A YEAR has passed but the day is still in the vivid memory of tens of millions of people. Prime Minister Narendra Modi’s address and the salutation “Mitron” (my friends) he used while announcing the scrapping of the old 500-rupee and 1000-rupee notes still echo in their minds. An irony of irony, the government is still not tired of celebrating its “achievement" called demonetisation.
The way it brought the general public to streets and made them stand in queues in front of banks was certainly unprecedented. No other government or country would imitate it, if the lessons are anything to go by.
While the RBI data suggest otherwise, the government does not want to end its celebration. The day has been named as anti-black money day. The media were full of reports mentioning the high-ups in the government holding Press conferences quoting data to prove the success of demonetisation.
The Opposition, essentially the Congress, also sprang up into action and observed it as Black Day. It, too, had deputed different leaders for giving press statements, thinking that projecting the Modi government in a poor light might help them in winning the upcoming state elections in Gujarat and even the Lok Sabha elections in 2019. Rahul Gandhi went to the extent of meeting factory workers in Gujarat and concluding that the GST and demonetisation had adversely affected their lives to a large extent. In the evening he led a candle march as well.
Not only this, the media, too, has done its best in encashing the occasion. Some of the new channels came up with extensive debates discussing its pros and cons. There were some websites that published e-books, comprising nothing but the news-items that were published the previous year on demonetisation.
Some also conducted online polls giving the people an opportunity to express their opinion on demonetisation. Of course, the polls reflected the Modi government in a better position, thanks to the illiterate or less-educated janata, who easily falls prey to fancy claims.
Even the foreign media did not spare the occasion. They, too, published articles deliberating on the effects of demonetisation on the Indian economy. The only thing that seemed to be missing was the retail sector announcing some schemes. If sanity permitted, we would have certainly received some emails mentioning the huge discounts on clothes or electronic goods on online transactions to mark the first anniversary of demonetisation. Paytm certainly seemed to have been in a better-off position as shown by its front-page advertisement that many newspapers carried. Nevertheless India seems to have a new festival now – festival of demonetisation, which will be celebrated every year as anti-black money day till the Modi Government remains in power.
Union finance minister Arun Jaitley wrote a blog post on demonetisation and called it as a “watershed moment in the history of Indian economy”. This day signifies the resolve of this government to cure the country from the “dreaded disease of black money”. He even mentioned that as per the RBI annual report, the specified bank notes (SBNs) worth Rs. 15.28 lakh crore has been deposited back as on June 30, 2017 against the outstanding SBNs of Rs. 15.44 lakh crore on November 8, 2016 with a total of Rs. 17.77 lakh currency in circulation.
Critics have been questioning that if 99 per cent of the SBNs have come back to the bank, demonetisation was a huge failure as the government expected that people who had black money would not be able to deposit cash back into the banks.
Jaitley, on the other hand, made a statement that the objective of demonetisation was to make India a less-cash economy. He said the currency in circulation as on September 30, 2017, was Rs. 15.89 lakh crore which is Rs. 1.39 lakh crore less than last year. Jaitley’s contention may be right to some extent but the other side of the coin also suggests that, perhaps, the situation is not normal at some places even after one year of demonetisation.
He went on praising the government over 2.97 lakh shell companies that have been identified during the demonetisation drive and the names of 2.26 lakh companies have been struck off by the registrar of companies. The Income Tax Department has never done such a big job as it is doing now, he seems to suggest.
If Jaitley wrote and praised the government in a blog post, Rahul Gandhi wrote an Op-Ed for the Financial Times, arguing that the gargantuan exercise has actually deprived India of its “economic prowess”. Demonetisation wiped out many small businesses, rendered many jobless, and destroyed the informal sector, thereby reducing the GDP by 2 per cent. He argued that China, whom we are competing with, actually benefitted from India’s “policy misadventures”.
Whatever be our opinion on Gandhi, we don’t have any other option but to agree with his basic argument that demonetisation actually harmed the Indian economy.
While it is normal for the government to defend its move, it is atrocious for a Union minister to say that demonetisation has led to a dip in prostitution. Yes, Union Law and IT minister Ravi Shankar Prasad went on to say that since cash was the only way for dealing in flesh trade, a trend suggested a reduction in prostitution. It suggests that the government will go to any extent for presenting it in a good light.
On the other hand, the defensive mode of the government also suggests that even Modi is not convinced with what he did in a jiffy while scrapping 86 per cent of the currency in circulation. It also suggests that the government’s understanding of “ kaala dhan” is puerile.
A white paper published by the government itself puts the cash component to only 5 per cent in the entire black money market. Of course, it was published by the Central Board of Direct taxes during 2012 when the UPA-led Congress government was in power, which the Narendra Modi government would not like to refer to for obvious reasons.
To target this small unaccounted wealth, Modi disrupted the entire economy, without actually consulting the RBI as mentioned by Raghuram Rajan in his book “I do what I do”. He forgot that he was putting his power and might against a symptom and not the disease that leads to black economy, without realising that people will invent some jugaar mechanism to convert black into white, something that actually happened. To recall a popular saying, demonetization was like burning the house to kill the rats!
Over the last one year, we have seen the government changing goalposts and rules, albeit to prove that the gamble called demonetisation was a huge success. Of course, it helped the BJP in winning the UP elections. Perhaps, it wants to reap some dividends in the upcoming state elections in Himachal Pradesh and Gujarat. And the opposition, too, wants to use it as a trump card against the BJP to win elections.
As the Modi government strives hard to prove that demonetisation was a huge success, one is reminded of what George Santayana had said, “Those who cannot learn from history are doomed to repeat it.”
(The writer, a company secretary, is director communications, Deepalaya and can be reached at email@example.com)
(Published on 13th November 2017, Volume XXIX, Issue 46)