Demonetisation is the best thing to happen to India. Modi has nothing to fear
In the confusion and clamour over demonetisation, two things are reasonably clear.
It is time for all right thinking citizens to stand up in support of Prime Minister Narendra Modi's bold and brave move.
It is equally true that the government must step up its efforts to minimise the ensuing hardships of the people of India.
Painless
That this daring feat isn't entirely painless is evidenced by the long lines at banks and ATMs. Many of the latter run dry early, leaving cashless commoners stranded and irate.
Private banks, barring a couple, have ceased even to pretend to serve the public.
Simply closing down ATMs and turning away customers from branches, they have exposed that profit making is their raison d'être.
It is the public sector banks and post offices that have helped the people, proving that they cannot be written off so easily. Where state and institutional mechanisms may have failed, the common people have succeeded in helping each other.
Such remarkable trust and generosity show the traditional resilience of Indian society. That the Reserve Bank of India during this tumultuous operation did not measure up is obvious.
First of all, it should have introduced Rs 500 rather than Rs 2,000 notes. That would have eased the difficulty over change in most ordinary transactions.
Second, it should have ensured an adequate supply of new notes so that the cash crunch could have been avoided.
Third, it should have prevented inexcusable printing mistakes in the Rs 500 notes.
Finally, it might have used this opportunity to introduce plastic notes, which are practically impossible to counterfeit and far more durable.
We must not, however, be unduly harsh on our central bank knowing how big the challenge that it faced was. There are one or two other criticisms of demonetisation.
For example, hoarders, traders, and racketeers in new currency are having a field day. Like any other shortage, unscrupulous elements have taken advantage of the present cash crisis in India too.
 |
| That the Reserve Bank of India during this tumultuous operation did not measure up is obvious. (Photo credit: PTI) |
All kinds of businesses, small and big, with large cash receipts may nip, tweak, and cook their cash-in-hand books to launder money.
Tax-free territories, such as in the Northeast, may also receive large sums of old notes, including those gathered through terrorism, drug-trafficking, extortion, and insurgency. Worse, black money may return into circulation. How?
Not only because old black money will be exchanged for new, but also because the underlying system hasn't transformed completely.
Advantages
Yet, in the long run, these and other drawbacks of demonetisation will be more than adequately offset by its innumerable advantages.
First of all, it deals a deathblow to counterfeiting. This alone reduces the reach and strike capacity of terrorist groups operating with enemy support.
Second, a lot of the money used for terrorism, drug-trafficking, and other criminal goings-on has evaporated.
No wonder, there is an immediate and noticeable drop in such harmful activities, including Rs 500 a day stone-pelters.
Similarly, many insurgent groups find themselves starved of funds. Black marketeers, hoarders, and similar offenders, ill-gotten gains rendered useless, are sitting on rubbish heaps.
Antisocial elements, funded in cash by political parties are similarly jobless. This brings us to the heart of the present controversy, fuelled by disgruntled political parties.
It is as if the government, in one fell swoop, has confiscated all their undeclared wealth.
Moreover, the extinguished currency reduces RBI's liability and results in proportionate swelling of the government's coffers.
It is this sudden coup that has galled them so much. Let us not forget that the UPA was no less vindictive to the incumbent regime, leaving it an empty treasury and ballooning commitments to social spending that would have bankrupted us.
Now, these same parties find themselves outsmarted and cashless. Deprived of their dough, no wonder they are furious and incensed.
They want to extract their revenge in the only currency that ultimately matters in a democracy: votes. They want Modi himself and the NDA to lose at the hustings.
Offensive
But the government has nothing to fear. It must not back down. Rather, it must to go on the offensive, calling into question the Opposition's bad faith and worse politics.
Karl Marx would stand corrected in India for it is not economics, but politics that seems to be at the base, bottom, of everything here.
It is not as if every demonetisation detractor is a crook or a rogue, but the motives of most are questionable, if not dubious.
Therefore let us shout out, once again, the gains of monetisation. These include cessation of counterfeiting, clamping down on terrorism, restraining of illegal activities, disruption and rollback of black money, push towards cashless and more accountable economy, remonetisation of banks, reduction of RBI's liability in the elimination of unreturned cash, more revenue and resources for development, and most importantly, an overall decrease in dishonesty in society… and much, much more.
No wonder one commentator called this the biggest event in global economics, while another start of "permanent revolution".
I would, instead, characterise our throes of transformation as a neo-liberal version of Jayaprakash Narayan's "total revolution" or Deen Dayal Upadhyaya's "integral humanism".
What we are undergoing is not Marx's dangerous, messianic, even apocalyptic, conception of "permanent revolution" or what Marx himself called Napoleon's (mis)adventurism of "total war".
Demonetisation should instead be seen as one giant and daring step towards making India a great and prosperous country.
(Courtesy of Mail Today.)