Demonetization: Modi’s Gamble

As Narendra Modi took the central stage in widely televised address just hours before the midnight of his demonetization drive coinciding with US presidential elections, which was slated to strike at 86 percent of total money, there was surprise in store for one and all.
Demonetization: Modi’s Gamble

Demonetization is much in the news for the last two weeks. While it has ruffled many feathers in length and breadth of India from the parliamentary chambers to the urban and rural dwellings, Kashmir stays unconcerned and unruffled. The long bank queues, the resultant wait to get the demonetized tenders declared illegal changed to new legal tenders remain marked by absence of the prevalent Indian scenario in Kashmir. The contrast is being debated, of that later; we may first get to what Narendra Modi's announcement on the stroke of big global news of American elections had in store for people across India.

Narendra Modi in the middle of his first term as Prime Minister for reasons best known to him has put himself in the dock, virtually in the bar of public opinion. Demonetization whatever the ripples it might cause in Indian economy has a political outfall, though politics and economy in most parts remain intertwined. The effect of long queues and the resultant wait has been as great a calamity as more than 40 deaths.  Narendra Modi in the days ahead will have a lot of explaining to do, whether his pronounced effort to hold to account the unaccounted money of corruption and illegal business practices was worth the loss in human lives and immense discomfort to what in Indian parlance is called the 'Aam Admi' the common man? We may first set to assess what demonetization means in real terms. 

As Narendra Modi took the central stage in widely televised address just hours before the midnight of his demonetization drive coinciding with US presidential elections, which was slated to strike at 86 percent of total money, there was surprise in store for one and all. His detractors though, such as Delhi Chief Minister—Arvind Kejriwal would have everyone believe that Modi's cronies in corporate sector were pre-informed of the move, so that they could take steps to safeguard their ill-gotten millions. Eight six percent in previously legal tenders of 500 and 1000 rupees denomination amounts to 13.76 lac crores. Out of a total of about 16 lac crores released by Central Bank—the Reserve Bank of India, 11.26 lac crores is the cash with the people, while as the rest 3.50 lac crores is the cash that remains with banks.  We may look at the various possibilities of how is it going to play out until ending December, the date set by Narendra Modi to prove his point that demonetization was meant to target black money. 

We may play out a win-win scenario for Narendra Modi regime in simple terms. In case a substantial amount of say 3 to 4 lac crores out of a total of 11.26 crores with the public is not received by the receiving agencies—the banks and post offices by December, the 31st the shortfall could well prove what Modi regime contends that there is a substantial amount held as black money. In spite of the shortfall—none too happy an outlook, Government could sound the trumpet from the rooftop, which could echo widely—we told you so! We may look at the reverse of it and visualize a situation where with the exception of a meagre amount, the bulk of 11.26 crores are deposited with banks and post offices, it would mean reversal for Modi, as questions would multiply– why did the Government put people to inconvenience, unnecessarily and needlessly?

 It could be said thus that by undertaking the venture, Modi has played a big gamble, which could turn either way. Besides, the cost of demonetization by ending December could be very high, as the very process has hit the agriculture and small businesses across Indian states. The cost factor would pile-up and 20,000 crores would get added to it, which is the cost of printing new currency notes. Though GOI has gone on an overdrive in easing the strain on 'Aam Admi' the woes that government is entangled with seem to be continuing in spite of the relief provided. GOI could have been better advised on timing, as the farming community needs more cash in the season in focus to put the farming frame in proper shape. Besides the marriage season demands bulk withdrawals from banks, whereas there are restrictions on it. Though GoI came up with relief measures such as 2, 50,000 rupee withdrawal for marriages and 25,000 rupee per week for farmers, there were reports of barter dealing in rural areas especially due to difficulties encountered in cash exchange. It could be construed as throwback to ancient times. 

While Narendra Modi's risky venture is unfolding with difficult to predict consequences in length and breadth of India, Kashmir stays calm, though entangled with death and destruction of last four and a half months. It is widely asserted, with justification that demonetization of currency notes of higher denomination has disproved the suspicion in some quarters of Kashmir being a safe sanctuary for black money and hawala transactions. Economist, Prof Nissar Ali asserts, ''the people in Kashmir traditionally deposited money in the bank notes''. His take is backed by industrialist and civil activist—Shakeel Qalander, ''There are 2000 bank branches, which means bank for every 6250 people in the state'' emphasizes Qalander. 

It could be safely said that Kashmir stays safe, whatever Modi gamble might otherwise hold! 

Yaar Zinda, Sohbat Baqi [Reunion is subordinate to survival]

(Author is doctor in medicine, a social activist, and a senior columnist)

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