Demonetization or MODItization of the economy

Radhika Menon provides a counter-narrative to the monetary circus

The first deadline of 72 hours for demonetization is over, so is the second one of November 14. New announcements have declared a ventilator lease of life in petrol pumps for the old Rs 500 and Rs 1000 notes, with the caveat of an eventual death. In the meantime birth of a new legitimate ‘bleeding’ purple currency has been delayed by three weeks of ‘inconvenience’. Then in an afterthought, by a really long shot of 50 days, ‘for the sake of the country’. It could be six months too. Maybe seven months. In the meantime, the country has been lining up with legal-that became illegal-money outside banks- first for depositing them, then for withdrawing part of it, and then outside ATMs for a little cash. Once this is done, it is time to stand in a queue again. The wealthy who were supposed to “take sleeping pills” because of the decision are giving public statements in support of the decision , while the poor are running out of food, medicines, life, leisure and life. More than 52 have been dead directly because of this policy move, till the time of writing this. We may unfortunately have to keep counting more. These numbers are long past those killed by the alleged terror operations from across the border, be it Pathankot or Uri; and it is increasingly becoming evident that the Prime Minister and the government does not quite care, if it is the one killing its own citizens because of ‘surgical strikes’.

Theatrics of war and policy

As the monetary circus unfolds and people are put through banking trapeze acts, the funny part is over, audience laughs are forced and nervous, and the clown presiding over the circus is looking even more dangerous. For he laughs on one side of the gallery (in Japan) growls in another (Ghazipur, Belgaum) and then goes to another part (Goa) and sobs pretty tears for himself, even as people begin to die in forced acrobatics. Those who survive are left shaking in belief and disbelief. The clown has become the gatekeeper and ring master, and he is out to scare the opponents by invoking the power of beastly terror that “pull hair, publicly hang, burn alive and kill”, by pretending that they are interested in him, when everyone knows that these are the forces whom he commands. In one chorus, from various corners of the tent, believers and trolls oblige about the grief that will come to those who will not let the tragedy unfold.

Allegory fails me, here. So let us see the circus as it is.

The demonetization move and speeches of the Indian Prime Minister have carried theatrics of a war on the economy. The performance have included a war camouflage of secrecy, sermons of austerity, demands for unquestioning obedience for 50 days, helpless shocked civilians, emerging shortages of goods in the market and cash rationing. It has been called unsurprisingly a ‘surgical strike on black money’. As if following a military strategy, a hullaballoo of an unprecedented (even if unnecessary) secrecy was made out, wherein not only bankers, economists, media and the public but also his own ministers were kept out. It was supposed to carry Mr. Modi’s signature and he took it upon himself to announce it to the country. Military commander style an emergency television address was staged at prime time 8 p.m. on November 8. Following it, foot soldiers were implored to silence the shock of demonetization and he left the country for Japan, where he went off to talk nuclear deals. This entire approach on the economy follows Mr. Modi’s authoritarian, dictatorial stamp and projecting the image of a decisive leader, never mind what the consequences of these decisions be upon the people. The refusal to explain and debate the economic rationale of demonetization or even extending possibilities of a review despite the terrible human tragedies follows a pattern, which has already been exhibited in his political posturing and acts after the Gujarat killings of 2002. He further announced, in a language of threat at a speech in Goa, that he personally had several other projects in mind for the economy. The ominous plans promised by Mr. Modi, include his personal interest in recruitment of youth (possibly RSS/BJP members, since he was addressing them in Goa) for tracking the enemies of these ‘projects’. The integration of an extra-constitutional force based on his own whims, with processes of economic governance indicates an official announcement of a fascist game plan. The personification of the government’s policy measures was signed off with an emotional outburst and tears for himself. Thus this entire package of demonetization has arrived with a clear Moditization of the country’s economy and polity. In such a case, he is also accountable for the costs of demonetization, the deaths and other human miseries of hunger, loss of health and livelihood. What the country requires hence is deMODItization of the economy and its policies, by re-scripting the agendas of struggle beyond his own war and teary eyed stories.

Corruption and suspect agendas of demonetization

So would demonetization work smoothly, after the initial hiccups and struggles? All the instructions and acts that have followed demonetization, have been ad-hoc and symptomatic to immediate crisis. Interestingly, it is not even a measure that is intended to fulfill the tasks that Mr. Modi has set for it. Demonetization of higher denomination notes were clearly not to prevent ease of cash storage. If it indeed was so, then why introduce even bigger notes? It is not as if no one knows the limitations of demonetization as a tool against corruption or even inflation. The advisors of demonetization to Mr. Modi, RSS, Baba Ramdev and BJP, includes an organization called Arthkranti. They themselves have called corruption a process of leakage of revenue. But if anyone still had doubts, demonetization’s ineffectiveness has already been demonstrated both within the country in 1946, 1978 and in other countries such as Zaire, North Korea, Soviet Union, Ghana and Nigeria.

