India Cash Ban Devastating Economy

When politicians have too much power, people tend to suffer. And that’s what’s happening in India.

The recent ban on cash imposed by India’s PM Narendra Modi is having a devastating effect on the economy.

India has struggled with tax collection – as if that’s a bad thing – and tried to combat the “underground” economy by taking 500 and 1,000 Rupee notes out of circulation by invalidating them as a medium of exchange. Note that after accounting for exchange rates those are relatively small bills – used by a massive amount of people.

The effort is to move people to putting money in bank accounts – replacing physical currency with digital currency.

But what do you think would happen if you took tons of money out of people’s hands, including people without bank accounts?

Nothing good.

And that’s exactly what’s happening, as reported in the Washington Post:

“Several small- and medium-scale industrial clusters, employing a total of more than 80 million people across India, are reporting declining sales, production slowdowns and layoffs since bills worth 500 and 1,000 Indian rupees were invalidated (500 Indian rupees is worth about $7.40). Towns famous for weavers, lockmakers, power looms, bicycle-parts manufacturers, ready-made garments and handicrafts face rising inventories of unsold goods.

Even large car manufacturers have halted production in some of their factories for several days because of a sharp dip in consumer spending. And in a reflection of the belt-tightening that has accompanied the general sense of uncertainty, credit card companies have posted a decline in the total value of transactions, even as the cash shortage is forcing people to use their cards more.”

This is often what happens when politicians get some utopian scheme in their heads. With the power they hold, they can destroy entire industries and ruin countless lives – as we’re seeing in India.

It’s time to move beyond giving a few people tons of power over all of us. Empowering individuals, families, and local communities must be the path forward if we are to succeed in this era of change.

Spencer Fernando

Photo – Twitter