It's official. The Reserve Bank of India was convinced that demonetisation would fail in obliterating black money and would have negligible impact on counterfeit notes. Despite the written caution in the minutes of the 561st board meeting of the central bank, Prime Minister Narendra Modi appeared contemptuously indifferent to the advisory.
At 8 pm on national TV, mustering considerable flamboyance befitting the stagy announcement, Modi said exactly the opposite. The RBI’s prudence was summarily dismissed and political artifice was in. The latter won hands down.
Despite demonetisation failure, Modi was hailed for his 'risk-taking' propensity. (Credit: PTI photo)
The principal agenda that caught public imagination and created a media frenzy was the promise to eradicate black money with that one midnight stroke that would decapitate Rs 500 and Rs 1000 currency notes, aggregating 86 per cent of the currency in circulation.
Modi had overnight grabbed headlines that would remain a sustainable electoral ploy — a leader who was cleansing the system of the perniciousness of ill-gotten wealth. Everyone fell for the calculated chicanery like nine pins and Modi literally tore into critics of demonetisation as being on the playing field with the crooks, criminals and conmen who fleece India of its tax revenue. The opposition was badgered with unrestrained vilification at the hustings.
If anyone opposed Modi’s authoritarian diktat called demonetisation, they were anti-nationals who deserved to be packed off to Pakistan. Hyper-nationalism was the real currency. Modi was hailed as a big-thinking spectacular Superman with a risk-taking propensity that only the bravest leaders possess.
But as the RBI’s heedfulness on black-money establishes, Modi was lying.
A long queue at a bank in New Delhi post-demonetisation to exchange banned notes with new currency. (Credit: Parveen Negi/Mail Today)
When making that announcement on November 8, 2016, he knew that he was fabricating a sales story that had no legs to stand on. A certain wise man warned that demonetisation was organised loot and legalised plundering, but he got ignored.
In the crucial state elections in early 2017, which included the crucial game-changer state of Uttar Pradesh, Modi assumed the garb of a messiah who was on a mission to save the 130 crore people of India from the carpetbaggers, the cabal of conniving thieves who were looting India surreptitiously.
It worked because corruption and black money are not just economic but emotive subjects for the common man.
Modi’s 'Us versus Them' found many takers. This, despite standing in long queues to withdraw one’s own money. Everyone wants a savior when the odds are stacked against them. Around 100 Indians died in the aftermath of demonetisation mostly due to the excruciating torture of being hustled while standing in endless queues.
But they still trusted Modi.
They were not aware of RBI’s apprehensions that the black money objective of demonetisation was burlesque. It was not going to happen.
Numbers don’t lie unfortunately.
Numbers don't lie. 99.3 per cent of the demonetised currency was back in the banking system. (Illustration by: Nilanjan Das)
When the RBI officially announced that 99.3 per cent of the demonetised currency was back in the banking system, all hell broke loose. Even Modi fans had to concede that the black money plug was all smokes and mirrors. India had been taken for a ride.
BJP rebel leader Arun Shourie called demonetisation as the “biggest money-laundering scam” in history, given the fact that it appeared that there was a tip-off to favoured cronies who conveniently converted their black money to white before November 8, 2016.
A new government in 2019 must launch a full-scale independent forensic investigation into the alleged fraud. Several skeletons could potentially roll out of polished cupboards. The other stated objectives of demonetisation highlighted by Modi also bit the dust, namely, successful elimination of Naxalism, terrorism, stone-pelting and fake notes, the latter’s failure forewarned by RBI.
Modi gets an F grade, but his luminous political immorality has set a new gold standard.
Dishonesty, remember, is usually deliberate.
Modi sent Finance Minister Arun Jaitley to do some sandbagging on his behalf. Naturally, he disappeared into hibernation when the heat got unbearable. Jaitley, a past-master at hyperbole, spun a story about how the real intent of the government’s (read Modi) demonetisation goal was digitisation and formalisation of the economy. Now this was another cock and bull story and a new goalpost. Increase in taxpayers and tax returns is logical progression in an expanding economy. But forced formalisation boomerangs, especially in a country that still does not have a robust technological infrastructure, has rampant illiteracy, and where traditional norms of doing business involves substantial usage of cash.
Finance Minister Arun Jaitley told the nation that the real goal of demonetisation was digitisation and formalisation of the economy. (Credit: Screengrab)
As of October 26, 2018, currency in circulation stood at 19.7 Lakh crores (up by 9.5 per cent since November 2016), and cash withdrawals from ATMs was up by 8 per cent at 2.75 lakh crore. The currency to GDP ratio was back up at 10.9 per cent in FY 2017-18 after falling to 8.8 per cent. Evidently, Jaitley had done selective cherry-picking to spin some cockamamie.
By an extraordinary coincidence, CMIE released data that said that unemployment was at a two year-high at 6.9 per cent, a clear manifestation of the economic ramifications of voodoo economics. The loss in GDP would conservatively tantamount to Rs 300,000 crore. And the small farmers, MSME businesses and petty traders are still recovering from the lethal blow.
As I write this, #JawabDoModi is trending on Twitter. But of course, in its second anniversary of demonetisation, Modi is conspicuously missing. There is a new mendacity to manufacture. After all, elections beckon in December 2018.
The saga of lies continues.