Corruption is a process of tax evasion and illicit channels of money making. It is not a golden goose shoved under somebody’s mattress. The government and its advisors know that well. If anything, post demonetization there has emerged parallel networks of nepotism, commission agents and black marketers, who are oiling bankers, bureaucracy and government machinery for exchanging old currency into new notes. Instead of worrying the rich into “taking sleeping pills”, as claimed by the Prime Minister, demonetization has wiped away the earnings and savings of the poor, as also their sleep. Those who have cared to look at the lines outside the banks, have not seen any big names of corruption lugging suitcases to banks, be it 2G spectrum, coal scam or Vyapam scamsters. It is known that big unaccounted money is often kept in foreign currencies, gold, land and shares, so big black money was not even the original target. The government never went in for the worst offenders of corruption in Panama papers, never made public HSBC list of Swiss bank holders, did not investigate the payments made to Gujarat Chief Minister in 2013 by Sahara and Birla income tax raid papers. Instead we find amusing endorsements for demonetization for combatting black money coming from tax evaders reported in Panama papers such as Aishwarya Rai and Adani. While Mr. Modi played military-miltary, these evaders got to do their two bit morally upright act.

Further, far from acting upon wilful defaulters of loans given by public sector banks, sixty three wilful loan defaulters, including Vijaya Mallya, got their Rs 7016 crore worth loan written off as non-performing assets (NPAs). The banks have already been alleviated of their pain of possessing these NPAs thanks to the flow of poor and middle class people. Those who were earlier out of banking systems, have been lining up to deposit their money in the banks because of demonetization. With withdrawals restricted, the cash rich banks now can continue to support these rich defaulters who have duped banks and the public. Those with corruption charges like Lalit Modi enjoy comfortable life abroad, assured by government’s lack of effort to pursue extradition and charges. Many like them can expect even more loans in the coming days with increased liquidity of the banks, since they are considered more credit worthy than farmers and small entrepreneurs.

Face of aggressive Capital

In the meantime, the Prime Minister has not let the dignity of office to come in the way of loyalty to his rich pals. He even poses in their advertisements showing clear preference of one company over another, clearly driven by those who supported him in his political project and electioneering. The complaints against rationing and License Raj and entrepreneurship are homilies, since rationing of cash has begun and arm twisting of people’s agency to even decide the form of keeping their wage as cash, plastic, digital has been taken away. The micro, small, medium manufacturers are crashing by the day, first following international dumping of cheaper goods and now by the paralysis enforced by the collapse of a cash economy. All this while, the big corporates are gobbling up the market through digital wallets and political support. Capital and neoliberalism clearly has arrived at a stage when even economic liberalism is becoming too burdensome for it and Mr. Modi with a militarized aggressive posturing is its face. Mr. Modi, thus has stopped to talk about or care for the small entrepreneur, trader, manufacturer, farmer and their initiatives. It just really doesn’t matter.

The RSS linked ‘Arthkranti’ advisors of the Prime Minister, make no bones that they want to reduce the informal economy. Yet most people in the country are involved in, know about and find even a semblance of inclusion only in a cash and informal economy. This is because the banking system has not generated trust among the informal sector community. Those let down by banks till now include thousands of farmers who have killed themselves unable to bear the harassment that follows loan defaults by the poor. So several prefer to remain outside it. The co-operative banks which they still trust were deliberately cut off from their legitimate role in acting as exchange agencies in states such as Maharashtra, Gujarat and Kerala, where they are still strong. Demonetization has affected this small manufacturing, informal and agricultural community forever. And this is not a ‘minor inconvenience’. What is worse, is that when they get included in the larger formal banking system, their money is also likely to be diverted to Hindutava political projects, chasing down of ‘enemies’ by extra constitutional forces, whims and fancies of crony capitalists and open thefts by unscrupulous elements because of the vulnerability of unprepared users of technology.

The Prime Minister and Arthkranti, don’t stop short here. Some of the new projects proposed by Modi may include what Arthkranti has promised. This includes banking transaction taxes, and no income tax or excise tax. This does not exist anywhere in the world, but that is not far-fetched considering the events of the last two years and particularly chaotic post demonetization days. Well, that would mean the poor after being forced into the banking system can expect to be forced to pay taxes, while the rich will pay little taxes! If the working poor do park the money of their employers out of coercion and helplessness in their accounts, they may suffer even further, with all subsidies locked out, as has already emerged in the promises of strict action. Integration of Aadhar cards to the accounts of the poor can also mean the fall in whatever little subsidies are got through cash transfers in coming days.

The sudden dramatic announcement, lack of thought and planning, gross mistakes in implementation and daily chaos since demonetization indicates that the hurried decision appears to be timed to score over other parties in the money game during UP, Punjab and other state elections. Yet, there is no denying that Mr. Modi, with his promises of more such projects, is also assuming the face of a ruthless Capital (albeit crony in nature) that intends to squeeze dry the working poor, middle classes, marginal small and medium farmer, trader and manufacturer. More than black-money, demonetization appears to step one, for chasing the goals of enriching the rich and impoverishing the poor further. MODItization is already beginning to inflict terrible misery to India’s economic and social fabric. Its counter has to emerge from the very people, who have been scripted out for a terrible fate.



Subscribe to RAIOT via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 15.6K other subscribers
Radhika Menon Written by:

Radhika Menon teaches in a University of Delhi college. She follows and researches on pedagogy and education's interface with society, polity and economy in the lives of working class and marginal groups. She is associated with Jan Sanskriti Manch.

Be First to Comment

Leave a Reply