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Mainstream, VOL LIV No 50 New Delhi December 3, 2016

Demonetisation: The Sordid Saga

Monday 5 December 2016, by SC


Today is the twentythird day since the Narendra Modi Government carried out surgical strikes on the Indian people through demonetisation (by pulling high-denomination Rs 500 and Rs 1000 currency notes out of circulation) on the ostensible plea of fighting black money and corruption.

Despite all endeavours by the authorities and sections of the media (acting as the mouthpieces of the Modi dispensation) what is undeniable is the fact that the country is currently facing a severe currency crisis with the withdrawal of the high-denomination notes—which constituted about 85 per cent of the total currency in circulation—from the market. This was clearly manifest today, the first pay day after the November 8 announcement: the queues before banks and ATMs today were seemingly unending. Public patience ran thin not because of being forced to stand in queues for long hours but due to the shortage of currency—there was a mass demonstration before a bank in Kolkata as well.

But what about the genuine poor—those who struggle every day in search of some work to help them eke out their existence?

In an exceptionally moving article in The Indian Express (November 29, 2016), well-known human rights activist Harsh Mander wrote:

The poor have not counted for policy-makers for a long time. They were guzzling subsidies and were impediments to the country’s brilliant future through galloping economic growth. They should not grumble if their lands and forests were dispossessed, their slums demolished. This was the price to pay for industrialisation, for smart cities. But even by these standards, the spectacular absence of compassion and stunning arrogance of the official imagination of this new enterprise, turning 85 per cent of the country’s currency into wastepaper overnight, hits a new low. Did the government not think of the devastation this would wreak for millions of informal workers, farmers, migrants, nomads, tribals, single women, disabled, sick and old people, street children—96 per cent people of the country without any kind of plastic card, and three out of four people in the country without effective and accessible banking? I have known the women and men I met in the past few days, on Delhi’s pavements, for more than a decade. They are accustomed to shiver through winter nights, to search for dirt-waged work every single day, to eat at charities on many days of no work, to beg if there was no other way. But they could not recall a time when life has been so hard.

Against this backdrop the words of two leading Indian economists in the US—Nobel Laureate Amartya Sen and Prof Pranab Bardhan—assume extraordinary significance. Prof Sen categorically states that demonetisation was a “despotic action” as “it undermines notes,... bank accounts, the entire economy of trust”, adding: “Only an authoritarian government can calmly cause such misery on the people.” And Prof Bardhan observes:

Apart from the tremendous hardship that the poor people are going through, the large informal sector in the economy will find it very difficult and time-consuming to recover from this big blow... The bungling and mismanagement in the implementation of this highly intrusive and disruptive policy so far suggests “maximum government, minimum governance”, exactly the opposite of what the PM had promised in 2014. He and his loyal Finance Minister keep on advising the poor people to go digital (“eat cake”).

This brings out in bold relief the sordid saga of demonetisation that has caused immense distress to those occupying the lowest rungs of the socio-economic ladder.

December 1 S.C.

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