Narendra Modi’s abrupt decision on November 8 to invalidate 86 per cent of the value of cash in circulation in the country has caused immense hardship and terrible pain to millions of Indians, mostly from the poorer section of society.
Nearly 100 people have died due to this whimsical administrative decision and no one knows when the misery will end, if it will end at all. However, with this decision, Modi has lost his talisman, which had helped him get an international image makeover, from a bigot to a builder.
No other democratic regime has ever taken a cash ban decision of this magnitude. Only some authoritarian regimes like the Soviet Union, Zaire, Libya, Zimbabwe, Myanmar and Nigeria were forced to do this to control spiralling inflation in their countries, but failed miserably to achieve the stated fiscal objectives.
So, when Modi suddenly imposed his draconian demonetisation drive, India watchers in the West were too stunned to react immediately.
A majority of the international media has repeatedly taken Modi to task for his utter disregard for human rights, crude use of state machinery for censoring critics, trying all tricks to undermine the independence and power of the judiciary, and using both constitutional means and Hindutva footsoldiers to suppress religious freedom.
However, the international community was ignoring to take note of this rising anti-democratic fascist tendency in India and was still buying Modi’s development story for its own business interest.
With China’s decline in economic growth, India had emerged as the world’s fastest growing economy and a huge potential source of new business. Thus, Modi had been able to make world leaders look like, as Time magazine had described last year, “teenage boys drooling over the homecoming queen”.
Since 2007, Modi has been meticulously branding himself as the messiah of development. By hyping the "Gujarat Model", his hired agencies in the West had helped him get an image makeover to hide his robust record on bigotry.
Even before the 2014 election, influential international news media like The New York Times, Washington Post, Los Angeles Times, Economist and Guardian have been carrying reports and editorials regularly disapproving of Modi and his brand of majoritarian politics.
But, the business newspapers had still pinned their hopes on his promised economic growth and hooked to the promised India story. Even Wall Street Journal till recently was describing Modi as India’s best hope for economic renaissance.
Not only the Wall Street Journal, Forbes and Financial Times were downplaying the fast deterioration of India's secular democratic character under Modi’s watch, in the hope of India’s possible economic "miracle".
In the immediate aftermath of Modi’s cash ban decision, these international business news heavyweights like most others were clueless about the impact and went on to buy the official spin that it will curb the country’s menacing back money problem and were expecting it to be the beginning of Modi’s so-called big bang economic reforms.
But with the fast changing narrative of the central government - moving from demonetisation being a strike on black money to fake currency to making India a cashless economy - serious doubts have started to creep in.
|Narendra Modi's noteban is being talked about not as a "surgical strike" but as an ill-judged "carpet-bombing". (Photo: Bloomberg)
The abject failure of the Modi government to remain prepared to reduce the hardship of the common people and to bring the country back to some sort of normalcy exposes that the unpredictability of the PM's decision-making without seeking expert advice is not limited to foreign policy issues, but also to core economic matters.
One thing is for sure, business does not like a country with such magnitude of unpredictable decision-making at the highest level.
Almost unanimous criticism of Modi’s cash ban policy by India-based economists has been reciprocated by their counterparts in the West.
Larry Summers, the former US Treasury secretary, Kaushik Basu, former chief economist of the World Bank, and Ruchir Sharma,chief global strategist and head of emerging markets at Morgan Stanley, have come out openly against the policy.
Nobel laureate Amartya Sen has gone to the extent of describing the cash ban as a “despotic action” and “only an authoritarian government can calmly cause such misery to the people".
Kenneth Rogoff, professor of public policy and economics at Harvard University, who even recently published the book The Curse of Cash has been unsparing in his criticism of the way Modi decided to impose the note ban and his abject failure to implement it.
Financial analysts estimate that growth of the Indian economy over the next two quarters could drop by as much as 1 per cent or more. The failure of the government to implement the policy effectively has been a huge headache for millions of Indians and has raised pertinent questions about the success of this whimsical scheme.
These developments have invited serious criticism from the same influential international business media which was sympathetic to Modi till now.
While these business newspapers had initially lauded Modi for his bold gamble, the cash ban is now being talked about as an ill-judged "carpet-bombing" because of the widespread chaos it has unleashed.
A recent Forbes report taking into account the confusion, chaos, and fear has concluded that the cash ban policy has turned into a mess.
For the Wall Street Journal, which had gone to the extent of describing Modi as India’s best hope of economic renaissance last year, it did not take more than a week to predict the serious adverse consequences of his abrupt decision to void India’s largest bank notes.
Financial Times did not hesitate in reporting how India’s cash chaos has sparked growing backlash and how Modi’s fantasy of heralding a "cultural revolution" in the country is unlikely to discourage Indians off cash.
The latest caprice of turning India into a cashless country has clearly exposed to the international business community Modi’s inadequacy with viable ideas to lead the country for sustained economic growth and to make the India story a success.
His decision to impose the ill-conceived note ban has seriously dented Modi’s carefully cultivated image of an efficient business friendly administrator, not only in India but also to the outside world.
Moreover, Modi always had very limited support internationally to protect him from the growing criticisms of his "fascist" policies at home by liberal media and civil society groups. The loss of support from global business groups due to the cash ban has also made him more vulnerable to increasing international censure.