Earlier I had shared my one-paise view on demonetisation. Here, I would like to share my 2K view or the demons of 2K. Before you lay any apprehensions, I must take you aside for a moment and say that my concern for these demons does not in any way support other demons - black money, counterfeit money or terror funding money. I reiterate that I am against all these three demons, which I will now refer to as dark matter, an euphemism to avoid being called a racist or anything that is not politically appropriate (not withstanding the fact that dark matter is a cosmological constant attributed to contribute to expansion of universe).
Use of image at source.
My concerns for 2K are in some sense related to the Y2K problem. Or, should I say related to the bug problem, which is intertwined with the computational or mathematical logic. For transactional purposes, getting a 2K note is a restriction (given the paucity of 0.5K notes), one would be in need of at least 15 notes of 0.1K from the receiver for transactions below 0.5K. The need of the hour would have been 0.2K notes along with more of 0.5K notes and should have done away with 2K notes. Besides, more of 2K notes will add to the dark matter (all three demons) and lead to an expansion of the universe that will end with a big explosion (unless of course the universe has neither any beginning nor an end).
If you are of the view that the current dispensation is not thought through the dispensing of the 2K and 0.5K notes then you are mistaken. These notes are not going to replace the old notes withdrawn, neither now nor any time in the future. This, as of now, is a given; something akin to a cosmological constant, but without the dark matter.
To state that the universe is finite with its existence being infinite can be a point of view, subject to verification. However, if one takes a similar position with regard to the economy then my existence (as an economist) will definitely become finite.
Nevertheless, with trepidation, I assume (not presume, as I want to leave some safety valve for my survival) that the new 2K and 0.5K notes are meant to have a finite existence and are not going to replace the old 1K and 0.5K notes. One strong reason for this assumption being that the 2K notes (along with the new 0.5K notes) will add to the dark matter (the three demons).
One also feels that one is not going to see the 0.2K notes to come to our rescue any time soon. Given the mammoth task of getting even the limited amount of 2K notes and new 0.5K notes to circulation, this will not be physically possible.
The new normal is that we are moving into a digital world (tending towards cashless). The sooner all of us understand this and plan to adjust to this new normal (whether we agree with it or not) the better for all of us. Now, if the economy (nay, universe) is constant and there are substantive changes in the nature of internal transactions then some will gain and some will lose.
It is imperative now to know whether those who will gain on account of 'facilitating' the transition into a digital transaction have any checks and balances on their rent-seeking returns. Are our institutions geared towards recognising and addressing these concerns. What would be the cost of internet accessibility and transaction charges? What would be its implication on the poor and the vulnerable?
We also need to be concerned about dark matter beyond the above-mentioned three demons and have adequate safeguards for card cloning, data theft, phishing, pharming, smising and vishing among others. Do we have human resources to train the entire population and enable them to guard against such incidents? Will there be space for sovereign guarantee under such circumstances?
Further, as we will be moving towards an automated world, as is being globally talked about then what would be the implications. Is it not appropriate that we also start discussing the need for a universal basic income, as the need for that, at least for certain sections like those dependent on agriculture indicated through incidence of higher farmers' suicides (notwithstanding efforts at their underreporting), is already knocking at our doors.