50 days of Demonetisation: A hollow war on black money

Two years back PM Modi had asked for 60 days to transform India. He has kept to that promise. He has transformed India from an economy that ran on cash, to one that is currently running on credit

Photo by Ravi Choudhary/Hindustan Times via Getty Images
Photo by Ravi Choudhary/Hindustan Times via Getty Images
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Nilanjana Bhowmick

How does one understand and explain the chaos that has been unfolding in India over the last 50 days, ever since Prime Minister Narendra Modi, in one strike banned India’s two highest denomination notes? We could start with history or we could start with logic. The first will educate. The second might fail.

India was once ruled by a king called Muhammad Bin Tughlaq, who wanted to be the emperor of entire Hindustan—which then included the Gangetic plains of northern India between the Himalayas and the Vindhyas and the Indus River basin in Pakistan according to Wikipedia—but he ran short of money for battles that he would need to wage to rule over the entire region. So, he taxed his people mercilessly and drove them away into jungles. The crisis spiralled. Soon, there was no money. No food.

Tughlaq then decided to withdraw all silver and gold coins in circulation and introduce copper coins. But the copper coins were badly made and soon were being faked by all and sundry. To combat the counterfeits, the copper coins were recalled and he began paying people with original coins with their equivalent in gold and silver from the state coffers. The state coffers were empty within days.

Much like ATMs in India over the last 50 days, that is since November 8 when Prime Minister Narendra Modi, in one strike banned India’s two highest denomination notes. The promise was that the impromptu demonetisation would rid the country of its black money problem but reports say Indians have validated more than 80% of the unaccounted for money. Meanwhile, the cost of the exercise was pegged at a neat ₹1.28 trillion by the Centre for Monitoring the Indian Economy (CMIE), an economic forecast agency. This includes cost to households for standing in queues to change their money, loss of business or sales as well as the cost of printing new currency notes. The report also says “unaccounted cash worth at least the transaction cost should be unearthed to claim that the exercise was worth the effort.” Reports do not suggest that has happened. There are also no reports yet to detail how the government plans to settle this humongous cost and its impact on the economy.

Photo by Ravi Choudhary/Hindustan Times via Getty Images
Photo by Ravi Choudhary/Hindustan Times via Getty Images
Several ATMs have not been replenished with cash and remain closed across the country

GOALPOSTS SHIFTING FASTER THAN THE SPEED OF LIGHT

And 50 days into this palaver, the goalposts are shifting faster than the speed of light.

“People are only watching the news these days, madam. Otherwise, it is hard to keep up with what one is expected to do,” a taxi-driver tells me during one of my commutes. Hard fact. “But what to do, a minor inconvenience for greater good,” he shrugs.

And for days, that was a refrain that kept the spirits up. People updated their Facebook status, tweeted, Instagrammed: “Minor inconvenience for a greater good.” It was almost the national anthem, only no one needed to stand up when it played. But by December 1, a variety of factors have led to a marked decline in the decibel levels.

A crowd outside a private bank in Delhi is militant. TV crews, reporters are booed away. “They only show that people are happy with this. They are not showing the harassment,” says a middle-aged lady in the roiling queue. A new month has begun. Salaries are sitting pretty in bank accounts. This is not black money. And yet, you can only watch your bank balance, not touch it. To withdraw you have to skip work, for the ETA to reach the ATM or the bank cashier is a minimum of 4 hours.

Meanwhile, economists have downgraded the country’s growth prospects in Oct-Dec.

Another recent report had claimed that demonetisation has destroyed the human trafficking industry, including child trafficking. If it is true, then indeed it is great news. But as with all such claims that have been crawling out of the woodwork post demonetisation, they are just anecdotal, not backed by facts or figures

the mythical blackmoneygate proved to be a non-starter

The death toll in India’s blackmoneygate stands at 115 right now. None of them were black money hoarders, or the super rich or politician. Those who died were from the poor and the middle classes. And yet middle-class Indians are turning misty eyed in queues, comparing their sacrifice (of standing in queues for hours) to that of soldiers who stand guard at the borders, while...er...PM Modi’s Bharatiya Janata Party seemed to have parked all its ₹500s and ₹1,000s—accounted and unaccounted for—in real estate.

And right from the beginning, and 50 days on, the measure feels as vacuous as America looking for WMDs in Iraq. What exactly are we still cheering?

I have running tabs with my vegetable vendor, fish seller, milkman, electrician, and as of last Saturday with my vet - all of whom returned PayTM payments back to my wallet as their suppliers are not accepting PayTM or as is the case with my vet he has stopped accepting PayTM payments. And yet Indians are not rioting like they are doing in Venezuela because we are so used to living with jugaad, or put-together lives. And, also because we thrive on Utopia. And there have been a few around in the last 50 days.

