It just makes for a better headline and hopefully I have the attention of people interested in Seattle, Pune, cash or cashlessness.
Growing up in the 1970s, ‘80s, and ‘90s, I was well tutored, well instructed and (for good measure) well experienced in life lessons on what happens when you don’t have cash in your pocket. Which was almost every day because when I did manage to have cash in my pocket, I also managed very well to spend it all. As a result, I had nothing in my pocket at the end of most days. Like, when I did start getting pocket money some time in secondary school (I think it was Two Rupees a week and the two buck notes then were nice, crisp, and red in colour), I would go to school, buy vada-pav, and a Soya milk and that was it. Six days later, I would get my next Two Rupees and I would spend it that very Monday.
Then my pocket money was raised to Ten Rupees (I got four crisp, red two-rupee notes and two crisp, purple one-rupee notes). What did I do? I went to school and spent it all in the canteen, the very Monday.
This went on till I was leaving high school and my pocket was up to Twenty Rupees a week (but by this time, I was rushing out to the corner book store and buying four Commando comics on that very Monday, every week).
Meanwhile my friends, siblings, and sundry other well-wishers were saving and saving and saving and spending a little and saving and saving, like good middle class children were taught. (I was terrible at learning good lessons).
I went from school to college and from college to my first full-time job, and my life changed significantly. I now started spending my handsome salary of 1500 rupees within five days of receiving it. It took me some time to get used to waiting 25 days for the next input (since I was used to weekly pocket money), but I learned fast.
I remember when I got my first permanent journalism job in Pune and my first pay cheque; I regret to say that it took me seven days to spend the 6000 Rupees – I had to first deposit the cheque, and then three days later, I was able to spend everything on rent, groceries, et al by the seventh day.
Then, in 2006 I started travelling abroad. This was a very difficult time for me. Companies gave me United States Dollars for what they called per diem (my colleagues called it ‘savings’). The colour was different, but it felt like my red and purple notes, and I knew exactly what to do with it: spend it. But after the first few trips, I started noticing that outside India, there was really no need to carry cash. Most places – including roadside eateries and cabs – took credit and debit cards and gave receipts for every transaction. But since my conditioning was good and thorough, it wasn’t until 2010 that I really accepted that I don’t need more than a tiny amount of cash (just for emergency) when I stepped out of India. By 2012, I had stopped purchasing forex more or less. If I had been able to follow the advice of Learn to Trade Australia then, I probably would have made some serious money from it, but at the time I was making nothing. Stock market trading can be risky, and inevitably will come with failures, which explains the limited amount I was earning. This is why so many traders draw up a risk management strategy, to reduce the number of failures and learn how to tackle them when they do occur. I wondered if I’d perhaps taken a different route in the Forex industry, such as becoming a broker, I would’ve had more success. Joining a brokerage would’ve been simple, but with so much material out there to help you Start a Forex brokerage with leverate, it would’ve been equally as easy to start my own brokerage. However, I remembered the experience that one of my friends had in the Forex industry, and I wasn’t sure whether to go ahead with it or not. My friend had started investing in the currency exchange, however, he felt that he deserved compensation. As the currency prices are speculated, it allows people to undervalue some transactions. When people do this, a lot of people can lose more money than they originally invested. I remembered my friend had to look into mis sold cfds to try and get some compensation for this. This was quite a stressful experience for him, so I was hesitant about getting involved in currency exchanges.
This habit overseas, became a habit back home and in past few years, I haven’t really been transacting much in cash.
The picture I am trying to paint here is that, I have been practicing all my life for our dear government’s demonetisation lesson. I have been so ready, that I don’t remember having any money to spend beyond the tenth of any month. Ever. But it was my choice. I wasn’t forced not to spend cash.
Then two sets of events happened over the weekend which made me think. In the first set of events, we had to get a few company seals made (the round seal with which you stamp company documents for filing to the government). After scouting around, our Operation’s Head decided on a particular vendor and the conversation went like this:
“It’ll be 300 per seal.”
“We need seven.”
“Okay, I’ll give to you at 275 a piece.”
