Mess as policy
Demonetization has failed. The sooner the Prime Minister accepts this, the better.
New Delhi: Days before the 2004 general election, tragedy struck in Lucknow. Twenty-one women and children died in a stampede in a small park where the Bharatiya Janata Party’s Lalji Tandon had organized a function to distribute sarees to the poor. The organizers apparently threw the sarees into the crowd of 5000 persons which resulted in the stampede and the deaths.
Atal Behari Vajpayee was the Prime Minister. Surprisingly for a man known to be sensitive, he issued a pro forma statement of regret with a superfluous twist in the end. “It is a great tragedy,” he said, “we are mourning it, but elections can’t wait.” Reading the statement the next day in the papers, this writer was convinced that the BJP had become callous and hubristic in the belief that Vajpayee was unbeatable in the coming polls. This writer was more or less certain that the party would lose the general election or merely scrape through. It lost.
This sad incident comes to mind in relation to the deaths that have occurred in the first two hard months of the demonetization programme. The Congress Party has put out an exaggerated number for the deaths at more than one hundred. The BJP has not even bothered to respond. Prime Minister Narendra Modi has not expressed a single word of regret for the deaths, not even Vajpayee’s half regret. Even if one person dies as a result of a policy initiative, it is an untimely and unjust death, and needs to be mourned. Far less from mourning, the Prime Minister speaks of demonetization as yagna. India’s poor are amongst the poorest of the world. What sort of yagna does the Prime Minister expect from them? Their daily lives have been disrupted by demonetization. Their informal employment in multiple small trades has gone. The informal sector that constitutes a bulk of the economy has sunk. People have been destituted. What sacrifice are we speaking of here?
As a policy measure, demonetization has resoundingly failed. Meant primarily to target black money, that object has not been remotely met. Most of the demonetized currency has returned to circulation. Terror funding has been hit, but to believe this is a permanent feature is to be foolish and foolhardy. An unintended consequence of demonetization is that digitization of the economy has grown. But to extrapolate from there that India can become a cashless economy in a matter of months, leave alone years, is to reveal a complete absence of thinking. Arun Jaitley, the Union Finance Minister, says to the effect that if you do not have cash, go cashless. That is like saying, as Marie Antoinette is supposed to have said, “If you do not have bread, eat cake.”
It is now very evident that demonetization was done without planning. There was no plan B, C or D if the first set of actions failed. At the cost of the country, the Modi government experimented with demonetization. We all became guinea pigs, as it were. How could the government be so uncaring? Did it not visualize the humungous costs of failure? The economy is hit. No question. All the disinformation of Modi’s ministers cannot cover this sad fact. The economy will take at least two years to recover. The rural and semi-urban economies have been ravaged. The wholesale markets have been virtually liquated.
As sad is the minimization of the role and responsibilities of the Reserve Bank of India in the demonetization programme. It now transpires that demonetization was not driven by a specific need expressed by the Reserve Bank but imposed on it by the Central government. This is a clear usurpation of the monetary policy responsibilities of the Reserve Bank. The RBI stands lowered today. Its worldwide prestige is in tatters. Unsurprisingly, at least three former Reserve Bank governors, not including Manmohan Singh, have spoken in strong words against the present subjugation of the Central bank. And for all his sins, considerable as they are, Manmohan Singh did two good things, not counting the 1991 reforms. He adamantly pursued and negotiated the Indo-US nuclear deal whose benefits flow to the country today. Secondly, he ensured the autonomy of the Reserve Bank in his tenure as Prime Minister as an article of personal faith. He insulated the governors from political pressures and obstreperous Finance Ministers, one of them a most venal creature currently much active, and he gave the country a splendid Reserve Bank chief in Raghuram Rajan.
It is not too late for Narendra Modi to rectify matters. He should admit to the failures of the demonetization programme and be genuinely contrite for the deaths caused. If he remains unmoved, he will likely face Vajpayee’s 2004 situation in 2019: Beware the curse of the poor. The Congress is the cruising crocodile of the muddy river, ready to grab power in case the present hubris and policy blunders continue. There are reports of widespread corruption in the local BJP and RSS leadership in the ticket-distribution in Uttar Pradesh, Punjab and Uttarakhand. Tickets are being auctioned for up to Rs 1 crore, and winners are expected to pay up in new currency. The public is watching. If it can bring a party to power, it can also ruthlessly dethrone it. It has done so several times before.
Editor’s Note 1: Some things are sacred. Khadi and the Khadi Village Industries Commission (KVIC) are associated with M. K. Gandhi. The KVIC calendar should feature no one but Gandhi. It is wrong for Prime Minister Modi to be featured in it. The calendar with Modi must be scrapped and a new one with Gandhi published. If Congress leaders featured in the KVIC calendar earlier, that is also wrong. It cannot be a justification for doing more wrong. Two wrongs do not make a right. If he governs well, Prime Minister Modi will get his deserved place in history. Personal glorification must be absolutely resisted.
Secondly, Sushma Swaraj has reduced her office by going after Amazon on Twitter for a rug carrying India’s flag. Her minions could have done that if that was so central to India’s foreign policy, which it isn’t. She has reached a plateau as the External Affairs Ministers. Getting journalists to write puff pieces convinces nobody in today’s world. The world is going topsy-turvy. Hyper-nationalism will not save this country. Wise and intelligent foreign policy might.
2. Rahul Gandhi should cease the drama of being a serious and concerned politician. He is a jet-setter, and he should honestly admit to being one. It is perfectly alright that he must want to celebrate the dawn of the New Year in London and in other Western capitals. It grates, however, when this charlatan speaks of the poor, and it is rank hypocrisy when he calls the Modi government a “suit-boot ki sarkar”. He and his party are no better, and perhaps infinitely worse. The Lutyens’ Delhi media has given him and the Congress Party a free pass for too long.