A Pied Piper leading us to the brink?

A year after demonetisation, even the Modi and BJP faithful wonder if it was all a mistake

Photo tweeted by @MEAIndia
Photo tweeted by @MEAIndia

NH Economic Bureau

In Japan barely 48 hours after his dramatic announcement of Demonetisation , Prime Minister Narendra Modi looked smug and pleased with himself. Addressing a meeting of the Indian diaspora in Tokyo, he said in Hindi that they must all be aware of what happened back home in India on the evening of November 8. There was a pregnant pause as some in the audience tittered. At 8 pm that evening, Narendra Modi continued, all currency notes of ₹500 and ₹1000 ----then there was yet another pause and then the PM made a slashing gesture using both his hands, indicating the end.

That single gesture brought the house down with laughter. With a smile hovering on his lips, the PM’s next sentence was: There is a wedding in the family (pause) …but there is no money at home. Another round of laughter and applause greeted him. He clearly had the corrupt in mind. His Government had dealt a blow to the corrupt, the dishonest and the rich, he claimed. Indians at home and abroad just loved it.

The PM had claimed that even banks did not know about the decision till his televised address to the nation that day at 8 pm. But the very next morning’s newspapers carried a full-page advertisement in virtually all the newspapers with the PM’s beaming photograph, welcoming the move. The advertiser: PayTM, a mobile payment app company, an obvious beneficiary of digital transactions, seemed to know.

When did PayTM come to know? How fast could they have taken the decision, finalised the advertisement, booked the space in all the newspapers and reached the copy to newspapers across the country?

Curiously, barely three days after he returned from Japan, the Prime Minister was on the verge of crying. Press Trust of India reported an emotional PM saying in Goa, “They thought if they pull my hair, I will stop and do nothing. I will not be cowed down. I will not stop doing these things, even if you burn me alive.”

“I know that (some) forces are up against me, they may not let me live, they may ruin me because their loot of 70 years is in trouble, but I am prepared,” Modi said. His lips trembled and there were long pauses while fighting back tears, he said, “My dear countrymen, I gave up everything…my home, my family. I gave up everything I had for this country.”

Even as doubts persisted and banks struggled with accepting, disbursing and accounting for cash, ATMs dried up , nerves got frayed, queues formed, police used the baton and around a hundred people were reported to have died (140 is the final figure) while standing in queues, either unable to bear the chill or due to natural causes was difficult to tell.

A German business journalist Norman Haering alleged in his blog post that Demonetisation was planned in Washington D.C. and that the American ‘Deep State’, the World Bank, the IMF and possibly even the CIA had played a role in prodding India into the exercise.

With most mobile payment apps using technology, expertise and even servers based in the US, he suggested, digital transactions could easily be tracked by the American establishment. This suspicion, Haering wrote, had stopped other countries from embracing the ‘cashless economy’.

By December 30, 2016, the Government had started claiming that Demonetisation had served the purpose of adding to the liquidity of the banks. With so much cash returning to the banking system, officials claimed, the banks would be in a better position to lend to business and industry. On December 30 Finance Minister Arun Jaitley claimed critics of Demonetisation had been proved wrong.

“Already a large part of benefits of this historic move are visible. A lot more money has come into the banking system… the ability of the banks to lend has now increased,” the Finance Minister said, adding that the remonetisation process had substantially advanced and there was no unrest reported in the country. “What comes into the banking system gets identified with the person and therefore its impact on taxation and revenue collection is already being seen,” he declared.

With the crucial Uttar Pradesh assembly election coming up in early 2017, it was believed by many that the real purpose of Demonetisation was to cripple rival political parties. With Demonetisation, several BJP leaders gloated in private, war chests built up by Samajwadi Party, Bahujan Samaj Party and the Congress must have simply disappeared.

The Bharatiya Janata Party, however, had no such handicap. Barely three days after Demonetisation, the CPM mouthpiece in Bengal alleged that the state unit of the BJP had deposited ₹3 Crore in denotified currency ( ₹500 and ₹100 currency notes) on the day of Demonetisation. On November 18, 2016 cash worth ₹96 lakh in new currency was seized in Maharashtra from the car of a BJP minister Subhash Deshmukh. In July, 2017, ABP News reported that a message going viral indicated that cash worth ₹20,000 Crore had been seized from the car of BJP MLA Sudhir Gadgil. The report said that the money had been sent to Gadgil before Demonetisation.

In September, 2016, police in Ghaziabad had recovered cash worth Rupees three crore from a private vehicle. The car had tried to speed past a police check post. People travelling in the car claimed the money belonged to the Bharatiya Janata Party. While the ‘news’ was duly reported by the media, the Bharatiya Janata Party claimed that the money was being transferred to Lucknow by the BJP central office in Delhi. The question nobody asked was why the money was not transferred through banks or cheques. Why was so much cash being sent by road ? That too by a party which believes in digital transactions !

True enough, BJP did not appear strapped for cash during the UP election. It appeared to be the only political party which had enough money and cash for not just paying party workers and meeting election expenses but also to entertain the media and sustain a publicity blitzkrieg.

A year after Demonetisation, more questions are being asked. But as Swati Chaturvedi argued in a piece published by The Wire, failure of Demonetisation is unlikely to affect the Pied Piper. Narendra Modi, she wrote, had moved ahead after convincing the common man that Demonetisation was for his own good; that the sufferers have been the rich and the corrupt, the terrorists, Naxals and traitors.

They are the ones who are criticising Demonetisation, which has not really been a disaster –is the PM’s spin. But a year later, even the faithful wonder if it was all a mistake.

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Published: 08 Nov 2017, 11:00 AM