Monday, November 28, 2016

Heehaw of a king as subjects cry

Pankaj Sharma
28 November 2016

This massive exercise of flushing out black money has paralysed the economy.

No country in the world would have seen politics of the kind that India is witnessing today. Instead of realising the mistakes and making the requisite amendments in the implementation of demonetising, we have a ruling dispensation that is behaving in an insensitive manner and conveniently ignoring the widespread distress. Acute sufferings of common people were never dealt with such callousness by any government in past seven decades. The economists are unable to understand the intent and rationale of a measure through which the citizens are inconvenienced to this extent. Never ever has any government enjoyed the sadistic pleasure out of a situation where people are crying and dying for want of their own hard earned money.

Current Prime Minister Narendra Modi does not want to pay any heed to what former Prime Minister Dr. Manmohan Singh had urged him last week in the Upper House of the Parliament. It has no meaning for the present government that Dr. Singh is one of the top economists today - he has been the Governor of Reserve Bank of India; he had been the country’s Finance Minister, a position which, in Modi’s government, has been demeaned; and the Prime Minister of India for a decade, the post that Modi does not think gives him the status of being first among the equals. Modi had an opportunity to make corrections after Dr. Singh’s appeal to find practical and pragmatic ways to relieve the distress of the people. “After all, 90 per cent of our people work in the informal sector, 55 per cent of our workers in agriculture are reeling in further distress. The cooperative banking system which serves large numbers of people in the rural areas is non-functional and has been prevented from handling cash”, he said. But, Modi chose to order the discontinuation of changing notes instead. He was worried that the increasing anger among the citizens waiting in the long queues for weeks might result into an outburst.

A man of few words, that too, uttered whenever it is beyond unavoidable, Dr. Singh told Modi that “the way this scheme has been implemented is a monumental management failure, and in fact, it is a case of organised loot, legalised plunder of the common people”. Global media, economists across the world and the political leadership of major nations have endorsed the views expressed by Dr. Singh that Modi’s scheme will hurt agricultural growth, small industry and all those who are in the informal sector of the economy. Global rating agencies have downgraded India’s economic rating drastically and agree with Dr. Singh’s prediction that India’s GDP will decline by at least 2 to 3 per cent as a result of ill-conceived demonetisation.

What could be worse than the fact that Modi’s ministers are making fun of the humble suggestion given by the former Prime Minister that it is important to take note of grievances of the ordinary people who have suffered as a result of this imposition on the country overnight. Modi had no answer to Dr. Singh’s tweak when he wanted him to tell the name of any country where people have deposited their money in the banks but they are not allowed to withdraw their money. “This alone, I think, is enough to condemn what has been done in the name of greater good of the people of the country”, he said.

The question of timing is central to the debates on the move in the entire country. The social media, which until a few months ago was in no mood to entertain any disagreement on whatsoever Modi said or did, is flooded with criticism of demonetisation attacking Modi’s personal motivations of playing realpolitik to cover up governance failures, security situation on the borders, and the his apprehensions of a case in Supreme Court. There are few takers of the narrative that Modi is the savior of the poor facing the rest of the political class.

I hope, Modi knew before addressing the nation that in country’s total currency, the share of Rs.500 notes was 47.8 per cent and of Rs.1000 was 38.6 per cent. Did no one tell him that the notes of Rs.100 are only 9.6 percent of the total currency and Rs.50 are only 1.2 per cent? Our currency has 0.6 per cent of Rs.20 notes, 1.9 per cent of Rs.10 notes and 0.3 per cent of the notes are in denominations of Rs.2 and 5. Has any sensible leader not the responsibility to assess the after effects of a move that is going to make 87 per cent of the total currency dud in one stroke? All the note printing facilities in India cannot print the required number of notes for six months even if they run 24 hours a day. All of them together printed around 24 billion pieces in different denominations in 2015-16 and were indented to print 24.55 billion pieces in 2016-17. As a result, we have millions of misprinted new notes of Rs.500 and 1000 in circulation.

Modi government has told us that it expects the flushing out of around Rs.3 lac crores as a result of this massive exercise that has paralysed the entire economy. India’s GDP at the current prices is about Rs.140 lac crores. That means the share of the impounded black money would be around 2 per cent only. If Modi was serious in fighting black money, he would have focused on FDI, as it has been a major conduit for the re-entry of funds flown out of the country. Stopping the round-tripping will erode the generation of the bulk of black money. Instead of taking steps in that direction if a Prime Minister prefers to make the lives of countrymen hell, I have no other option than to doubt his intentions and/or intellect. If the claims by certain insiders that Modi’s Address to the nation was not live are true, I have no hesitation in saying that India is on the verge of losing its democracy.

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