By Arfa Shahid
India made a major economic move by demonetizing 500 and 1,000 Rupee notes and introducing a new 2,000 Rupee note, but what many don’t know is that this policy was created and presented to Indian Prime Minister Narendra Modi by Arthakranti Sansthan, an NGO, founded by social activist and mechanical engineer Anil Bokil.
“Arthakranti looks at this as a stop-gap arrangement put in place to address the severe liquidity crunch due to the sudden withdrawal of about 85 percent of monetary value in the form of Rs 500 and Rs 1,000 currency notes. We believe this will get withdrawn once the currency circulation is stabilized,” Bokil tells Newsweek Middle East.
The NGO was founded “with the aim of implementing this proposal,” Ashutosh Phalke told Newsweek Middle East. Phalke is Bokil’s partner at the NGO and one of the volunteers who presented this demonetization proposal to Modi in 2013 when he was the Chief Minister of the Indian State of Gujarat.
Phalke says they were given just 10 minutes; “When he [Modi] arrived in the conference room, he confirmed he’s running late. Once the presentation started unfolding, he postponed [his other engagements] and listened without any disturbance. He paid complete attention to this for two hours.”
Phalke is confident the demonetization policy has the power to “radically transform the Indian economy.” However, its implementation “was really not what we had envisaged,”
“Today what has happened is that Rs 500 and Rs 1,000 notes are withdrawn. About 14 lakh crores ($217 billion) of currency have been suddenly taken out of the system.”
“We were really clear that we have no intentions for a punishment model. We were always proposing a correction model…and after that…a systematic withdrawal of the taxation system. The last thing was the currency compression—the most difficult part– which required these other steps to be taken before (demonetization) so that it becomes easier to handle,” Phalke added.
The main thing remaining now in this process is the “withdrawal of the taxation system” and replacing it with a banking transaction tax. “That has to be done as early as possible so that this proposal gets implemented and you can see the transformation of the Indian economy completely,” says Phalke.