild fire , all that he has to do is to replace existing notes ( not demonetize ) as suggested above

Sanjay Sarma ( MIT ) who has written 75 research papers on RFID sensors,
wrote to me :

" I think it is a matter of time before it happens

  I do agree with your idea  "

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hemenparekh.in / blogs

12  April  2016

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