A few weeks after Prime Minister Narendra Modi had administered demonetisation to the nation, I drove from Bangalore to my old haunts in north Karnataka. Knowing how difficult it would be to pay to fix a puncture or for a cup of tea, I took along whatever small change was lying around our house. There was a cash crunch everywhere and the newly introduced ₹2,000 rupee note — referred to good-humouredly, as Modi-note by many — was not only an impossible to change denomination but also one which evoked much merriment everywhere.
What however was missing, except in intellectual circles, was the intense dislike for Modi that our media was reporting daily along with graphic, and more accurate, accounts of cashless ATMs and grim faced people queuing up to change old ₹500 and ₹1,000 notes. What was under-reported however, was the fact that the queues became significantly shorter once indelible ink markers were used over the objections of the Election Commission.
Under-reported, however, was the impact of demonetisation, however fleetingly, on terrorism. By all accounts, it came down and a significant quantity of counterfeit notes was flushed out of the system.
Demonetisation had obviously hit India hard. It slowed a cash-based economy down for a while significantly. Small businesses closed down, some permanently, and luxury goods sales, especially high-end automobiles, plummeted. Plantation owners had no way to pay their workers and a messy IOU system took over in many parts of the country. Under-reported, however, was the impact of demonetisation, however fleetingly, on terrorism. By all accounts, it came down and a significant quantity of counterfeit notes was flushed out of the system.
Although many were badly affected, what surprised even die-hard critics of the move was the equanimity with which Indians accepted demonetisation. There were no riots and few agitations. In subsequent elections, the BJP went on to trounce its rivals across most of the country. Many put it to the way Modi sold the idea to the people and they were not wrong. If only the critics had stepped out of their drawing rooms and talked to the people, they would have known that Modi's move was not badly received after all.
The only one who could have argued against demonetisation with conviction, Nitish Kumar, the ever astute Chief Minister of Bihar, smartly chose to stand by Modi.
Many considered demonetisation a great step in combating black money and were willing to view the inconvenience that followed as a necessary pain. The Congress Party played no small part in demonetisation's success. In criticising it as an anti-poor move from every forum, Rahul Gandhi was seen as having joined hands with a convicted politician like Lalu Prasad Yadav, a discredited Samajwadi Party in UP, an ever-in-opposition Arvind Kejriwal, and a shrill Mamata Banerjee who few took seriously outside West Bengal.
In coming out stridently against demonetisation, a party that had the unenviable reputation of heading UPA -2, widely considered the most corrupt government since Independence, lost the little credibility it had left. The only one who could have argued against demonetisation with conviction, Nitish Kumar, the ever astute Chief Minister of Bihar, smartly chose to stand by Modi. In doing so, he sanctified the move like no one else could have, while unwittingly reinforcing a feeling of acceptable collective suffering, essential to take on multiple evils such as terrorism, fake notes, and ill gotten wealth stashed away in vaults and mattresses. That the economy did not tank, as many inside and outside the country had predicted it would, was an added bonus for Modi.
As subsequent elections showed, people had bought into Modi's narrative and were in a mood to 'sacrifice for the larger good.'
The steady stream of news reports of raids unearthing crores in the most unlikely hands reinforced a public perception that Modi had rightly, and courageously, taken on the vile forces bent on destroying India. As subsequent elections showed, people had bought into Modi's narrative and were in a mood to 'sacrifice for the larger good.' This was the kind of mood I, for one, had last witnessed as a boy during the Chinese invasion when people voluntarily gave gold and money — worth over $ 200 million according to one estimate — to save the nation.
This was reinforced by the comments of the poor who also were made aware of the value of their Jan Dhan Accounts which mysteriously began filling up once demonetisation kicked in, and according to some reports, at over ₹87,000 crores was well in excess of the ₹65,000 crores declared in an amnesty scheme just prior to demonetisation.
Whatever the amount, for the first time in their lives, the poor of India had the unusual experience of seeing the rich, with stashes of unaccounted money seeking their help to legitimise at least a part of it. That this happened across India is by now well-known but largely ignored by those who view demonetisation as an unmitigated disaster. Also, ignored by its critics, is the fact that demonetisation brought a lot of black money into the verifiable formal economy. This allowed the government to calibrate a continuous stream of raids and seizures which we can now expect will go on right up until the 2019 general elections, reinforcing Modi's reputation as a beleaguered corruption fighter.
Clearly, demonetisation was Modi's 'Garibi Hato Desh Bachao' moment and it is astonishing that the opposition was naive enough to facilitate it.
It now appears that biggest blunder Modi's opponents committed was not in going along with Modi on demonetisation and sharing the credit for it. That one no longer hears the opposition parties rail against Modi's move is proof enough that they have learnt their lesson.
In retrospect, demonetisation can either be viewed as the Bramhastra that Modi unleashed leaving opposition ranks in disarray or a bait he threw at them, and which they collectively bit, damaging themselves no end, while allowing Modi to emerge as the champion of the poor. Clearly, demonetisation was Modi's 'Garibi Hato Desh Bachao' moment and it is astonishing that the opposition was naive enough to facilitate it.