16/11/2016 3:56 PM IST | Updated 17/11/2016 9:46 AM IST

Demonetisation: We're Singing Hymns About The 'Greater Good', But Has Anyone Seen The Flow Chart?

Hindustan Times via Getty Images
People in queue outside a bank to deposit and exchange 500 and 1000 currency notes at Paharganj, on November 16, 2016 in New Delhi, India. (Photo by Arvind Yadav/Hindustan Times via Getty Images)

It has been just over a week since Prime Minister Narendra Modi declared in a surprise TV announcement that currency notes of ₹500 and ₹1000 would become invalid within four hours. The objective behind the decision was to render useless millions worth of black money lying in people's houses: under beds, behind toilet flush tanks, hidden in basement garages. It was one tight slap by the government on the face of greedy, corrupt people who'd been hoarding money in their homes for decades, evading taxes, running a parallel economy, funding illegal activities (terrorism, Naxalism, etc). Their stash turned into trash overnight.

Modi reminded us of Rajinikanth— heroes who don't waste time thinking... It's all about action, and this time an audience of 1.2 billion Indians was applauding.

That obnoxious neighbour who was always flashing a new cell phone or gloating over a new car had been shown his rightful place; people like him would now be reduced to sitting with their useless, filthy cash, crying hysterically. As the PM reminded us during his trip to Japan, it was time for honest citizens to have the last laugh. Indeed, there is immense pleasure to be had in watching a neighbour go down, whether it helps one or not. Many people cannot stop gushing over this bold, heroic move. Modi reminded us of our filmi heroes, of Rajinikanth no less — heroes who don't waste time thinking or getting cowed down by legal nuances and professional ethics. It's all about action, and this time an audience of 1.2 billion Indians was watching and, mostly, applauding.

Unfortunately, this is not a movie, and if you come out of that scene you were imagining, you'll realise that the rich and greedy are not crying as profusely as you might hope. Instead, millions of people at the bottom of the social and financial pyramid are suffering, even dying. Women are the worst hit, followed by other marginalised people living on the fringes, outside the systems created by the establishment, with no decision-making power and limited or zero mobility. The beggar, the child labourer, the sex worker, the old woman ostracised by villagers for being a witch, the illiterate housewife who isn't allowed to even go to the balcony but who waits for small freedoms like a plate of chow mein paid for by her secret stash of money, the lesbian couple on the run from a family baying for their blood, the housemaid who is too scared to use the building's elevator and too intimidated to open a bank account in the city where she works — overnight the government forced all such people to come out of the woodwork, to go to the bank or post office and prove their identity for access to their own money.

Hundreds of millions of such people are robbed of their limited financial agency as they are forced to hand over their savings to the male members of the family or to somebody else who has power over them. It is no longer just a "minor inconvenience"; there are major collateral damages. The Supreme Court made a telling statement when it pondered over whether the move should be called a "surgical strike or carpet bombing." A surgical strike is like a doctor doing an operation with proper safety measures so that no other part of the body is damaged; a carpet bombing is like a drone attack on a civilian village to take out terrorists.

Is there a flow chart that explains how the black money tumbling out of corrupt homes will enter poor households as white money?

But it is all for the greater good, we are told. Let us examine this claim for a while.

Firstly, everybody is talking about this illusory "greater good" but nobody seems to know how it will play out. Has anybody seen the flowchart? The poor will be the most benefited we are told. How? Is there a flow chart that explains how the black money tumbling out of corrupt homes will enter poor households as white money?

Perhaps the government has announced a new scheme. A freely accessible pool of money, like a river or a well, where black money smoked out as a result of demonetisation will be kept, and poor people will be allowed to take money out of the pool whenever they wish. No? The government did not make any such announcement? Then how is everybody so convinced that the poor will be benefited?

Most of us get money by working for it. From a poor daily wager to the CEO of top company, our salaries on which we pay taxes are our white money. A poor daily wager goes to work and she gets paid; when she doesn't go to work, she doesn't get paid. How will this move suddenly change her earning capacity? Will the labour contractor suddenly increase her daily wage overnight because of this move?

The largest beneficiaries at the moment are the e-commerce giants/digital wallets like Paytm and Rupay etc. Consumerism and corporate conglomerates are greatly benefited. Look at the newspapers, full of ads on how you can do all your shopping online — for that movie, pizza, Gucci dress. The banks, and of course the government's treasury, will also gain by way of revenue with which the government promises to build more roads, hospitals, schools. That promise has existed since eternity, but little benefit trickles down to the poor. The question thus remains, is there a direct cause and effect equation which proves that the poor will be directly benefited by this carpet bombing?

The largest beneficiaries are the e-commerce giants/digital wallets like Paytm and Rupay etc. Consumerism and corporate conglomerates are greatly benefited.

Secondly, how will the greater good arrive in future when this move is not even addressing the basic process of black money creation?

If I break down the process, it is something like this. I go to a property dealer to buy a flat, she quotes ₹45 lakh — of this ₹10 lakh is payable by cheque for property registration documents, and the remaining ₹35 lakh must be handed over in cash. Now, I am an honest person but I need a house, so I take out my white tax-paid money using ATMs and give the cash to the dealer. Thus, my clean ₹35 lakhs turn into black money in the dealer's hands. Another example — at the time of making every small and big purchase, the seller tells me if you pay by credit card you'll have to pay 2% extra or if you want a pucca bill you'll have to pay this much tax. So, to save money, I pay by cash or don't take the bill; on her part, the seller doesn't show the sale and avoids paying tax. The white money I handed over turned black in the seller's hands.

Question: how will demonetisation stop this process? It seems that with this move all that has happened is that the existing stash was rendered useless — yes, it's a temporary setback for the rich, but how do we know that they won't restart hoarding in new denominations? Meanwhile, the collateral damage far outweighs the illusory "greater good". So is it all worth it? Or was this a populist move before election— heropanti designed to elicit maximum clapping?

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