Modi's demonetisation is about making the poor pay for bad karma of the rich

Citizens are enraged as banks across India struggle to dispense cash following the government's decision to withdraw large denomination notes on November 9, 2016 in an attempt to combat black money. Hundreds of thousands of people are queued up outside ATMs and banks to exchange their Rs 500/1,000 notes, and withdraw cash since the last eight days.

The worst hit by demonetisation are people belonging to low income groups and the poorest of the poor — daily wage-earners, labourers, domestic workers — who get their means of sustenance, mobility and security from having cash in hand.

I myself did not have money to eat on November 11, despite having money (in denominations of 500 and 1000). I had to depend on a friend of mine for food. So I can imagine the situation of the working class.

There are children dying in hospitals because their kin don't have the new denomination. Women are committing suicides because all their cash savings have become worthless pieces of paper. It's the peak time for farmers but they have no money to buy fertilisers. 

Many instances of cash-strapped people resorting to violence are coming to light. An IDBI Bank branch in Subzi mandi, Delhi was attacked by an angry mob. An unverified video, doing the rounds on social media, showed people looting a supermarket in a Mall in Seelampur area of East Delhi. People are losing their patience and the whole country is in chaos and turmoil.

In the mission of flushing black money, this plan has actually created a"black" market in the short term, as some people are cashing in on the fears of common people to take commission for exchanging notes.

In a nation where banks are not open to a large segment of the population and poorest of the poor are ignorant about "banking knowledge", such plans create more ruckus than a solid economy. The genuine "black" money is beyond the scope of this "masterstroke".

According to a UNDP report, 80 per cent of Indian women don’t have bank accounts. Furthermore, 95 per cent of transactions are undertaken in cash in our country.

Many women regularly save all their income in cash, without anyone else's knowledge. This cash gets them food for their kids and also medications when they fall sick. Often, women in rural areas are victims of abuse by their own husbands who spend unnecessary amount of money on products like liquor. Demonetisation has not only financially crippled them, but has also destroyed their saving methods.

Also, amidst the unfolding chaos, economist and former RBI governor Raghuram Rajan once stated that demonetisation as a means of alleviating the menace of black money, though attempted and tested earlier, has never been a fool-proof method.

Apart from Rajan, World Bank chief economist and India’s former chief economic advisor Kaushik Basu said that the Narendra Modi government’s demonetisation drive was not "good economics" and that the damage it cause will be greater than its benefits.

There’s also the possibility of  the rich, who actually have black money, sending their drivers and other staff to queue at the banks to change their cash for them, while many among the latter will be facing bureaucratic harassment and will be left at the mercy of others to have their hard-earned income converted into legitimate currency.

The businessmen and real black money holders have already come up with ideas to get rid of their black money. Some of these are:

1.Temple donations

There are reports of people giving their black money to temple donation boxes. The government has already clarified that temple donations will not be subjected to scrutiny.

2. Giving loans to poor people

There are also people willing to give interest-free loans to the poor - which may seem like a good impact of demonetisation but is actually an effort to convert black money into white and defeat the purpose.

3. Finding Jan Dhan account holders

While the government says it will monitor unusual activity in Jan Dhan accounts, there have been concerns about the use of Jan Dhan accounts for hawala operations since the scheme was launched in 2014.

4. Banknote mafia

There are reports of people accepting old Rs 500 and 1,000 notes and giving back 15 to 80 per cent of the value in Rs 100 notes.

5. Paying advance salaries

Businesses having black money have reportedly used old notes of Rs 500 and 1,000 to pay advance salaries for the next three to eight months.

6. Booking and cancelling train tickets

There has been a surge in booking expensive train tickets that people intend to cancel later and get refunds in new notes, with a small cancellation fee.

7. Buying gold (self-explanatory)

8. Using farmers

Since agricultural income is not taxed, a farmer can easily get the old currency exchanged by saying that he got cash from the mandi by selling his produce before demonetisation.

At what cost?

Demonetisation has resulted in deaths of many people, including senior citizens in Maharashtra, Kerala, Uttar Pradesh and Madhya Pradesh, and so on. It is shocking that no provisions were made for the elderly and pregnant ladies.

Most Indians are not tech-savvy who use net-banking or Paytm; many keep cash at home for medical emergencies, and a majority of people live alone. What provisions have been made for them? The monster of demonetisation has already taken 47 poor lives (reported) till now.

All the dead have been people belonging to middle class and poor families. There have been no reports of black money hoarders committing suicide or dying of heart attacks due to the shock of realising their cash had become worthless paper overnight.

Delhi CM Arvind Kejriwal accused the Centre of inconveniencing the public with its surprise decision to scrap the Rs 500 and Rs 1,000 notes. “What kind of person holds black money in this country? Is it the Adanis, Ambanis, Subhash Chandras and Badals? Or is it rickshawala, cobbler, labourer or farmer?” he asked.

The government has said that those who deposit their black money will have to pay tax and face a 200 per cent  penalty, which means 90 per cent of the amount will be lost. Which black money holder is going to make such a deposit?

This is a totally failed attempt on curbing black money. Karl Marx had explained the distinction between the miser and the capitalist. The miser believes that you become rich by hoarding money, while the capitalist rightly believes that you become rich by actually using the money, throwing it into circulation.

Black money holders are not misers, they are capitalists. They are trying to expand their business, much the way normal business is trying to expand. So they are forever throwing their money back into circulation. The amount they will be holding at any point in time will only be a fraction of their total transactions.

Also, this initiative shows an absence of understanding of capitalism by the government. The monetary policy of introducing new high-value notes will create a fresh cycle of black money circulation.

Basically, what happens in capitalism in a situation like this is that there would be another business opening up to change old currency notes into new ones.

A whole group of individuals would come up and ask you to give them, say Rs 1,000, and will give you Rs 800 or 700 in return. Subsequently, rather than checking black business, it will really give rise to the multiplication of black money.

What sin have the poor people committed due to which they are going through all this? On the other hand, the business class people who really have black money are not going through any trauma at all.

Using the government's twisted logic, we should arrest all citizens of an area and subject them to third-degree torture. The ones who confess their guilt will be arrested, and the honest will have nothing to fear as they will eventually be set free. This way we can rid our society of all criminals.

It will be a "surgical strike" on crime, a genuine masterstroke! We will have BJP supporters saying, “Can't we just go to jail for a couple days for the sake of the nation? What is this 'minor inconvenience' in comparison to the long-term benefits of a crime-free society? Don't we all love India?”

The fake Rs 2,000 notes have already been found in Karnataka. It shows the failure of Modi’s decision in its very first phase. As usual, in the end, it is the poor who will end up paying the price for the bad karma of the rich.

Now you can call me a communist, socialist, anarchist, Congi, anti-national or whatever you feel like.

Also read: One year on, how India will remember DeModitisation

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