IT’S a doomsday scenario. But in India, as always, the dark cloud of doom has the silver lining of a boom. That explains demonetisation, which, for now, at least, has gone awry, but promises to be a landmark economic reform.
Known through the ages for their readiness to accept what fate wills, Indians, chasing their own money lying in bank vaults, are buffeted between old fatalism and the present-day materialism that they have gotten used to over the last 25 years, thanks to economic reforms.
“Money doesn’t make you happy… It doesn’t make you laugh when you are lonely, or make you full of contentment on New Year. But wherever you are, you have to work for a living,” avers a Times of India blogger, drawing a delicate line between spiritualism and lifestyle.
The reality, however, is exemplified by a photograph that has gone viral of an impoverished 78-year-old former soldier unable to withdraw his pension money from an automated teller machine (ATM) after three days of waiting, breaking into tears on the fourth.
Demonetisation has hit every sector of the economy, from construction to automobile, the service sector that has seen maximum job growth. It has hit the construction sector, which is India’s second largest employer, providing jobs to 45 million people. But, that sector is supposed to have attracted much black money, which the government wants to curb.
As senior economic journalist Prem Shankar Jha points out, not only was demonetisation unnecessary, but it was also badly bungled. It was unnecessary because the government knew from its income tax raids that people held merely five per cent to six per cent of their undeclared income in cash, and the balance was in gold, gems, real estate and benami shareholdings.
Prime Minister Narendra Modi, who unleashed the demonetisation move on Nov 8, has sought a period of 50 days for things to return to normal. That period concludes by year-end, but there is little to cheer come the New Year.
Long lines at banks and ATMs persist. The government denies reports that many ATMs do not “work”. Of course, they do — they just do not have money.
Of the civil servants who advise Modi and execute his policies, none has an inkling of how ATMs work. Living in rarified government houses, with servants at their command at home and the office, the elite civil service has no idea how ordinary people live, make business transactions and get their money. They probably never have to do such ordinary chores.
Worse, even as their political bosses exulted at having pauperised their opponents, the bureaucracy did not contend with Indian jugaad — managing things, somehow.
Black money hoarders have used many ingenious devices, like Modi-announced Jan Dhan bank accounts. They used proxies to deposit money into these accounts, buying foreign currency from their banks, buying gold and land quickly at exorbitant prices, etc. Much of the black money has been “whitened” in the last month.
Inevitable, in such a money “revolution”, some managers and employees at the Reserve Bank, India’s central bank, have sought to make the proverbial hay while the sun shines, making the public angrier.
Urjit Patel, governor of the Reserve Bank, was heckled in Kolkata when he visited in response to serious complaints. And, NITI (National Institute for Transforming India) Aayog, successor to the Planning Commission, has announced prizes, amounting to 3.4 billion rupees (RM224 million), for lucky draws in time for Christmas and the New Year for those who engage in digital transactions.
The new currency notes have swiftly gone into the “black market”, prompting the Supreme Court to ask the government about how it had failed to control this. Income tax officers netted 2.9 trillion rupees in 586 search operations across the country.
Called Note-Bandhi (cash ban), it has become synonymous with Nas-Bandhi, the forced vasectomy conducted to curb the baby boom during the 1975-77 Internal Emergency declared by the then premier, Indira Gandhi.
Here, the political irony is complete in that the activists of the current ruling alliance had played victim then. Today, Indira’s daughter-in-law Sonia and grandson Rahul, heading Congress, the main opposition party, are leading nationwide protests against what they contend is the “biggest scam since independence”.
The normally taciturn Rahul has been making frontal attacks against Modi, the most serious being charging him personally with graft. He claimed “bulletproof” evidence to prove that, and threatened “a political earthquake” when he disclosed it.
But, he made no disclosure at all, and in an anti-climax at the end of a failed Winter Session of Parliament, met Modi. Now, the opposition is angry at Rahul’s inexplicable volte-face.
Upbeat at having thwarted the opposition onslaught in Parliament, the ruling Bharatiya Janata Party tom-toms about Modi making it to ninth place in the Forbes list of the “world’s most powerful”.
While the opposition demonises demonetisation, Union Minister Ravi Shankar Prasad explains it with earthy Indian-ness: people will face a little problem. But, the pain is the one that a woman in labour undergoes. Eventually, one experiences joy like one does upon hearing the first cry of a baby.
Having just demonetised its high-denomination currency, distant Venezuela has cautioned India. Demonstrators there have turned violent. Mercifully, Indians have, so far, not. Demonetisation is being justified as a way to make money transactions digital and transparent, to fight graft. But in the same breath, there are warnings of a rise in cybercrime.
Now, India’s neighbour, Pakistan, may go for demonetisation. Its Senate has passed a resolution demanding the demonetisation of 5,000 Pakistani rupee notes. The objective, like that of India, Venezuela and a host of other nations that have gone for demonetisation, is to fight corruption.
There has got to be something unique about this measure that some of the more corrupt nations resort to, with varying success, to fight the hydra-headed monster called “corruption”.
To tweak Samuel Beckett, everyone is waiting for Godot. Will Godot arrive?
Email: mahendraved07@gmail.com
Mahendra Ved, is NST's New Delhi correspondent. He is president of the Commonwealth Journalists Association (2016-2018) and a Consultant with Power Politics monthly magazine.