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Why Demonetisation Is A Bad Idea And Not A Remedy For Black Money

22/11/2016 7:29 PM IST | Updated 22/11/2016 7:53 PM IST
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Mukesh Gupta / Reuters
People gather at the entry gate of a bank to exchange and deposit their old high denomination banknotes in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta

On the evening of 8 November when Prime Minister Narendra Modi appeared on television to address the nation, many, including me, thought it would just be a video version of his "Mann Ki Baat" address on the radio. Not in my wildest dreams had I imagined that Modi was about to announce a decision that would not only wreak havoc on the country's economy but also claim scores of innocent lives as 'sacrifice'.

When Modi announced the decision to demonetise high value currency notes, my first reaction was that of shock. It took a few minutes for the fact to actually sink in that the three ₹500 notes in my pocket would not be of any use post midnight, which was less than four hours away. On my way back home in the metro, I found people appreciating the move and the audacity of Modi.

Then, next morning, the mayhem started. The cycle-rickshaw driver who takes me to the metro station was cribbing about how the ₹5,000 he had sent to his family back in Bihar before chatth pooja were useless now. In the metro, people were fighting at the counter, as officials were not accepting ₹500 and ₹1,000 notes. Later that day I heard the news that metro authorities had been asked to accept the old notes till a later date. Some high-level officials had to intervene to ensure this. That was the first time it struck me that the Union government was unprepared and had not thought through this decision.

Over the next few days the queues in front of banks and ATMs grew longer and longer, marriages were postponed or cancelled and, according to reports, more than 50 people have died due to incidents related to demonetisation. People died in hospitals as the old notes they had were not being accepted, some died while waiting in queues and some committed suicide. One bank employee died due to heart attack after working non-stop for three days.

On social media, you might have seen many saying this is a service to the nation and also comparing standing in queues to soldiers defending our borders. I beg to differ!

Modi's methods remind me of local doctors in small towns. Their remedy to all ailments is the same: paracetamol and an injection of 'god knows what', if the patient's condition worsens.

First, what our soldiers do is honourable. Even if they lay down their lives in the line of duty, it's an honourable death. What honour is there in dying while trying to withdraw your own hard-earned money from your own bank account?

Then, there's this argument that circulation of black money will stop due to demonetisation. Money is not black or white, it's the cause for which it is used that makes it white or black. Already several cases of people caught taking bribe in the new currency has been reported by various media. Was this white money? If it was not, the argument about demonetisation curbing black money menace fails. The question of how people giving these bribes were able to get lakhs in new ₹2,000 notes is another mystery altogether. While the aam aadmi is dying standing in queues, those with the right contacts are still obtaining enough cash, and even using it to pay bribes.

Modi's methods remind me of local doctors in small towns. Their remedy to all ailments is the same: paracetamol and an injection of 'god knows what', if the patient's condition worsens. Modi's paracetamol is 'development' and his 'god knows what' injection is nationalism. Be it Digital India or Startup India or Swacch Bharat or Beti Bachao or any other campaign that the Modi government has launched, they are more about media and social media campaigns than making real a difference on the ground. How many female foeticides did Beti Bachao prevent? Or how many startups were funded as part of Startup India? Nobody actually knows. And if I dare ask these questions, some 'goons' would start threatening me.

Someone shared an interesting analysis of who are these people very vocal about supporting demonetisation and why are they doing so.

Category 1: Urban upper middle class youth working in private companies who have credit card, debit card, petro card, sodexo coupons and, above all, Paytm are all happy. They were already doing most of their transactions online. They are busy with their own lives and voted for Modi on the development plank. Many of them believe Modi is doing the right thing through demonetisation.

Category 2: The underprivileged in small towns and villages are enjoying seeing their local small-time politicians or moneylenders having a tough time. They don't have much cash and many of them don't even have bank accounts. They live hand-to-mouth and in the coming days they are the ones who will face the brunt of cash crunch due to demonetisation.

Category 3: Ardent fans of Modi. Need I say more?

The next two weeks are going to be crucial. Whether demonetisation will go down as a success or a failure will be decided on the calls the government takes during this time.

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