Even as the central government continues to stonewall the demands of opposition parties to take steps to mitigate the financial and economic crises that the demonetisation has pushed people into, former Prime Minister Manmohan Singh's short statement in the Rajya Sabha today appeared to be a potential game changer.
For a change, it was not just a politician speaking, but a scholar-economist giving his measured analysis. And he minced no words when he said that it was an "organised loot and legalised plunder" and "monumental mismanagement."
He also said that the GDP will slow down by at least two per cent which will hurt the people in agriculture, small industries and in the informal sectors. He added that he wanted to ask the Prime Minister to name a country where people have deposited their money but are not able to withdraw it. "This alone is enough to condemn what has been done in the name of growth".
These were potent words because they were from a man with illustrious academic and official credentials. And the Shiva Sena, an ally of the BJP, immediately seized the opportunity saying that the government should take Singh's words seriously because he is an economist. His Cambridge-Oxford, Reserve Bank and Planning Commission legacies added considerable conviction to what he said.
For a change, it was not just a politician speaking, but a scholar-economist giving his measured analysis.
Close on the heels of Singh, CPM General Secretary Sitaram Yechury also upped the ante. In a press conference he said that industry reports show that about 31 million people have lost their jobs. He also referred to the constant changes in the rules of implementation of the demonetisation drive. He said there were notifications every day and it's not even clear who is issuing them. That there are daily changes indicated that there was a problem.
Although Prime Minister Narendra Modi attended the Rajya Sabha and heard Singh speak, he didn't say a word. He just left without addressing the house. Singh's words were the most damaging counter attack against Modi machinery's claims that people were happy and the difficulties would be short-lived.
Modi, Finance Minister Arun Jaitely, the BJP and their supporters will find it hard to ignore Dr Singh's measured, but, scathing attack because of his stature and the evidence emerging from different parts of the country. Although they are yet to be quantified, the shortage of money, loss of jobs, decline in economic activities and a host of avoidable hardship imposed on the daily lives of people are hard to ignore. The government says that people are happy and things are improving, but the media reports say otherwise.
No amount of pro-demonetisation soundbites from film actors and favourable businessmen wouldn't help because the trouble is already showing. The cash supply is yet to improve even after 16 days and going by what former Finance Minster Chidambaram predicted, it's unlikely to change for months because India's capacity to print replacement-currency is only 300 crore per month. The slowdown of the economy will be real because without cash, the informal sectors, small and medium enterprises and agriculture will become lifeless--there will no money to invest and hire for the employer and no money to spend for the workers. And it has already set in motion a vicious cycle retarding the overall growth, whose ripple effect will be far-reaching.That's precisely what Singh has estimated at a two per cent. He even said that it was an underestimation.
The BJP may claim that 93% of the respondents to a survey on the "Modi App" supported the demonetisation, but unfortunately what the party doesn't say is that these results have no statistical significance because the process followed no science. The idea of a survey through a smart-phone app and presenting it as the national mood is quackery and cannot hide the reality on the streets. Singh's entry, although a bit late, adds to the volume of disapproval of the demonetisation-drive by the community of economists across the world. Modi got no support from any quarters except for a few pro-government and low-brow names at home. Introducing him at this stage was a masterstroke by the Congress.
The idea of a survey through a smart-phone app and presenting it as the national mood is quackery and cannot hide the reality on the streets.
One of the clear signs that things are not working in the government's favour is the everyday changes in the rules of demonetisation. Singh also referred to this and said issuing fresh instructions and modifying the rules every day on the conditions under which people can withdraw money "reflects very poorly on the Prime Minister's Office, the Finance Minister's office and on the Reserve Bank of India. I am very sorry that the Reserve Bank has been exposed to this kind of criticism which I think is fully justified."
The opposition, as its performance in the Rajya Sabha (also thanks to Trinamool's Derek O'Brien and Mayawati) showed, has got fresh ammunition and the government will be certainly on the back foot because the situation on the ground is not improving. It won't be a bad idea to listen to its ally Shiva Sena, which incidentally asked the party to listen to Singh.
Fifty days that Modi had asked for may be a short period for the government, but not for the common people and a major part of India's economy. As Singh portentously said "in the long run, all of us are dead." There are no long term gains if people are perishing in the short term.
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