Modi-Shah should admit demonetisation robbed Indians of jobs
Three years after the NDA's sweeping victory in the Lok Sabha polls in 2014, its promises are coming back to haunt it. The most important promise was the creation of 125 crore new jobs.
The PM and his chief lieutenant Amit Shah have admitted that this promise was not even partly met. Shah was quite blunt: "It is not possible to give jobs to all 125 crore people." He further defended this massive failure by arguing that "had the Congress brought out a white paper on its 10-year rule, maybe (its) government would not have lost."
So what is Shah implying? That a white paper, presumably heavily tweaked, would have enticed the people to vote for the Congress? Even if 125 crore jobs were not created, perhaps if 25 or 50 crore jobs were created, this may have been considered enough of a beginning?
Shah also defended the NDA government by stating: "Even our political opponents have not been able to call us corrupt."
Very few political parties in the secular Opposition would agree with Shah's statement. However, given the huge promise they made, why didn't he present a white paper on the limits of increasing employment, with more rigorous efforts to stimulate the job market? Or was that just not possible?
One major job creation policy is the MGNREGA, in which all rural families are given minimum official wages for 100 days per year. When Modi came to power, he mocked the rural employment scheme, and called it a "monumental" blunder by the Congress.
Later, there was talk in the NDA to increase the employment to 150 days a year, in both cases with reservation of 33 per cent for women. But this rural policy has been undercut by the widespread failure to deliver wages in time to the rural labour.
In the last year, only 47.5 per cent of rural labour got wages in time, forcing the rest to move out looking for work, at wages less than the official minimum wages. A major opportunity lost to provide steady employment in the rural sector. This could have been done if the political will was there. Unfortunately, it was not.
Most political parties, especially in the Opposition, have been critical of the demonetisation drive, and its impact on employment. The noteban at midnight of November 8, 2016, which took 86 per cent of the currency out of circulation, is extremely large for a developing country. It is however also illegal.
The RBI Act, 1934, clearly states in Article 24(2) that: "The central government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue of bank notes of such denominational values as it may specify in this behalf."
Obviously, given the extreme secrecy of demonetisation, the Reserve Bank of India's Central Board could not have made such a recommendation. Thus, the noteban violated the RBI Act, and was illegal.
Article 9(1) on local boards was to consist of "five members to be appointed by the central government to represent, as far as possible, territorial and economic interests and the interests of co-operative and indigenous banks". These banks were not allowed to function during the noteban, causing immense hardship in the rural areas.
Further, all currency notes bear the promise, "I promise to pay the bearer the sum of... rupees" signed by the governor of the RBI. This pledge comes under Article 300A of the Constitution that, "No person shall be deprived of his property save by authority of law." But the noteban confiscated currency without compensation, violating Article 300A.
The great void of currency hit employment in both rural and urban areas, especially among the poor and middle strata. Traders, in particular, were hit very hard.
PM Narendra Modi promised to unearth hoards of black money, confiscate counterfeit notes, and stop terrorism by denying terrorists high value currency. There was hardly anything said about employment, by far the most important agenda of the NDA government. But what really happened?
How much currency has been replaced: 40 per cent? 50 per cent? How much is the deficit? No answer. How much black money has been unearthed? Again no answer. With these major uncertainties, how can employment be given a huge boost?
If we look at economic indices, the facts are grim. According to the Central Statistical Organisation (CSO), industrial output has fallen sharply. In 2014-15, industrial output grew by 2.8 per cent; in 2015-16, it fell to 2.4 per cent; but in 2016-17 industrial output crashed to 0.7 per cent, i.e. during the demonetisation period.
Recent data shows that in the high tech sector jobs are likely to fall by at least 56,000. Forget increasing employment, now the struggle is to save jobs. Modi and Shah obviously knew the facts on the ground. But they chose to be silent. Surely the people had the right to expect better.