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Will demonetisation take Modi down?

The ill-advised banishing of two critical currency notes by Prime Minister Narendra Modi seems to have incurred everyone’s wrath in India but his diehard supporters won’t relent. That and a perpetually divided opposition are a good hint that he will sail through the current crisis too, if it is that, possibly even turning adversity into a careening goal.

In most other countries, the head of government would have been forced to go for inflicting the mess that has been let loose on the Indian economy. Modi’s abrupt withdrawal of the 500 and 1,000-rupee notes from November 8 midnight sent people begging to the banks for loose change, but that too is in short supply. A few have passed away waiting in endless queues to change old notes with those that work. Banks and ATMs seem ill-equipped for the task, and riot police have been guarding the outlets against irate mobs. Those who succeed in getting hold of a new 2,000-rupee note or even the new 500-rupee one can’t use it for want of change.

Goalposts have shifted about the purpose of the so-called demonetisation. It was first advertised as the surest way to end corruption and terrorism. Now we hear the idea is to turn India into a cashless economy. The latter may be the least damaging afterthought, but it is not bereft of controversy. Mr Modi featured in full-page ads for a high-speed mobile phone launched by the Reliance Group of Mukesh Ambani. How could the prime minister openly support a corporate house, giving it an edge over others?
The chaos that has followed India’s decommissioning of 500- and 1,000-rupee notes is the first big setback for the BJP

The ad did not go down well with Mr Ambani’s business rivals. Reports say the Reliance Group is to be fined all of 500 rupees for the apparent breach of protocol. The morning after Mr Modi destroyed the currency notes, full-page ads were sponsored by a recently launched electronic wallet outfit, which lauded the prime minister’s decision. Smart phones and electronic wallets are the biggest winners from Mr Modi’s undisguised affection for a digital economy.

The opposition, not surprisingly, is in no position to intervene. Modi said his move would rein in the black money that drives the country’s fabled parallel economy. That is a non sequitur. Ill-gotten money is mostly parked in Swiss banks or invested in real estate and gold. He also claimed that the removal of the two largest notes would rob terrorism of its financial clout. This too doesn’t rub as the new notes can be just as easily forged. In fact, they could be more readily copied since not many know what the new ones look or feel like.

The opposition is aware of all this. West Bengal Chief Minister Mamta Banerjee and Delhi Chief Minister Arvind Kejriwal became the most strident critics of the demonetisation move. Kejriwal has traditionally been the lead campaigner against what he sees as corporate loot of India in cahoots with the government. The corporate media has naturally banished him.

The Modi move set off opposition protests that paralysed parliament, but that’s about as far as anyone has gone. The feeble protests have parallels with the stance the country’s acutely divided opposition has presented since 1992. That was when Hindutva mobs razed the Babri mosque in Ayodhya and changed their electoral fortunes forever. There is something perverse about India’s democracy here. A leader, it seems, can be accused of mass murder or massive corruption but that may not dent anyone’s electoral prospects. If anything, the Gujarat and Muzaffarnagar killings boosted the popularity of the accused.

It is not different with the demonetisation episode even though the move has frozen large swathes of the Indian economy. The middle classes are grumbling impotently for having to line up at banks and ATMs for an erratic and uncertain daily allowance of 2,000 rupees. Banks may grudgingly release even 24,000 rupees a week to some account holders but usually run out of cash at the start of business. In some places, the Indo-Tibetan Border Police, the paramilitary force raised to keep vigil on the Chinese border but which has served in Kashmir, patrols Delhi’s banks and ATM outlets to deter violence.
A woman holds 500 and 1000 Indian rupee banknotes as she stands in a queue to deposit her money in a bank. —Reuters

I was asked if the fiasco would bring rack and ruin to Mr Modi. After initially joining the chorus that sees his imminent fall from grace over the issue, I have changed my opinion. I don’t believe Modi has been rattled by his folly, nor are his supporters deserting him. If anything, he seems to have successfully derailed the opposition strategy to sort him out in the two critical polls in Punjab and Uttar Pradesh that are due soon. If he fails it would be for some other reason, possibly poor caste arithmetic.

After he announced the demise of the two invaluable currency notes in a televised late night address, the country has been at a standstill. Fruit and vegetable vendors have given away their stocks free. Peasants fear going to the bank to return the old notes. The manager might confiscate the note in lieu of an unreturned loan — which is ironic. Money raised from the old notes is expected to make up for the billions of rupees the banks lost to big corporate in bad loans, according to Kejriwal. The loans were handed out not without political persuasion to corporate houses in billions. They seem unlikely to be returned.
I was asked if the fiasco would bring rack and ruin to Mr Modi. After initially joining the chorus that sees his imminent fall from grace over the issue, I have changed my opinion. I don’t believe Modi has been rattled by his folly, nor are his supporters deserting him. If anything, he seems to have successfully derailed the opposition strategy to sort him out in the two critical polls in Punjab and Uttar Pradesh that are due soon.

There are positive reports from Modi’s perspective though. Small traders and in some cases tea-stall owners are switching over to the electronic credit card reader. Moreover, the perverse logic of anger is dotted with familiar fatalism, all laced with admiration for Mr Modi’s self-applauded campaign to wipe out corruption. There’s a sense of glee among the poor that the rich are hit. The bureaucrat is happy that the politician has been fixed. The rich are happy that their real estate and Swiss bank accounts, the biggest pillars of the parallel economy, have been overlooked in the dragnet. Mr Modi may have thus given a few people a reason to revel in the misery of their real or imagined tormentors regardless of its impact on the economy.

“Demonetisation in a booming economy is like shooting at the tyres of a racing car,” said development economist Jean Drèze. In his view, the debate on monetisation is vitiated by delusional hopes of the impact it might have on the black economy.

Arundhati Roy captured the sheer hopelessness of the state of affairs long before the advent of Modi. In her 1998 essay — ‘The greater common good’ — she presciently scoured the dialectics of Indian democracy thus: “To slow a beast, you break its limbs. To slow a nation, you break its people. You rob them of volition. You demonstrate your absolute command over their destiny. You make it clear that ultimately it falls to you to decide who lives, who dies, who prospers, who doesn’t. To exhibit your capability you show off all that you can do, and how easily you can do it. How easily you could press a button and annihilate the earth. How you can start a war or sue for peace. How you can snatch a river away from one and gift it to another. How you can green a desert, or fell a forest and plant one somewhere else. You use caprice to fracture a people’s faith in ancient things —earth, forest, water, air.

“Once that’s done, what do they have left? Only you. They will turn to you because you’re all they have. They will love you even while they despise you. They will trust you even though they know you well. They will vote for you even as you squeeze the very breath from their bodies…”

Has anything changed at all, except perhaps the beggarly melee for loose change?

courtesy : dawn news

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