Demonetization II

An enterprise be undertaken after being thoroughly thought through; to pause and ponder after the decision is taken and the ball is set rolling is a blemish on intelligence.

                                                                                                                                    Thiruvalluvar

(translation not literal)

The essence of ultimate decision remains impenetrable to the observer – often, indeed, to the decider himself.

John F. Kennedy

(In pursuance of Wanchoo Committee recommendations on demonetization) When Y.B. Chavan told Indira Gandhi about the proposal for demonetization and his view that it should be accepted and implemented forthwith, she asked Chavan only one question: ‘Chavanji, are no more elections to be fought by the Congress Party?’ Chavan got the message and the recommendation was shelved.

Bibek Debroy quoting in the Open Magazine

As the motley, malingering opposition smirk and simper that they have laid the Government low and successfully scuttled functioning of the Parliament’s winter session, little do they realise that this is negation of the very doctrine of democracy.

It is the prerogative of the elected Government to frame policies, introduce legislation and implement their policies during their reign. They have the people’s express mandate to do so. The opposition’s duty is to marshal their arguments and counter the Government’s policies and lay bare the chinks in the Government’s armour, given the impossibility of anything being perfect. When an issue is debated, nuances not known earlier become clear to the decider himself.

The Indian lawmakers have now brought a new, frightening dimension to democracy. Any political party with a few abject seats can effectively bring the Parliament to its knees and stonewall legislative function. In the process they can nullify the electoral verdict of the people. This calls into question the very need for elections, votes and the majority party taking over the reins. This is jugulating democracy.

Kushwant Singh once lamented that no quotable quote was to be found in any of the speeches of Parliamentarians, indicating their own intellectual deficit as well as that of the ghost writers. Now even that kind of vacuous discussion has been rendered out of question.

In exercise of its prerogative, the Government of the day will take and implement certain decisions. All decisions will not always bear the desired efficacy. Some will go wrong. Every decision is underpinned by certain variables; premised on certain reasonable assumptions and perception of behaviroural pattern of the segments targeted. Even supposing for argument sake, the present decision on demonetization has gone wrong; it is absurd to argue that velleity is preferable to venturesome initiatives. The litmus test is whether the decision was taken in good faith and sincerely believed to be in furtherance of national interests.

And who can cast the first stone? The grapevine had it that on the day Indira Gandhi was assassinated, an important functionary of the party left for Switzerland even before the funeral. If true, he could not have gone for an eyeful of scenic splendour.

In India’s chequered history, there have been decisions with far greater disastrous consequences for the nation. The 1962 Chinese debacle is likened by certain historians to juvenile trust in a courtship. The ideological blinkers India put on and the economic decisions flowing therefrom throttled economic growth, killed the Indian entrepreneurial spirits and India became the only country in the globe, as Time magazine put it succinctly, where excess production was penalised. (Many of the current generation may not be aware of the dreaded licenced capacity and the need for its religious adherence). The subsistence had to be helped in no small measure by American PL 480 handouts of food grains. India was hobbled in every possible way from realising her full commercial and industrial potential. Inevitably, soon enough, bankruptcy stared at our face, and in the most humiliating moment of  Indian history, gold had to be lifted and physically pledged abroad to borrow foreign exchange, as no country in the world would trust an Indian Government’s IOU. In 1991 the country was literally scraping the barrel as sovereign default on forex deposits loomed large. It was the path-breaking decision of P.V. Narasimha Rao to implement economic policies advocated by Rajaji with remarkable foresight that saved the nation. It is a slap in the face of socialist maharajas that today we boast of a 370 billion forex reserve.

There are also counter view points about the inevitability of Operation Blue Star and its tragic consequences, not the least important of them being Pakistan getting a handle on Indian secessionist groups. The resounding victory of Bangladesh war and vivisection of Pakistan is still being ascribed by certain schools of thought to be the raison d’etre of Pakistan’s inexorable thrust to avenge by inflicting on India a similar vivisection and where else will they find a more fertile ground than Kashmir.

Leave alone the UPA’s economic decisions resulting in monumental plunder of the Indian exchequer, the opportunity cost of a decade of policy paralysis of UPA is colossal.

In the vicissitudes of a nation’s journey, there are bound to be injudicious decisions just as there will be epoch making ones turning her fortunes. The way ahead is not dereliction but extricating the country from unintended consequences and setting the economic juggernaut into motion. The opposition has failed the nation in this calling.

Hail the Hoi Polloi

We are well into the seventh week post demonetisation. The winter session of Parliament has been shouted out. The queues outside ATMs have not thinned. The moment the cash van pulls up near the ATM and well before the ‘no cash’ board is taken off, the news spreads like wild fire in the neighbourhood and within minutes you find a sizeable queue outside the glass door.

The promised weekly quota of cash continues to be chimerical. Cable operators and newspaper and milk suppliers have not been paid off by the households for they could not give change for Rs.2000. No business establishment in fact gives change and insists that the purchase be made for more than Rs.2000.

In all this hoopla, we have failed to notice how our people have conducted themselves. Except for occasional outbursts of anger and frustration there has been no major incident. The queues have been orderly. People do have difficulties but they are abiding by rules of decency and decorum.

