Book Review: ’Note – Bandi’ Edited by R Ramakumar

The various contributors to Note-Bandi debate the decision of demonetisation (spelled note-bandi for the equivalent Hindi language word) in 2016 in. On 8 November 2016, there was an announcement on national TV channels by Indian PM Narendra Modi. The 500 and 1000 rupees notes were demonetised and replacement notes of 500 and 2000 rupees were sought to be disbursed. The sequence of events is mentioned on various news channel websites.

There are thirty seven scholars who have put together twenty seven articles in this volume. Articles from the Economic & Political Weekly are also included in Note-Bandi.

Editor Mr R Ramakumar sets the tone of the discussion in the first article, “A Nation in the Queue”. In a critique of the 2016 demonetisation, he clearly brings out the massive impact wrecking the economy and livelihoods in India. A scepticism from the central bank RBI, unpreparedness regarding ATM calibration, remonetisation status at end of ten months from the major decision, economic impacts of demonetisation, and various scholarly discussions summarize the various aspects of demonetisation. Consequently, the editor finds the faults on the economic front regarding this policy with justifications.

The subsequent articles do an in-depth scholarly investigation into size of the black economy and its estimation, black money and tax evasion, demonetisation and the Indian economy.

One of the interesting articles included in this book is the excessive focus on chase for black money in Switzerland. Example is given of an anonymous banking expert on tax havens who flew to Dubai to provide investment advice to an Indian group based in the emirate. Thereafter, he is taken around a warehouse with large quantum of funds stored as cash that he was required to inject into unauthorized accounts in Swiss banks.

In this instance, the expert declines to enter into any transaction to recycle the rupees to Swiss francs or dollars saying it was a crime to do so under existing Swiss laws. Additionally, he also suggests that the Indian government should be focusing on the new financial centres of Dubai, Singapore, British Virgin Islands, Luxembourg, etc. where suspicion is of Indian black money getting routed.

Further the same article briefly discusses some points of importance regarding illegal income from India stored and transacted via overseas route.

Another insightful article highlights the usage of participatory note investments, P-Notes. There are newer liquid contracts available in the Indian equity markets. The older method of P-Notes  only serve to provide anonymity to foreign investors, and a potential route for tax evasion. Hence, the author of this article makes a strong case for phasing out P-notes.

Many of the other articles bring out some of the less discussed aspects of demonetisation. These include black money and politics in India, excise duty evasion on cotton textile fabrics, estimates of the unreported economy in India and the usage of the Hindu Undivided Families (HUF) clause to avoid tax.

To summarise the review, Note-Bandi presents a set of insightful and scholarly articles bringing out major aspects of demonetisation and critiquing its supposedly foundational arguments. Its recommended as a reading article for the range of academic to the political economist and the governance professionals.

It will be useful generally to anyone trying to uncover the many facets of this policy, nuances of which are lost in agitated public discourse. Its also a warning treatise for adequate homework to any other national government planning to take on this major step.