How can we make the Indian currency stronger?
India: The sham reform
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Swapnil Patkar takes the card reader out of the drawer. It's actually just a show, he puts the device aside again: "We have had server problems for a few days," the kiosk owner apologizes. His customer owes him ten Indian rupees for a few cookies, about 13 cents. Ranjit Savarkar, who is also in the store, can help out: "We'll still do it without cash," he says, pulls out his smartphone, opens an app and transfers the money for the customer. She now owes him the ten rupees.
Here in Dhasai in the Indian state of Maharashtra it should actually work better. At the end of 2016, it was the country's first cashless village. Since then, the merchant Patkar and the initiator Savarkar have shown dozens of reporters how people are paid here. The journalists make a pilgrimage to this place because they want to see what Prime Minister Narendra Modi has been calling for more than a year Cashless India applies. At the time, there was a photo of a crowd in the newspapers, everyone holding up their bank cards, and in the middle of it all the finance minister of Maharashtra - the staging was perfect.
Yes, that's right, the largest democracy in the world is doing away with cash. Anyway, that's the plan. He's part of a big one Digital IndiaCampaign, issued in 2015 by the ruling BJP party. She wants to digitize the administration of the country and bring the entire population to the Internet, so far only about a third has access. And the banknotes should go too.
When Premier Modi in a television speech in November 2016 declared all 500 and 1,000 rupee bills to be invalid - around 86 percent of Indian cash in circulation - the idea was not entirely exotic. France, Greece and also the EU have long since introduced upper limits for cash payments. Experts expect Sweden to print its last note in 2025. But: India's economy is almost 80 percent cash based. Just half the population has a bank account. The government has given more than 300 million people a free account in recent years, but around one in two of them has never been used again after it opened.
"The Indian Elite Is Lawless"
Modi justified the radical abolition of cash with the fight against corruption and black money, against tax evasion and terrorism - all those demons that prevent the whole country from rising. Many experts doubt that this argument is correct. Arun Kumar, for example, who holds lectures on India's shadow economy as a professor emeritus, also in the USA: "In people's minds, black money equals cash," he says. "That's wrong." A large part of the black money is invested in real estate or is in foreign accounts. While the invalid notes have almost completely disappeared from circulation, Indian wealth in tax havens almost doubled between 2007 and 2015, according to the Bank for International Settlements. "Technology alone is not the solution, it's the people behind it," says Kumar. "The Indian elite is lawless. In order to really change something, strong civil movements have to be formed."
The first experiences with the abolition of banknotes were sobering. Indian citizens stood in line for weeks in front of the bank branches, some collapsed in the heat, and there were deaths. Workers received no wages, housewives could not buy food, the economy collapsed and has not recovered properly to this day. Even so, many supported the prime minister's reform because he sought order where there was chaos. The poor had no money anyway, so no additional problems. Others carried the inconvenience like a weapon: in the queues in front of the banks they patted their shoulders, Modi's soldiers were in the fight against those who enrich themselves in the country instead of helping them to become great. And the government drove Cashless India Moved ahead, among other things, a lottery opened with big prizes: anyone who paid with a card or one of the many apps automatically took part. All over the country, cashless places became flagship projects of the campaign.
In Dhasai, Ranjit Savarkar has made it her business to bring the cashless future to the village. Those who want to flee from noisy Mumbai to this idyllic country can take the NS22 motorway to the east. After about 45 kilometers, shortly after the next big city Kalyan, the cell phone network breaks down, at least for the customers of the second largest provider Airtel. After that, the road gets bumpier, and the 100 kilometers to Dhasai takes a good three hours. Green rice fields glow in the monsoon heat, mango trees stretch their green arms across the road.
Savarkar commutes this route at least twice a week. In Dhasai he actually runs a boarding school for boys, in Mumbai he looks after the business of a foundation. He considers Modi's reform to be a courageous step. He wants to help the people in the village to get their money. "I was wondering why they didn't just pay with their bank cards instead of withdrawing cash," he says. When he talked to some dealers about it, the answer was simple: no one had a card reader.
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