“Here’s the card, please charge to this.”
“Would prefer cash.”
“Cash is limited nowadays as you know.”
“If you pay by card, you’ll need a bill, and there will be VAT.”
“That’s fine. How much is the VAT?”
“Well, I can give you a note books and register bill and then VAT will be 6%,” he helpful offered.
“But we are buying seals. We need a bill for seals.”
“Then VAT will be 13.5% sir. Pay by cash, it’ll be 13.5% less no?”
The argument makes one think that one is paying 13.5% less. Which in a way is true, but if you are used to proper accounting, then you’ll know that VAT, Service Tax or any tax paid to the government can be offset against something or the other in most cases. More importantly, you have a clear bill of sale to show as a credible business expense. But from the seller’s point of view, it is very different. A true bill of sale means that the transaction is now recorded officially and it will be counted as revenue, and will count towards taxable income, and therefore, possible income tax. But in most cases, it is convenient for all parties not to think that far ahead, and pay “less”, but the benefit is to the seller.
What I didn’t get, is once the seller had realised we would pay by card and wanted a bill, what difference did it make if it is 6% or 13.5% VAT? Now, imagining a majority of transactions to be in such cash mode, I began to understand, that less income tax is collected, which means less revenue for the government, which means less to spend on development projects, which means other means of shoring up revenue, which could mean higher costs to some or all sections of society. So I start thinking, maybe it’s not necessarily a move only against people under reporting income, but mainly, businesses and traders who are under reporting income. But am no expert in anything.
The second set of events occurred Sunday. I was in Dhayari (off Sinhagad Road), and had to go from DSK Vishwa (which is a township perched atop a pretty hill) to the vicinity of Narhe village, for a meeting. Given my general penchant for cashlessness and propensity to use cards or e-wallets, we pinged Uber (since rickshaws don’t yet accept anything but cash). Within seconds, we got a booking, a fare of 79 Rupees and the promise of a cab arriving within minutes.
I started admiring the digital vision of our government and the efficient, timely progress of our society … then the cab driver called to say he couldn’t really drive the half kilometre up to the township, blah and blah, and so the ride was cancelled. Ping. Another Uber ride booked. Another cab driver calling. Another cancelled ride. Ping … finally after 20 minutes, I borrowed two 100 Rupees noted, two 20 Rupees notes, and a Ten Rupee note from my brother, and walked to the bus stop. Rickshaws are scarce on the hilltop.
I was in time. The bus was going down. I bought a 10-buck ticket, enjoyed the bus ride to Dhayari phata, got down, and guess what? I found a share-a-rickshaw ride to the Bank of Maharashtra branch near Narhe where I had a meeting. Fare? Ten Rupees. I had the meeting, hitched a ride back to Dhayari phata with the person I had the meeting with, and then hitched another share-a-rickshaw, this time to Dhayari goon (sort of the foothills) – Five bucks. And just then, a bus came along to the township, fare Rupees Five, and a five-minute bus ride later, I was back having spent 30 Rupees in all. That’s 49 bucks less than the one-way fare for an Uber.
I guess I am beginning to understand the digital vision. Uber makes money if they can get their drivers to drive, that is. The banks make money, the e-wallets make money, the card merchants make money, the government collects more taxes. And we, the common people, pay for it all. Yes, yes, I can see how it all makes sense.
On the other hand, what I do know, is that all the places I visited overseas where most transactions were digital have great infrastructure, clean streets and life is streamlined and efficient.
But, even in those places, there are scores of people who find ways to avoid taxes, and run corrupt practices.
The questions that trouble me are; So what exactly is a democracy? And should democratic governments be prescriptive? On the other hand, should citizens of a democratic nation take dissent to be an unalienable right?
Like I was saying: am no expert in anything. Just a confused writer going round and round in circles in my head, trying to understand both sides of the new currency notes.
Incidentally, What do you think is happening?
——
Sanjay Mukherjee is a Pune-based business consultant. He is Founder of RedstoneSummerhill and The Mountain Walker and also serves as Chief Strategy Advisor for the Hong Kong-based learning technology company, Peak Pacific Limited
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