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The Demon in Demonetisation


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January 19, 2017

08 November, 2016 – This date will be etched in our memories for a long time. It was this day that the Prime Minister, Narendra Modi, announced his government’s flagship scheme of demonetisation.

The moment I heard the news, I couldn’t believe myself. I couldn’t believe that we had a politician amongst us who could take such a bold step. I couldn’t believe that a country so deep in corruption, could come up with something like this. However, it had happened. I was excited and couldn’t contain my emotions. Immediately, I wrote a piece about how I loved the idea; about how we all should stand by the government; and about how this will make India a better country.

Like me, there were many others who lauded the idea. People were anxious, but enthusiastic and full of hope. 50 days is what the Prime Minister asked for, and we are here beyond that period. So, what do we see here? Why am I not as excited? Why are the people not as excited? Why is there so much anger around? Why has despair engulfed people like me?

I am one of those who have turned from being hopeful to despondent. Each day after the scheme was announced, was like a layer of onion being peeled off. Each day brought to fore something that we hadn’t thought of. In fact, there were many aspects that even the government hadn’t thought of. Multiple exchanges of notes in different banks by the same person despite the government’s restriction, is a case in point.

The level of despondency was so high that in the days leading to the Prime Minister’s speech on 31 December, 2016, people were anxious and scared. They feared that the government may announce yet another scheme that could take them by surprise and cause inconvenience. Nothing of this sort happened, but this sentiment shows the level of acceptance of the current scheme.

The best part is that not only did the narrative of the people change in the most important 50 days of 2016, but that of the government too. The government that launched this scheme in the name of washing away black money, was suddenly seen shifting the focus to digitisation. Well, if digitisation was the aim, then why this rush? In a country where about one-third of the population has access to the Internet, should not the move towards digitisation have been gradual, if actually that was the real aim?

Some questions still remain unanswered. If one of the objectives was to curb hoarding by scrapping high denomination notes, then how does the government explain the replacement of 1,000-rupee notes with an even higher denomination of 2,000? Would the latter not make it easier to hoard big sums of money?

Another objective that was stated was that of terrorism. Well, does that mean we are safe now? Can the government give us that surety? The very fact that the government is silent on this, shows that it too does not have an answer. It was just a rhetoric!

Coming back to the main issue of bringing out the black money. Has the government been able to do this? How many rich people could be seen standing in the queues? We all know that black money where big sums are involved, is seldom kept in cash, but invested in gold, or silver, or real estate, or kept in overseas accounts. How did this scheme manage to address this? What if all that has happened is that the white money that was held in cash, has come in the banking system? I would want to believe that at least some amount of black money must have come into the system, which in itself would be an achievement. However, the moot question is if the government has the bandwidth to actually identify such people?

Demonetisation also aimed to reduce corruption. Sadly, here it has failed miserably. This scheme has, in fact, introduced new forms of corruption. There have been many cases of notes being exchanged illegally at banks while the poor were standing in long queues. Even at the ground level there were cases of chemists refusing to give medicines of low value. They were seen insisting the customers to buy more medicines in exchange of old notes. There were hospitals that turned away people with old notes. There were employers who refused to hire daily wage-earners because they could not pay in cash anymore.

Another goal of demonetisation was to check counterfeit currency. May we ask how? It might have stopped for a few days, but the new fake notes are already in circulation.

What angered the common man were clauses like exemption of donation to political parties from scrutiny under the scheme. May we ask why this special treatment? While the common man was allowed to withdraw only two and a half lakh rupees for a wedding in his family, there was a politician seen spending crores at his daughter’s wedding. How did this happen during the tenure of the now infamous 50 days?

As layers of the demonetisation-onion peeled, there were some reports that there was a surge in deposits in the banks in the months preceding the announcement. Was it a mere coincidence, or did some well-connected people know in advance? Also, this announcement came close to the UP and Punjab elections that are considered very important. The government may have tried to break the backbone of its opponents, but the latter have found ways to circumvent this. There have been many instances of the common man being stopped on the road and being made to pay some money for passing by. Moreover, this has not happened once, but many times even for the same traveller who may have already paid the so-called toll tax once. What makes it worse is that the extortioners were blatantly saying that this money was for the state government as it was falling short of cash. Unbelievable! Is it possible that such rampant corruption was hidden from the government? Why is it turning a blind eye? Much needs to be answered.

One thing is very surprising. There have hardly been any protests against demonetisation. NGOs and political parties come out in protest for the smallest of issues, then how come they did not find this worth their time? Other than some whimsical attempts by some opposition members, there have hardly been any protests. Is it that they believed in the scheme? Is it that they did not get affected? Is it that they were pro-BJP? The main reason is that Narendra Modi has craftfully connected this scheme to patriotism. Anybody not in favour is being shown as being unpatriotic or corrupt with something to hide. Or, maybe it’s a case of not disturbing your enemy when he’s making a mistake.

Modi is a master at public relations. His parallels with soldiers standing at the borders for hours, abandoned mothers having their sons deposit money in their accounts, etc are all statements that win applause, but may not necessarily translate into ground reality.

One thing that struck all was the lack of planning and management of such a gigantic task. The common man suffered because of the scarcity of new notes. The government too seemed ill prepared as there were many flip-flops like changes in withdrawal limits and introduction of indelible ink, to name a few. This added confusion to the already confused implementation. Not only were the citizens clueless, the bank employees too seemed to be looking for answers. Also, the government did not consider the cash lying with the NRIs. It is only after the 50-day deadline that the government came up with something for them. By then, most of them had already made arrangements with great difficulty by taking help from their friends back in India.

In order to support his digitisation claim, the Prime Minister recently launched BHIM, the UPI-based digital payments application. Did the Prime Minister consider the readiness of his people? Did he take care of online safety and security?

If the government is really serious about encouraging people to go cashless, then why the re-introduction of service charge on debit card transactions or fee on ATM withdrawals? Could it not have waited for some time? Amid the already rising prices for most essential goods, the common man was not prepared for yet another fee on their purchases from an income that hasn’t grown as a result of the scheme.

Nobody can call digitisation a wrong move, but what’s the hurry? It seems the government is bending backwards to call demonetisation a success. It seems the Prime Minister’s image is more important than the people themselves. This does not send out a very good message.

Whether the motive behind demonetisation was good or not, is open for debate. Politicians will always do politics, so even if the intent was motivated, the least the government can do is make the best out of this scheme. Such piecemeal approaches can only cause harm. The Prime Minister needs to speak about the real reasons for this scheme, face the ground reality, and come up with follow-up reforms.

The nation bestowed faith in the Prime Minister and cooperated in numbers. Prime Minister, it’s your turn now to live up to your own promise. People are waiting...


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