The Fundamental principle of management for a decision to be taken is to be very clear about the objective, and in fact objectives in its order of priority. In case of black money, we can probably set our priority of objectives like this:

  1. Removal of black money – Most of the black money is in 500 or 1000 rs notes. Now the owners of such cash would have three options – convert it into 100 rs notes, declare and deposit in the banks or let it go. The first option is not feasible because of the sheer volume and handling challenges. And the second option is also not possible beyond a certain limit. Therefore, most of the black money is likely to become valueless paper.
  2. Bringing black money into circulation – If some people are unable to convert old currency into white, it will reduce to paper. It’s currency after all! Pure Gandhi ji!! Like child is never illegitimate, but the parent’s relation is. The currency is worth money. If it’s in circulation, economy strengthens. If the hoarders uses it instead of destroying it, money is in circulation.
  3. And yes, bringing defaulters to books – Modi gave a chance to people to escape this. They could have declared the money, paid tax on it and come clear. No questions asked. But those who did not think that that was the last chance, might be wondering where to hide the money. Sleepless nights for the next few weeks would begin after this decision for these people.
Contrarian view

What has happened is that the priority of objectives have been put upside down. The way the incisive decision has been taken, suggest that prime objective of the decision is to prick and punish the hoarders and in the process let the black money be destroyed! Not a wise approach. Simply in a bid to punish 1℅ population of the country, you have chosen to panic and put into unimaginable inconvenience to rest of the population of the country.

500 rs to a poor man is what 100 used to be a decade back. Crores of people have been abruptly put into panic, and in the process many poor in the remote areas are going to lose their hard earned money.

Alternate approach

The problem is with implementability and undue hurry for the want of clarity of priority of objectives. What would have happened, if 1000 rs note were to be disband to begin with,and granting enough time to convert if and making it out of circulation. Eventually, similar action for 500 note. The hoarders might have got alerted? Means what? They would have stored this illegitimate money in may be real estate, gold, luxury etc. So what? At least, the money could have been in circulation. True, you might have missed the chance of punishing them. But gauge the costs involved, in terms of irreparable inconveniences and destroying of the money.

You certainly attain popularity, may be mileage by such drastic abrupt surgery, but the wounds are deep to stitch and scars are not scarce to forget.

The views expressed are author’s own and do not necessarily represent the views of Groww.