Demonetisation: An odd way to get even with black money
The buck stops here, the prime minister said last week, and the country came to a standstill.
If money did talk, your Rs 500 and Rs 1,000 banknotes would have bid a tearful goodbye with Narendra Modi's snap announcement that they were no longer legal tender.
The move - which affects some $223bn worth of notes, nearly four-fifths of the rupees in circulation - has shaken India's cash-driven economy and people used to fatter wallets and shorter queues at ATMs are showing withdrawal symptoms.
A Tufts University research last year found that less than ten per cent of Indians have ever made non-cash payments. So, those going dizzy screaming about digital money and online payments as the "obvious solution" need to think again.
The World Bank says India even now suffers from a stark digital divide, with nearly a billion people still offline. Besides, pushing people towards e-payment options without adequate preparation, education and security in place is recipe for disaster.
Certainly, the currency ban will help weed out some illicit money, but the pain it is causing to the public seemingly outweighs the benefits. I mean, would you take a pill to get rid of a headache if a possible side effect is permanent brain damage?
If inconvenience is not an issue, why not outlaw all currency and go back to the barter system? Even if lakhs of honest people die, surely the step will hurt many black money hoarders.
So, could I get that two-bedroom apartment for three tonnes of digestive biscuits? Three and a half tonnes, you say? All right, but throw in a jacuzzi.
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| PM Narendra Modi. (Photo credit: PTI) |
The decision is causing immense hardship, particularly to the poor, even as reports show that only about five-six per cent of the domestic black money stash is cash. And not all of it would be in the now-defunct Rs 500 and Rs 1,000 notes.
While the government will most likely pursue other measures to target corruption, and Modi has hinted as much, the lack of preparation suggests that it wasn't just the public that was taken by surprise when the PM made the double bill announcement. Carpe dime.
It reminds us of another high-stakes experiment that the capital saw for the first time at the beginning of the year. The AAP government introduced the odd-even driving restrictions for two weeks in January as dangerous levels of haze choked the city with the high court saying the metropolis had turned into a "gas chamber".
Commuters were broadly positive about the scheme, mostly because it freed up traffic on the usually clogged roads. However, thousands of residents had armed themselves with two-wheelers and second-hand cars by the time the restrictions made a comeback around the middle of the year.
The main reason the odd-even system cannot check air pollution is because no more than 25 per cent of fine, toxic particles are emitted by cars and trucks in winter, according to an Indian Institute of Technology-Kanpur (IIT-K) study, which was commissioned by the Delhi government.
Experts say even if cars stop running in the city, the air quality will never reach safe limits.
The real problem lies with the vast coal-fired power stations that supply electricity to the metropolis, the charring of litter and cow dung the city's poorest use to cook and stay warm, the dust billowing from hundreds of construction sites and the crop stubble burning in the fields around the Capital.
But attacking those challenges doesn't necessarily generate the same kind of eye-popping media coverage and hubbub as a disruptive policy like odd-even that throws the general public out of gear while giving the impression that the government is actually doing something.
Cancelling currency notes is a desperate measure, but it sure makes everyone sit up and take notice. However, we know that a lot of the illegal cash is actually held in assets - real estate, jewellery - and in banks outside the country.
Three years ago, Global Financial Integrity, a US-based non-profit that tracks the flow of dirty money around the world, estimated that some $344 billion in unaccounted for funds had been siphoned off from the Indian economy between 2002 and 2011.
The BJP's social media sepoys and even some party leaders have, of course, come up with predictable responses replete with ad hominem attacks. Aren't we all-too familiar with their reasoned rebuttals on views critical of the Modi government?
"The only people in pain because of the currency ban are the corrupt and opposition leaders who have amassed black money. All patriotic Indians are supporting the move. Of course I have no proof, but since you are clearly an anti-national jihadi, I don't need to produce any."
"Why would you not blindly believe whatever the Modi government says? You must be a Congress or AAP supporter. No? Well, that settles it. You are a Pakistani."
"Enjoying the work of a Pakistani artist is the exact same thing as being a terrorist sympathiser. No, don't try to argue. What about the soldiers at the border? Bharat Mata Ki Jai."
"So you are concerned because a Muslim man was lynched? What about the many Hindus killed and temples destroyed by Mahmud of Ghazni in the 11th century? Where were you then, you pseudo-secular, commie, presstitute? I rest my case."
The BJP-led government certainly had the banks' best interests in mind with the currency ban as they will be flush with funds. And rival political parties hoping to win next year's Uttar Pradesh and Punjab elections with a flood of cash have also taken a hit.
Of course, a party in power at the Centre, or in those particular states, has access to means of wooing voters that are out of reach for others in the fray.
So, it seems either the government had not done its homework before implementing the decision, or it was made for the wrong reasons.
If the Modi administration does go after tax dodgers, questionable election funding and benami properties, then it will be lauded. But, for now, it can keep the change.