What could have gone wrong in this big administrative decision of the Indian government?
I think it is one typical case of administrative goof up just as the deeds done by Muhammad-bin-Tugluq a few centuries ago due to lack of well informed planning and unprofessional execution. Historians do admit the good intentions of Tugluq, though!
In the current case, if we observe unbiased, it is not difficult to find an unnecessary and undue encroachment by the political leadership in an administrative act that involved high degree of economic and financial complexities! Though the government is supreme, it was a job of the Reserve Bank of India and the latter should have done it professionally after due homework!
Instead what the people of India witnessed? The PM announcing the decision most dramatically at an awkward time in the news channels! And the man responsible for the final thing- the governor of the RBI was not to be seen anywhere!
And for that matter, the RBI boss was a new one. No doubt, he was an experienced professional in some other field. But he took the reigns of RBI only very recently. That kind of a time period is just not sufficient for any external management expert to master the complexities involved in the management of the central bank! With that short stint, he was obviously not in a position to advise the political and bureaucratic bosses with correct predictions and consequences even if he was consulted prior to the move!
And that explains why the RBI is very poorly equipped to deal with the consequences of the 8/11 demonetization act! Nothing surprising then to learn about the inadequate stock of currency printing paper and security inks with the security presses managed by the RBI! Nothing surprising to find the ATMs of the country cannot be equipped for the new paper currencies! Nor the failure of the Indian banking system to act foolproof post demonetization is also nothing surprising!
No one with the right kind of information would have ever thought that India is fully equipped for digital revolution to such an extent that it can do away with physical currency in just one stroke! No doubt, India has achieved much in the recent years with regard to its internet networks and electronic communication systems. But that is just not enough and can never replace the common money that the poor and ignorant majority Indians are still depended upon in the present times. At the most these are wishful thoughts for India for the future!
There are better alternatives and that is the need of the hour! Income tax raids and stricter punishments for black money would only make corruption money to change hands! It will not eliminate corruption! Why not the government encourage people to pay taxes honestly and honor the high tax payers with awards instead of threatening all tax payers with draconian punishments? Draconian rules are the first cause for corruption, in my humble opinion! And corruption is the first cause for black money and black economy!
We may have moved to the 21st century, but with all those who enjoy power and position, the mindset remain as of the dark ages! The moment power and position are achieved, human mind tilts towards evil and begins to explore ways to exploit others instead of being of any good service to others!
Observe any man who occupies a powerful seat of power high or low. Observe his or her ways and manners. Is it not the same like the hawks or the wild hyena? Or may be of the cunning jackal? And watch the same person after he or she is removed from the seat of power!
And character cannot be brought in a man or woman just by education. Without character, there is potential of evil always. Developing good character in the people is a lengthy process that might take generations for full transformation. Yet, it is nothing non-achievable for the individuals!
In this context some readers might remember what I had written some time ago: An attempt to eradicate corruption in any characterless society would bring about more corruption!
So what the PM should have done in the current situation?
He should have created a situation that encouraged good citizens to do their economic activities without fear or apprehension while making it difficult for those who are more prone to corrupt acts.
He should have eased the income tax rules and laws and created better systems and procedures for people to pay their taxes honestly and removed the draconian or complex return filing procedures for individuals while making it perhaps necessary only for business firms. Let the government tax all incomes at the source, but why should the individual tax payers troubled for keeping all mundane accounts and file the returns error free in a system that no Indian can do without external help? Obviously, such systems and procedures are made by tax officials when they are in power with the intention of enhancing their power! And such enhanced powers obviously become another source of corruption!
Why does the government keep agricultural incomes tax free for all? Is it not a good opportunity to convert big black money? How on earth someone check the validity of any one declaring a million or more income from a few acres of land that he or she holds without doing any farming at all? This one provision compels many to buy cheap farm lands and keep them barren or under utilized for tax evasion. Even if the farms yield big incomes, why such incomes should be tax tree? Small farm incomes should be tax free. But big farms should not be.
Why does the government extent many tax free privileges and perks to the government officials while no such things are available to employees in the private domains? Why does the government keep enhancing the salaries, perks and pensions of the government employees without any due consideration to spend any tax collections for any logical social benefits to the general public including the tax payers?
I remember a youth working in a private company in India asking me this question recently: Why should we pay income tax when the government does nothing for us from the tax so collected? Will the government pay us subsistence allowance if I lose my job tomorrow and become income less from the tax they collected from me earlier? And remember, the several developed nations in the present day world do have such schemes while the government of India does not subscribe to any such ideas.
The youngsters of India do not wish to hear from the government that they take taxes only for fighting wars or defending the borders. Of course, that is important. But concurrently, the government has to prove to the nation that every rupee they collect as taxes are spent wisely for the people! When the people realize, it more and more will honestly come forward to pay taxes!
But no doubt, it is not good for modern governments to function as goonda sarkars of the bygone past when the word sarkar was actually associated with danda or stick!