“To break the grip of corruption and black money, we have decided that the five-hundred rupee and thousand-rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016.”
***
Even as he uttered those words 730 nights ago, it was blindingly obvious that Narendra Modi‘s three professed objectives behind #demonetisation—rooting out black money; detecting fake currency and ending terror financing—would meet the fate of Achche Din.
When the queues lengthened, lives were lost, homes destroyed, tears flowed, and the wheels came off, Modi began speaking the bloody language of retribution a certain kind of Indian is now comfortable with: “Give me 50 days, burn me alive if I am wrong“.
Public memory is short in the age of infinite distractions and amusements. But it is useful to remember that in just the first three months of the stupidest financial decision in the history of post-Independence India, there was a…
35% loss of jobs in micro-small industries
50% dip in manufacturing revenues
35% job loss in infrastructure and road projects; 45% notional revenue loss
Investments drop from Rs 2.36 trillion to Rs 1.25 trillion (Q3)
22% fall in two-wheeler sales, biggest dip since 1997
44% plunge in housing sale; notional revenue loss of Rs 22,600 crore
Cement, steel, FMCG all paying between 10 and 25 lower advance tax for Q3
Purchasing managers’ index (PMI) index down at 46.7, indicating contraction
Business confidence in services sector lowest in 11 years
Foreign portfolio investors sold equities worth Rs 18,909 cr for 18 consecutive days
GDP growth 5.2%, lowest in 5 years, excluding government consumption
Dollar breaching the Rs 68 mark
Indeed, the only thing that saw a 100% jump was Narendra Modi’s ego.
So, as Modi’s self-declared 50-day deadline passed without any bodily harm to the PM, newer objectives had to be found for a patently insane, hare-brained, brutal, undemocratic, unilateral move undertaken without debate, discussion or consultation.
Demonetisation was really about ushering in a cashless economy; no it was about a less-cash economy. Demonetisation had brought about a drop in prostitution. Demonetisation was about making India a tax-compliant country.
Etcetera.
Each one of the excuses trotted out for demonetisation now lays shattered.
Reserve Bank of India concluded that 99.3% of the banned money was legitimately back in circulation; the first fake notes of the new currency were seized in Kashmir; and the banned currency continues to be in demand in the motherland.
Gita Gopinath, the Mysorean recently appointed as the International Monetary Fund’s chief economist, says: “Not a single macro economist thinks note-ban was a good idea.”
***
So, the simple question is: how did a Gujarati in whose DNA ‘dhandha‘ (transaction) is ingrained get it so wrong? And what was the use of Modi’s 13 years of experience as Gujarat’s chief minister if he could get something so important so wrong?
We can only speculate, but here’s a counterfactual point to ponder.
What if Narendra Modi always knew that his “Financial Pokhran” (as RBI’s latest governor, S. Gurumurthy calls demonetisation) would explode and blow up in his face? And what if he went through with the “Surgical Swipe” despite that knowledge?
Nothing masochistic about this.
Put another way, what if demonetisation was not about any of the economic, financial or digital goals that Modi first laid out, or any of the other objectives that his colleagues and other camp-followers have since found for it?
What if it was, plainly and simply, the biggest PsyOp—psychological operation—ever attempted in the history of humankind, to condition a huge mass of people, a whole nation, into accepting a decision even if it could potentially harm them?
What if it was about making Indians learn to fall in line?
What if was about hurting them so as not to question or criticise?
What if it was about conditioning their minds to acquiesce?
What if it was about instilling respect through fear?
What if it was about preparing them for worse to follow?
And what better way than through a move that touches every Indian rich, poor or middling; urban, suburban or rural; man, woman and child?
***
If a Gujarati politician who prides himself on his financial acumen, more imagined than real, can get it so wrong. If a self-proclaimed chaiwala, who claims an ear to the ground, couldn’t think of Gandhi’s talisman, there must have been a reason.
As Sherlock Holmes says, “Once you eliminate the impossible, whatever remains, no mater how improbable, must be the truth.”
Also read: Delhi’s best read chaiwala
The suffering of the common man continue watching for
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LakshmanRao Krisnapuri Chennai
Good one. Different
Occam’s razor just went blunt. So many neurons died in the making of the hypothesis, I am sure. But I think he did it because, well, he could. That is all. He thought he could get away with it, and it was sheer stupidity rather than some kind of Machiavellian super-thinking. And, he did get away with it. What has been his punishment so far? Nothing.
It is the age-old Jan Sangh tradition of slapping each other’s backs and calling each other clever. They laugh at casteist, sexist, political jokes that they think are brilliant, and no one else does. They come up with clever retorts and beam at each other to proclaim how intelligent they really are. But unlike in the 70s, these idiots actually get elected now. So, no, nothing devious or “Chanakya-n” about this move. Just another bigoted, narcissistic idiot who thinks that whatever he does is inspired or brilliant.
It is unfortunate you are one sided
The stability in the real market and reduction in the inflation are the clear indicators of the positive impact
I am disappointed not with the doubts raised about the efficacy of DM but with set of questionable statistics quoted to defend the comment that DM was a wrong decision. Perhaps with few statistics most are doubtful and I would have believed if the source for them was given. It is like quoting Goipinath telling that not a single economist has support for DM. Let me give some though not conclusive proof to show how wrong she is. Read the following about what Bhagwati says about DM. I am sure Gopinath will agree that he is an economist of great repute- may be not a macro economist.
Jagdish Bhagwati, one of the most influential economists of his generation and professor at Columbia Univesrsity has risen, yet again, in stirring defence of Narendra Modi’s shock move to demonetise the lion’s share of India’s Rs 500 and Rs 1,000 notes last November which added up to 86% of the country’s currency in circulation at the time. (https://www.firstpost.com/world/demonetisation-jagdish-bhagwati-delivers-stinging-rebuttal-to-modi-critics-again-4203891.html)
Like the quote from Gopinath, most of the shocking statistics proving the impact of DM may be doubtful. They may be based on those who disagreed with DM based on traditional macro economics and not serious thinking. It is like several disagreed with the findings of Rowland and Molina’s findings regarding the ozone hole.
I agree with Churumuri that of the three goals only the detection of black money was a success whereas detection of fake money and reduction in terrorsim turned out the a total failure. It is true that even in the case of black money, jury is still out in that the government has not been successful in a proper follow up of and prosecuting those who could not show the sources of their huge deposit.
It is unfortunate that scholars and experts are against or for Modi while analyzing DM and there should be an objective way of analyzing the DM and this may be too early to conclude that it was a monumental error. While I was a full supporter of DM, I have changed my views to some extent. However I am still in the camp of those who support DM though with some questions. But I am strongly question that it was a huge blunder on the part of Modi.