Demonetisation: An Economic Atrocity We Must Never Forgive, Never Forget
No government has the right to put its citizens under duress, taking away their livelihoods to serve its own purposes.
Finance minister Arun Jaitley must have the world’s worst job. A few days ago, to mark the second anniversary of demonetisation, he told the nation in a Facebook post that the decision to ban the use of Rs 1,000 and Rs 500 denomination bank notes was made with an aim of “formalising the economy”. This is one among the many laughable defenses that the Modi government has tried out over time in a bid to justify this “bold” but actually insincere policy move. Demonetisation did not curb black money, it has not eliminated terrorism, it has not brought about a cashless economy, nor has it meaningfully widened the tax base. But one thing has become amply clear in the two years since the event: in the guise of giving the nation an unnecessary haircut, its economy was given chemotherapy.
Even today, while many feel it was a political gimmick that at best helped the BJP win the Uttar Pradesh Assembly elections in 2017, the general consensus among black money experts is that the ill-designed and hastily executed “surgical strike” on the cash in circulation was an economic misadventure that disrupted the lives of millions and victimised the poor. Is it then too much to ask: Why does Prime Minister Narendra Modi not address the nation as he did on the night of November 8, and admit that the decision was a colossal blunder? Modi, in fact, had said that if he did not bring back black money in 50 days, he should be publicly executed. It was an extreme declaration by the head of a government. Today, he stands exposed as someone who lacks the moral stature to come forward and take responsibility for a decision that was his alone, a decision that dealt a grievous blow to the nation.
What was the purpose?
About two months ago, I was in a taxi in Uttarakhand on my way to Kathgodam from Bhimtal. When I casually asked the driver how things were, all he could talk about was demonetisation. “It’s been almost two years now but our villages are still cash-strapped. They don’t have enough to attend even religious festivals,” he said. Religious functions are important occasions for communities in the mountains, as these are the times they get to meet, network and gossip, while they appease the gods for a good harvest. “What exactly was the purpose of doing this to us?” he went on. “While the corrupt managed to find ways to exchange their old notes for new, villagers like us who have houses far and wide in the mountains were pushed into ruin overnight.”
There are many such stories about how demonetisation has deeply scarred ordinary lives. Even if the government were to dismiss every one of these as just anecdotal evidence, it is tough to explain why India, which had enjoyed a growth rate of 7.2 per cent in 2014-15 and 8.1 per cent in 2015-16, suddenly slipped to 7.1 per cent in 2016-17 and 6.5 per cent in the following fiscal. At any rate, it is tough to explain without acknowledging that demonetisation was a step that severely harmed the economy and the people of India.
Earlier this year, the Reserve Bank of India in its annual report said that 98.96 per cent of the demonetised currency that was in circulation at the time has come back to the banks. According to senior journalist Anshuman Tiwari, if this is indeed the case, then it means either that all the black money has now entered the banking system, or that there was no parallel economy of black money in the first place. In any case, it is safe to say that the illicit cash is back in the system and is being freely used for corrupt practices.
Nation suffered for nothing
We all have our stories of how we coped. I remember I fell ill a few days after the big announcement. I was living by myself in Delhi. I had only Rs 30 cash in my pocket. On some days I wasn’t sure whether to spend that cash on milk or bananas. Fortunately, I could at least order food and pay online. My privilege allowed to me to weather the ordeal. But most Indians, and especially those who were either dependant on others, or didn’t have the means to stand in queues, paid a heavy price. The nation suffered for nothing, while the wealthy and the powerful got away unscathed.
Apart from demonetisation benefiting financial tech companies such as Paytm, the cash has found its way back, a case in point news reports of Rs 7.5 crore cash being seized in Telangana for distribution among voters ahead of the elections. What happened to the “moral cleanse” that Modi spoke about in the wake of demonetisation? For a PM who doesn’t skip an opportunity to beat his 56-inch chest and market his feats, why the silence over this exercise? Why no attempt to celebrate the second anniversary of his brain wave? Is it because he knows only too well that lakhs of Indians lost their livelihoods because of demonetisation — because of him?
Today the Modi government is under attack from Opposition parties. The charges range from demonetisation being branded a “money-laundering exercise” to “well-planned dacoity”. Shiv Sena, the BJP’s longtime ally, has even gone on to say, “The situation after two years has become so bad that people are waiting to punish the PM.” Whatever be the truth, demonetisation has proven to be an absolute disaster. We can only pray and hope that the real nature and magnitude of this scam will one day come to light.
Road to perdition
Also to be interrogated is the manner of its implementation — the sheer toxic arrogance with which the notebandi drive was imposed on the people. No government has the right to put its citizens under duress, taking away their livelihoods to serve its own purposes.
Even today, when I find myself questioning the intent and purposes of demonetisation on social media, I am attacked by trolls — those self avowed bhakts — who attribute all criticism of demonetisation to a hatred for Modi. Imagine going back in time and making a similar argument during UPA-2, viz., that the corruption allegations of 2G and the coal scams stemmed from a hatred of the Gandhis! So thick and layered is the spread of nationalistic propaganda today that questioning even the most visibly stupid policy of the state has become an extremely fraught exercise, demanding moral and physical courage.
And this, while every serious economist and thinker has come out in the last two years and said that no matter what the government was trying to achieve with note bandi, there was a simpler and easier way to do so without having to damage the lives of people. All said and done, demonetisation was nothing but a terrible economic atrocity perpetrated by the government on the people of India — an atrocity that we should neither forgive nor forget.