After the mythical blackmoneygate proved to be quite the non-starter, the demonetisation discourse had more or less centered on a cashless economy. PM Modi in a rally had recounted an amazing Elysian story based on a viral WhatsApp video. “I don’t know how far it is true but there is a video going viral on Whatsapp of a beggar being told by a man that though he wanted to help, he does not have change….the beggar asks him not to worry and takes out a swipe machine and asks for his debit card.”

The cost of the demonetisation exercise was pegged at a neat ₹1.28 trillion by the Centre for Monitoring the Indian Economy, an economic forecast agency. This includes cost to households for standing in queues to change their money, loss of business or sales as well as the cost of printing new currency notes

But why do we need a cashless society? Don’t we already have enough inequalities in this country? The merits and demerits of a cashless economy has been a hotly debated topic all over the world. The demerits often outweigh the merits, particularly so for a non-egalitarian society like India, where the fallouts for the poor can be grave. As Dominic Frisby wrote in The Guardian earlier this year, “Cash means total financial inclusion, a luxury the better-off take for granted. Without financial inclusion—and there will always be some who, for whatever reason, won’t have it—you are trapped in poverty. So beware the war on cash.”

And then PM Modi addressed a rally in Uttarakhand where he claimed that demonetisation has (not stalled or put a break to but) “destroyed” terrorism, the underworld and the drug mafia. In the Philippines, President Rodrigo Duterte’s aggressive and hugely controversial anti-drugs campaign involving vigilante groups and extrajudicial executions, has in the last six months killed almost 5000 but he is still far away from “destroying” the drug mafia. In India, we achieved that in just 50 days and with no bloodshed. Duterte, are you listening?

Another recent report had claimed that demonetisation has destroyed the human trafficking industry, including child trafficking. If it is true, then indeed it is great news. But as with all such claims that have been crawling out of the woodwork post demonetisation, they are just anecdotal, not backed by facts or figures. At the end of 50 days, what we are expecting from PM Modi, who promised (among many other things) “minimum government, maximum governance”, is a comprehensive report by an independent panel on the effects of the exercise, instead of phantasmic claims.

When the Indian Prime Minister was pitching for the country’s top job, he would often address two-three rallies at the same time with the help of holograms. This supposed war on black money is a bit of a hologram. And possibly a bit of a hollowgram as well.

Meanwhile, while waiting in a queue reserved for women and the elderly, I eavesdrop on a woman talking about how she had to call in sick two days in a row at work to withdraw enough money to pay the monthly bills. “So much for you women going out to work. Now stand in queue for money and lose your jobs. Good for your families,” an old man, who was also obviously eavesdropping, cackles.

We all hear him. But pretend we don’t. We are used to co-existing with patriarchy. Exactly how we know we have been shortchanged by this demonetisation demon, but pretend it is for some elusive greater good. We like status-quo.

When the Indian Prime Minister was pitching for the country’s top job, he would often address two-three rallies at the same time with the help of holograms. This supposed war on black money is a bit of a hologram. And possibly a bit of a hollowgram as well.

NO ANSWERS TO THE QUESTIONS ON EVERYONE’S MIND

Earlier in the day, in the marketplace, at bank queues and on TV studios, the PM’s address was trending. People did not ask each other what their plans were for the evening. It was given they would be in front of their television sets. Because no matter whether one is a Modi critic or a Modi fan, whether we are openly critical or privately so, we are all anxious. We all had questions.

  • Can we reboot to pre November 8?
  • Did the 50-days-long sacrifice achieve anything?
  • When could we again saunter out to buy a loaf of bread?

None of these questions were answered, although now we know that 125 crore Indians “will welcome the new year with new decisions, new spirits,” and that the pain that 125 crore Indians “have borne will be an example for generations”, and that “125 crore Indians have shown, in their fortitude, the importance we place in truth and goodness”, and that 125 crore Indians “have displayed the strength of people power, utmost discipline, and the ability to discern the truth in a storm of disinformation”, and also that 125 crore Indians “have shown that resolute honesty, can defeat dishonesty.”

What we still don’t know is how the pain borne by the 125 crore Indians will contribute to nation-building or how it will translate into an egalitarian society, if at all.

But the biggest question of them all is why the Prime Minister needed to address the nation when he had no clarity to provide on the situation to assuage the worries of the common man?

There is of course no law as to when a leader can address the nation. But it is given that it is reserved for the most pressing announcements or crises. When I hear that the nation will be addressed, I take it very seriously. I take it that matters of national importance will be divulged or discussed. And how fair is it to arrest the collective imagination of a country for days for an address that added nothing to the discourse or helped make it more comprehensible? The 40-minute-long speech could (and should) easily have been a PMO statement, or an episode of Mann ki Baat.

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Published: 30 Dec 2016, 10:33 AM