Article first published on   ABP  Live     Click here

Article first published on ABP  Live Click here

Ours is an amazing nation. First, we dare the Prime Minister to act on black money. When he doesn’t, we accuse him of ‘jumla baazi’. Amnesty schemes are announced and we taunt the Government for the poor response. If raids follow, we cry foul of “tax terrorism”. When demonetisation happens champions of banking inclusion suddenly remember they never asked their domestic staff to open Jan Dhan Yojna accounts. And, finally, a generation that made a virtue of standing in line for everything — rail tickets, cinema tickets, football tickets, water, kerosene, ration, temples and Ganapati pandals — suddenly realise queues are the worst form of oppression.

If Hillary Clinton could not trounce Donald Trump, he was dislodged in no time from social media platforms in India with comments and quips on demonetisation. It has gained momentum over time as tales of woe — real or imagined — started pouring in. While the mainstream media carried stories and  pictures of crowds at banks and gas stations, one did not see too many analytical pieces on the issue. One assumed it was because journalists and oped writers too were caught up in queues outside banks with no time to file a story or article.

But,  then I read the comment of a senior journalist on the Facebook post of a veteran colleague: “I do not know a single journalist who has actually gone to his or her ‘home branch’ and done a deposit or withdrawal transaction in the last few days. All of them have been busy cooking up fiction of ‘Hillary will win’ sort (of stuff) for the last few days”. His own Facebook page has quite a few interesting details (with photographs) on how employers are adding to woes of their staff by making them do “round-tripping” for bank withdrawals. One would have dismissed his observations as anecdotal had he not reported liquor shop sales were back to 80 per cent, something a good journalist can always be relied upon to know.

That is not to mean that I am insensitive to the plight of the “non-plastic” class, as one lifestyle journalist creatively described the section of society which does not possess credit or ATM/debit cards. Therefore, I trawled the papers for pieces that would analyse the economic merits, or the lack of them, of demonetisation. But, apart from a cryptic tweet of a famously flippant Indian economist of global standing (now with an international financial institution) — “GST good. Demonetisation not so good. Complex economics” — there was little available. With the gentleman concerned one is never sure if he is being tongue-in-cheek or making a serious comment. In any case, no two economists agree on any one issue.

A couple of business leaders have come out strongly in favour of the move, calling it a “masterstroke” of the Prime Minister. But, unlike the time when one of them had criticised the Government for “intolerance”, his comment was quickly buried under the heap this time. Therefore, what I found was loads of colourful tales about the hardship of the common man — including 12-year-old kids who are forced to sell pirated books at traffic signals as they had to run away from abusive homes. At this point even humanitarian considerations over child-labour seemed to take a back-seat.

But, we shall not try to counter anecdotal evidence and IIC bar arguments with more of the same. Within two days the discourse changed to the design of the new note. A large national daily had a lead editorial on it. An editorial doyen quipped on Twitter whether the designer of the new Rs 2,000 note was the same genius who had conceived the new uniform of Air India’s cabin crew.

The most curious reactions came from politicians. Mamata Banerjee was the first to shoot a salvo. No one doubts her love for the down-trodden or ber slogan of “Ma, Maati Manush”. But, it seemed a bit odd that she should vehemently oppose demonetisation since her State is reportedly the most affected by counterfeit currency smuggled in from across the border. There have been quite a few cases where fake currency printing presses have  been uncovered in Bengal.

It is true that many chit funds have had to shut shop. But, in a State that boasts of one of the highest rates of literacy, it is only to be expected that a large proportion of the people will have banking relationship of some form (PSU, private, co-operative or post office). One particular district of central Bengal has the distinction of having the highest number of bank branches and ATMs.

The angst of Mayawati and Mulayam Singh Yadav were relatively straightforward and they made no secret of where it hurt them most. True to form the scion of a political dynasty decided to para-drop himself for a photo-op at the branch of a public sector bank in the heart of the capital. The media and the public did not disappoint him. But, he failed to note that all the “poor people” who went berserk clicking selfies with him possessed expensive smart phones.

But by far the most curious response has come from Delhi’s perpetually aggrieved Chief Minister Arvind Kejriwal who came to power on the promise of fighting against “brashtachar” (corruption). After two days of studious silence he began to fire all four cylinders, claiming “demonetisation” was a “scam” as the BJP had given a heads-up to its friends and party leaders before withdrawing the Rs 500 and Rs 1000 notes. But, there was no mention if he was against demonetisation per se or not.

One would have expected Kejriwal who, apart from being an IIT graduate has also been an officer of the Indian Revenue Service, and the ever young vice-president of a large political party, a Cambridge alumnus to boot, to come up with some economic arguments. But all that one has got to hear are conspiracy theories and crocodile tears for parents whose children were getting married in the coming wedding season.

Rumours of essential commodities (salt) shortage and riots in some places were spread by the “dirty tricks” department of some parties aimed at derailing the process and creating dissatisfaction among the people. They were dutifully picked up by the media but were quickly quelled by the administration.

The idea of this blog is not to diss (if one may use a social media slang) the objections and criticisms, but to ask a few pointed questions even at the cost of repetition. Is demonetisation expected to result in any of the following:

– Immobilising fake and counterfeit currency, thereby striking at the roots of many terror organisations ?
– Reducing black money from the system, especially from elections ?
– Bringing more people into the banking (and, by extension, tax) net, thus moving us a step closer towards a cashless and more transparent economy ? (Essential to reduce future generation of black money.)


If the answer to all or any of the above questions is in the affirmative, would a few days of pain be a very high cost to pay for a cleaner, more agile and robust economy ?

Some have gone on to suggest that Narendra Modi has much bigger issues to tackle than black money. Soon, we might hear corruption too is not a problem in an economy like ours.

Everyone seems to agree that the constituency that is bound to be hurt most is the BJP’s traditional support base of traders and businessmen. If Narendra Modi has risked alienating the core, there must be a greater logic for him to play such a high stakes game. If he can deliver on his promise the masses are unlikely to fall for the disingenuous logic of his outwitted political opponents for a few days of hardship.

Demonetisation — a watershed moment in Narendra Modi’s Prime Ministership

Demonetisation — a watershed moment in Narendra Modi’s Prime Ministership