CURRENCY notes anywhere is a promise that must be kept, whatever the circumstances. This trust has been broken in India. The breach is temporary, but none knows how long.
Demonetisation of Rupees 500 and 1,000 currency notes, a good and well-intentioned measure that Prime Minister Narendra Modi announced on Novr 8, but badly planned and executed, has pushed the common man in the worst crisis in many years — and for no fault.
It’s means-and-end battle. The means adopted have confounded not so much those targeted — black money hoarders, militants, property sharks and fake currency racketeers — but for now at least, innocent millions living on and sustaining an essentially cash economy.
A country of India’s size and population is heavily preoccupied with securing legitimate money lying in bank vaults but beyond reach.
The ubiquitous machine that spells “any time money” has become the dark symbol of this crisis.
When the government demonetised all Rs500 and Rs1,000 notes, it sucked out some 86 per cent of all money in circulation in the country. Two weeks on, only 10 per cent of the value of money demonetised has been pumped back as new notes. The cash crunch persists.
Women buying provisions for households, farmers needing seeds and fertilisers for this harvesting season, those travelling, rushing the sick to hospital or organising wedding — all find the banks in disarray and the ATMs’ shutters down.
Being without money when you have it in the bank, and getting it in small sums after hours of lining up at the ATMs can be miserable. It is compounded by a sense of humiliation at having indelible ink marked on the forefinger while depositing one’s own money.
Triumphant ministers have called the measure a “surgical strike”, referring to a military operation in Kashmir two months back. “It is surgical strike against innocent public,” countered Arun Shourie, economist-journalist and a former minister.
Those ostensibly pauperised include militants from Kashmir to the northeastern region and Maoists in the tribal areas. But that is no consolation to those who have nothing to do with militancy.
A bank manager, also a cancer patient, weeps before TV cameras complaining of not having gone home for three days and of being manhandled by irate public.
The government’s motives are being questioned. Anger multiplies when critics are told that they are working against “national interest” and that they are sympathising with, if not in league with, the black marketers.
Reports that 70 people have died at ATM queues across the country are termed as rumours spread by the opposition “politicising” the issue.
But “politicising” is inevitable when key state assembly elections are but four months away. All political parties using cash to conduct polls campaigns have overnight turned pauper. Accusations abound that money managers of the ruling Bharatiya Janata Party (BJP) acted on prior knowledge of the measure.
The gladiatorial posturing by many ministers, lawmakers and BJP officials has rubbed the proverbial salt on festering wounds of those who slept in the open with autumn changing to winter to get their own money.
Only the black marketers need worry, not the common man, Modi told the public. But the former need not worry about how to pay the next food or medicine bill.
The crisis has united the entire political opposition for the first time since Modi took office. Parliament’s work is stalled. Everyone says the objective is good, but the way it is sought to be achieved is not.
The prime minister wept in public to remind them that he had “left my family to serve the nation”. At another meeting, he smiled away, declaring that his decisions were hard — like the strong cup of tea he served as a teenager — and more are in the offing.
The contrast in perceptions is painfully amazing. From India Inc to economic experts to financial institutions, all support “Rupee reform” as “the death of India’s black market.” You wonder who is wrong: they or the suffering public.
Singapore’s The Independent declared: “Modi does a Lee Kuan Yew to stamp out corruption in India.”
Bill Gates has said the demonetisation would help quicken digitisation and the “temporary pain” is worth going through. Working numerous projects, he ought to know India well. Digitisation is bound to take long when banking has not reached 40 per cent of the country and many in rural India work on barter, untouched by currency economy.
Unlike Gates, I belong to the generation of Indians who witnessed currency conversion from the old British-era ‘anna’ and ‘paisa’ and measurement from inches, feet and yards to metre. The rupee was devalued in 1966 and in 1991.
There was suffering on each occasion, but no jingoism. The present dimensions are multiple and the extent, gigantic. The 1978 demonetisation of the one thousand rupee note concerned just Rs1,680 million.
Black money in India is estimated anywhere between $400 billion and $1 trillion. Nobody is clear how much is in domestic circulation and how much stashed abroad.
Nobody in the government explains why Rs500 was considered high denomination currency when it cannot buy more than a day’s provisions for a family of four.
Nobody explains why the new currency notes printed in great secrecy and haste were of Rs2,000 (US$32) denomination that is difficult to change.
Nobody explains why new Rs100 and Rs500 notes were not printed to meet the demand post demonetisation.
And none bothered to estimate the time the vendors engaged by the banks would take to service 250,000 ATMs. The bankers will have to re-calibrate each ATM for the new notes they will dispense.
There are fears of a recession, while not entirely addressing the black economy. It is also feared that by the end of 2017, even the newly printed notes would have entered the black money economy.
Assuming those targeted have been maimed if not eliminated, that inflation might reduce, real estate sharks will be forced to deal in white money, a lot more needs done.
Till then, as consumers of money, citizens will have to bear the pain, with or without grin.
The writer, Mahendra Ved is NST's New Delhi correspondent. He is president of the Commonwealth Journalists Association and a consultant with ‘Power Politics’ monthly magazine. He also writes a column for The Hans India. He has co-authored two books,Afghan Turmoil: Changing Equations (1998) and Afghan Buzkhashi: Great Games and Gamesmen (2000). He can be reached via mahendraved07@gmail.com