Those aren't the only two alternatives. How about you lower the tax rate and create incentives so that the farmers actually pay back the loans. Right now, farmers take loans with the assumption that they'll be waived, and the cycle continues. I'm not shooting on the farmers here, I'm just saying that farmers, like bureaucrats, like businessmen, are human. If they're incentivized to game a system, they will. For once it'd be great if my tax money could be better spent on other things that would actually benefit the country (strong defense, capable law and order through an effective police and judiciary, etc.) rather than indirectly buying votes for the current political party in power (farm loan waivers etc.). Hell given the binary option of farm loan waivers vs stashing my cash abroad, most businesses will still stash it in real estate, abroad, etc.
> Are you suggesting that you should keep significant amounts of your money hidden from the Government because you think they might unduly target you because of your wealth and views?
No. Even after tax legitimate money is at risk if its just a number stored in a "secure" database somewhere. Whoever has ultimate control over that database has power over you. With cash, gold, you can carry them with you and anonymously pay for goods/services without compromising on your privacy. I was merely pointing out one limitation with a completely central digital payment platform.
> I don't see the connection between a hiring freeze in bureaucracy and demonetization
Ok who is on the receiving end of bribes? The bureaucrats/politicians. Demonetization was supposed to hit the tax evaders (usually bribe givers) and the bureaucrats (bribe takers). Maybe they both were seemingly hurt with demonetization as they both had cash stashed. But since the bureaucracy still exists (and has become more powerful eg - http://www.thehindu.com/news/national/the-taxman-now-has-mor...), there is no incentive for the bribe takers to stop taking bribes. Tell me this new bill won't be abused and misused. Looking at the history of laws being abused in India, I'd bet that it will be