Some random thoughts on Demonitisation

Prime Minister’s sudden announcement of Rs.500 & Rs.1000 currency notes being no longer valid legal tender starting from 09th November midnight has evoked a mixed response among the Indians. On one hand, there are die-hard Modi fans who are cheering this as a historic decision which would curb the nuisance of the black money and corruption for once and all and on the other hand, there are political opponents of the BJP who are blaming the unprepared government for the chaos which has unleashed since the announcement. It is extremely difficult to make any conclusive arguments about how this decision would affect the Indian economy at large. There are arguments and there are counter arguments both of which look very reasonable and powerful making the fence sitters wonder on what is actually going on. The news was broke to me by my wife who was informed by someone watching the TV. As usual, I thought this as just another rumour mongering stunt on the social media which keeps on spinning surprises from time to time. I googled the news and voila this was true. And suddenly, I became apprehensive for no reason. Although, I had nothing to worry but I started constructing fanciful scares in my mind. What better way of venting out your apprehension than social media? I was among the first ones to protest and wasted no time in equating Modi’s government as the ones incharge of a banana republic. As expected, I was hounded by Modi supporters online who were equally judgmental about the decision. Both the sides, the ones supporting and the ones protesting were driven by the emotions rather than rationality. Both the camps started digging out write ups available online in order to gravitate to their confirmation bias. It took me a couple of days to regain my sanity and I resorted to going through the matter in an objective fashion. The most obvious question is to find out the reasons for Modi taking such a major step. His supporters would waste no time in concluding that here is a man who wants to clean up the mess and is ready to go an extra mile for the same. This is the least convincing answer for a cynical personal like me. If Modi was so obsessive about cleaning up the mess then he would not have been surrounded by a large number of tainted ministers and politicians in the centre and the state governments ruled by the BJP. A sincere person would always put his own house in order before preaching others. I am ready to give in to the counter argument presented by his supporters that his decision is going to affect one and sundry without any discrimination. Yes, this decision has the potential of discomforting the real estate dealers, jewelers, corrupt babus and the professionals like doctors and lawyers. This is the very class which has been a vociferous supporter of the BJP and one has to concede that there is an element of bravery and political risk in what Modi has done. The answer lies in the ideological construct of Modi and the RSS. The entire artefact of the RSS ideology hinges on supreme sense of victimization which can be only overcome through radical steps. There is this admiration of a virtual bravado which would spare no one. It is this obsession of the Sangh ideology which finds no wrong in violence, genocides and strong corporal punishments whenever the things don’t move the way they want. This is precisely the imagery which the BJP and Modi had constructed for themselves and were able to assume the reins of power with it. However, their thirty months in power were failing them. They needed some radical steps to live up to their macho image and this demonetization was a low hanging fruit for them and they went for it. Yes, they have not been considerate to their own sympathisers and this is exactly how fascism works. The fascists do not like to listen to dissenting voices even if they come from within. Here lies a warning for each one of us. If we continue to fuel the megalomaniacs, their arrogance would not spare us even if we were their best of supporters. Coming to the economic merit of demonetization, it has its own pros and cons. This government is telling us that demonetization had become inevitable. This is a clear cut admission by the government that their machinery has failed to nab the black money hoarders and is incapable of stopping the entry and circulation of counterfeit notes. The demonetization would severely affect the liquidity bringing down the monetary transactions while hurting the economy at least in the short term. What the present regime has done is not exactly the demonetization of high currency denominations but this is essentially an exercise for replacement of the existing currency. Thus liquidity is expected to return to normalcy after the government’s promised 50 days. Coming to the advantages of demonetization, it makes people reluctant in hoarding the money in cash form. This propels spending which is favourable for wealth distribution. In the last three days, I have seen some of the most stingy people willing to share their money with others. The long pending receivables and payments are getting settled. Suddenly the people are discoverning new meanings of money. This jolt albeit a very short lived one is helping people to question the real meaning of life. Those who did not find any purpose in life beyond material pleasures are suddenly realizing that all their money may render useless within a flash. Obviously, these benefits are never thought of by the policy makers while implementing the demonetization moves. In the longer run, this is indeed a statement by the government. A statement to the people at large that they just cannot escape from the state. By instilling the fear of punitive measures, the government would indeed be able to make a sizeable chunk of the population to adhere to the laws of the land. This means that the state and its machinery would become more powerful in the coming days. Here again, the philosophical question arises on how to take a powerful state in our stride. If the state was powerful and benign then it ought to be the best thing happening to its citizens. However, a state is as benign or as hostile as the set of people in the ruling dispensation. Going by the history of the BJP, this may not be a very good news for the marginalized sections of the society. On the flip side there is no reason to not believe in the democratic processes laid down by the Indian constitution. Keeping my fingers crossed on what the future is going to unfold.