The news on demonetisation continues to become messier and messier. It seems almost sure now that GDP will contract and the economy will take a beating. Surely implementation could have been better!

Here are some thoughts on this:

  1. Continue with this experiment to its logical end. After all, there can be no roll-back without Namo sacrificing a lot of his political goodwill. But for this drive against hoarding of big currency notes as a method of accumulating black money, to be successful in the long run, discontinue denominations higher than Rs. 100/- permanently. The effect of this will be that more consumers will perforce move to plastic, electronic and mobile methods of payment to avoid the inconvenience of carrying large wads of currency.
  2. The root causes for the generation of black money must be stamped out.Three main reasons for black money generation are i) bribes and corruption ii) elections iii) high taxes.
  3. Bribes and corruption are practically almost fully generated in the government sector. The plethora of rules, regulations,licences, permits, etc that exist creates a paradise for a government employee inclined to be corrupt. Private businesses and individuals who pay bribes are forced to do so and the lack of oversight or accountability of the government employee seems to be the main cause for this.
  4. Some methods to do this are:
  5. Call for a monthly time sheet and identify slackers who normally arrive late or leave early or who leave office on private work. If this is done manually, there will definitely be fudging, but with the help of mobile gps tracking, this can be made effective. Every employee must have a mobile number that is gps enabled and he can be paid Rs 50/- a month for this. Repeated latecomers and absentees should be given due departmental process and terminated.
  6. Minimum work quotas must be established especially for the lower levels of employees whose work can be better quantified than those at the higher levels. For eg, a clerk must process a minimum number of citizen requests per day; this can be monitored by computerization where each request is given a ticket number and all records are time stamped and done real time through computers.
  7. Employees at the lower levels must have their pay divided into variable and fixed pay with fixed pay being no more than 50%. The variable part can be linked to the measurable work quotas mentioned above.
  8. Employees at higher levels must also be subject to variable pay with their variable pay being linked to the variable pay earned by the subordinates reporting to them.
  9. Encourage private websites where government employees by name and rank can be reviewed by the public for efficiency, corruption, tardiness, etc. Suitable checks like denying anonymous posts, moderating claims made, rewards for accurate posts, rewards and punishment for babus, etc must be devised and the monitoring of this must be done at the level of the PMO.
  10. Encourage citizens to sue middle and lower government employees for malicious and wanton delays, negligence and dereliction of duty, lack of preparedness, failures of commission and omission, harassment, demanding bribes, disproportionate assets, etc. A special court system like the “small causes” court can be established for this at every district center. With the prevalence of mobile phones that record audio and video, more successful prosecutions can be launched. Initially there might be a high number of malicious suits, but over time, malicious suit-filers and errant officials will be punished.
  11. Senior level government officials will automatically come under check when their middle and lower level employees rat out on them or point out their duplicity or complicity in the misdemeanors alleged against them.
  12. A special court must be established in all states to look into cases of  corruption and other crimes as mentioned above for judicial and police employees. These courts must be of the fast track type with no case exceeding three months.
  13. All election contestants must have a nil criminal or civil suit position. To facilitate this, courts must fast-track the suits filed for or against any candidate such that his position becomes absolved or convicted before contesting. This will also have a positive effect that those who want to go into public life will try and maintain a spotless record.
  14. Taxes must be rationalized.While current rates are sensible and moderate, more steps can be taken to reduce the generation of black money. Some steps are:
  15. Reduce the stamp duty and registration charges of property from the absurdly high rate like 15%in Kerala to 2% all over India. This will encourage property buyers to record the correct value and discourage black money.
  16. Remove agricultural income tax exemption. Instead give agriculture income a high exemption limit of say 10 lakhs over which agricultural income would be taxed. This will also remove the loophole for tax evaders who report crores in agricultural income. Besides, which farmer earning over 10 lakhs annually can be called poor?