Why the public fell for demonetisation, a magic trick by Modi
It is funny when a whole nation pretends to believe that merely by belabouring money - kicking it from this basket into that - we can enter a new world. Such thinking belongs to the domain of the magical.
This is not to doubt Narendra Modi’s sincerity of purpose. It is only to submit that there are fuzzy edges to the assumptions on which his peremptory venture is premised. Modi may sincerely believe money is the magic wand, the flashy waving of which will conjure up a new, mint-fresh scheme of things, scintillating with new hope and vigour.
The working principle of magic is that a material means - say, a wand - acquires special potencies when wielded by an extraordinary person, the magician. If the same wand is in your hands or mine, it is only an ordinary piece of wood.
Also, all magical feats are single-measure wonders. A magician who wields a wand, a bottle of exotic potions, a human skull, a reptile’s tail, a newt’s brain and a host of other eerie things and claims to perform wonders with the help of all of those, is no magician.
The spotlight of magic is necessarily bi-focal: the magician and the wand. There is nothing besides, nothing in-between. Whatever else there are, are mere accessories.
Yet another feature of the magical is the complete irrelevance of values and ideals. No magician claims to be able to pull a rabbit out of his hat by invoking a value or ideal. Ideals and values are alien to the magic domain.
Magic, being predicated on illusion, is hostile to rationality. Think of butting in with your rational arguments into a magical event that an artist is regaling his audience with! Not only the magician, even the audience will shut you up. Many of our "economic experts" who incur the wrath of the demonetisation apologists seem not to understand this logic.
In history, real changes have happened only when a people are re-oriented from one value to a contrary value. It is important to stay focused on this, as this is precisely what is being currently occluded through a smoke-screen of words.
It is naive to argue that the shift from cash-based transactions to cash-free transactions is a transformative change. It is, at best, a cosmetic change. To what shall we compare this change?
You used to frequent a five-star hotel. Till the other day you paid in currency. From today onwards you pay with a credit or debit card. If there is a change here, it is only a change in ”style”. Like in swimming. Till yesterday, you did the butterfly. From today you switch to breaststroke. Come on, it’s the same pool. The same water. The same body. The same distance.
 |
| Will Digital India be distinguished with “justice, liberty, equality and fraternity”? (Photo: PTI) |
It is real change if I adopt a less expensive lifestyle, and eat at home, so that I can (to borrow Shakespeare’s words) “shake off the super-flux to the poor”. I live simply, so that the poor may simply live. This change is real because it involves a change in value system. Short of this, there will be an illusion of change; but there will be none on the ground.
Digitalising money can only make it circulate within the same circuit in a changed form. Very likely, the radius of circulation will shrink. More citizens could be left out.
Suppose I manufacture high-end leather shoes. Through R&D, I develop a biochemical substitute superior to natural leather. I begin to market these hi-tech shoes, now more expensive than their former counterparts. I cannot, in honesty, tout this as a windfall change for the common man. If it is a change, it is a change in style, relevant only to those who can afford the new version.
Any measure that brings relief to the poor and the marginalised sections of our society deserve our passionate support, irrespective of who pilots it. But we must insist on the difference between “relief” and “charity”.
Relief is systemic. Charity is whimsical. It depends on the dispositions of an agent. Charity is an insult to human dignity. It reduces citizens to beggars. What, then, is “relief”?
Suppose you tie a tourniquet on your upper arm and cut off blood supply to the rest of the hand. You are in distress. You release the tourniquet. Blood circulation resumes. Relief results.
As far as the poor are concerned, they are on the wrong side of the policy tourniquet. In a country where the top 1 per cent squats over 54 per cent of the nation’s wealth, that tourniquet is lethally tight around the necks of more than 500 million Indians.
In nothing that Modi or his team have said so far on demonetisation, there is even a distant reference to equality as a preferred national value.
We are being told repeatedly that the present pain will convert itself, somehow, into gain for the poor. That the 70-years' loot will now begin to re-distribute itself, somehow, among the poor. But nobody is telling us on what shift in national ideals, vision or culture this is likely to happen.
One thing is absolutely certain: so long as we remain anchored in inequality and hide its obscenity with hypocritical sentimentality about the poor, nothing is going to change. Money, in new versions - notes, plastics, and virtual wallets - will circulate within the same distribution system; for there is no other system in sight! How can we not ask:
Are we, following Modi, marching into a new egalitarian socio-economic order?
Will Digital India be distinguished with “justice, liberty, equality and fraternity”? (cf. The Preamble to the Indian Constitution).
Will the rich-poor divide, which continues to widen with each passing day, begin to narrow henceforth?
Demonetisation has no bearing on, or reference to, this social malady. There is, clearly, no credible evidence to enable us to believe that the fiscal profligacy of the rich will be curtailed. If the government has any stomach to "ride this tiger" at all, it will do two things urgently and effectively:
(a) Bring banks' non-performing assets, amounting to several lakh crores, back into the circulating volume of the nation’s economic blood. About 7 per cent of the total lending of PSU banks remains frozen as NPAs. This is a whopping amount. The total gain through the present demonetisation drive will be less than what this cancerous kitty holds.
Domestic black money held in cash is much smaller in volume. The first thing that Modi should have done, if he meant to challenge and change the system, was to target this. But this is a constituency that is too costly even for him to touch.
(b) Bringing home black money stashed overseas. The promised 100 days are over long since. What is Modi waiting for? According to Ram Jethmalani, this segment of black money is worth Rs 90 lakh crore. It is 500 per cent larger than the total currency in circulation in the country!
Or, it is equal to five Indias in currency circulation volume. This one measure alone could have alleviated all our fiscal distress. The present huge disruption, its pain borne wholly by the poor and the lower middle class, could have been avoided.
It is beyond anyone’s understanding how our money turned black overseas can be separated from our money turned black within the country.
The problem, however, is that the NPA smart cookies and overseas black money sharks all belong to the top 1 per cent that sit over 54 per cent of our national wealth.
To touch any one of them, one has to risk much. That is the real test. Not whether or not helpless people are forbearing enough to endure short-term pain for a very long term!