Marxist intellectuals have confided in private that during the heyday of the Soviet Socialist Imperialism they were cornered and repeatedly pilloried in all the international fora as to why despite with most ideal conditions, they could not bring about a revolution in India.  The Telengana uprising fizzled out to the chagrin but not disillusionment of our Marxist brethren.

This is a question most social scientists would be hard put to answer. Why with such disparities in income and life style and amid penury, the indigent Indian masses have tended to go about their business in a calm and dignified manner.

Is this because of the innate religiosity of the masses? The Marxist scholars squarely blamed the Hindu religious tenets, particularly the belief in Karma, for opiating the masses.

Home grown commentators have always stressed that in India crime has always been less considering the size of the population not because of Law Enforcement machinery but because of the native sense of Dharma.

The scholars with occidental optics and deracinated specialists might well come up with very impressive and eminently readable theses on the subject, but the phenomenon will always elude their grasp. The ultra liberal stranglehold on discourse in the media in the west obscured their senses to the massive groundswell of people’s discontent and disdain for politically and journalistically correct way to conduct the affairs. Be it Brexit or the victory of Trump (against the formidable lining up of media from Washington Post to New York Times), the pundits could not simply gauge the groundswell. Our own media moguls, fashioned in the best of Occidental optics, cannot fare better.

The communists could not bring about a revolution, but they were voted into and out of power. The power flowed not from the barrel of the gun but from the ballot box.

It is an inexplicable irony that India’s teeming millions have taken to democracy with such an amazing ease but her politicians still wallow in feudalistic possessiveness and swear by dynastic entitlement.

To get back to the enigma in question, is it attitudinal, as the adage our grandmas used to recite, ‘how does it matter whether it is Rama or Ravana who rules?’  or ‘how does it matter whether the dog goes to the left or right side of us as long as it does not bite’. ?

Whether it is the conditioning of a millennium of slavery or inherent qualities of patience, stoicism and urge for lawful behavior, the apodictic ground reality is that they have put up with the hardships with extra ordinary poise.

Let’s give wholeheartedly the ordinary nondescript Indian the encomiums he/she richly deserves.

Demonetisation and its aftermath

The arrows from Modi’s quiver seldom fail to stun and stultify the targeted group. And this latest one that quaked the citadels of real estate sharks, practitioners of Azhagiri formula (to win elections, two or three crisp 1000 Rupees notes in a cover given to families according to the number of votes they command), even hospitals and educational institutions, had his distinct characteristics: surprise element, determination once he is convinced to implement policies and squarely face the consequences. The tremors set forth by his announcement of 8^th November can still be felt across segments inured to the power of unaccounted money and may take months to subside.

And the opposition, as horses run true to form, gravitated to the singular objective of villainising him. And they did what we are so familiar with since the day Modi took over as PM. They held the functioning of the Parliament to ransom.

The congenital disease with the opposition to stall the Parliament at the drop of the hat is undemocratic and undermines the very democracy that entitles them to a plethora of perks and privileges that would make even an American Senator blush with envy. But ever since the day the High Court decided to insist on personal appearance of the mother and son duo of the Congress’ first family in the National Herald case, the equating of personal interests with those of the nation had well and truly begun and obstructing the functioning of the Parliament baptised that day has been pursued with derelict abandon till the mid-term of this Parliament session. This time around, the fig leaf is demonetisation, but if you look back every session has been afflicted for some reason or the other, the raging issue to be forgotten and buried the moment the session got over. Every session, they seem to be clutching at any issue at all to relegate Parliamentary duty to the sidelines. The overall objective is effectively to thwart any legislative work. This obduracy in turn can be traced to the refusal of certain elite groups and political parties yet to concede functional space to the PM and come to terms with the electoral verdict.

In the current post-demonetisation session, God knows, there is ample ammunition available to the opposition to corner the Government and make the treasury benches sweat simply with the third page news items of the day’s news paper, replete with tales of serpentine queues, denial of medical treatment at hospitals, imminent starvation of daily wage earners in cities and hinterland and of workers in far flung tea/coffee estates etc – but the opposition is comfortable with filibustering and has substituted serious discussion and debate with boyish rambunction.

Nothing exemplifies more the chicanery of the Indian politicians than finding the Communists, putative protectors of proletariat, in the egregious ensemble of opponents of demonetisation, a motley crowd they (the Communists) would have in different circumstances christened as a mob of money bags, leeches, fat cats and other choice epithets from the prodigious Marxian repertoire of abuses. Or perhaps they fell in line because perpetuation of privation paves the ideal circumstances for the revolution, in the same way, as a Marxian story goes, one comrade prevented the other from giving alms to a beggar because that would delay the revolution.

Communists who pride themselves that their coffers contain more coins than wads of notes could have, sensing the adverse impact on vulnerable sections, in an out-of-the box initiative, instantly liaised with big ticket retailers like Big Bazaar, More, Reliance Fresh etc. and arranged for supply of essentials at far flung tea/coffee Estates, at the factories or even at the residences of the workers against payment (representing a portion of wages) by cheque or electronic means by the Management. Or, by insisting on issue of coupons like Sodexo by the Managements to the workers exchangeable for essentials at local stores. The overriding motive transpires to be aggravation rather than alleviation.

And in the melee, the distinguished Professor Amartya Sen shoehorns himself accusing the Government of having failed to honour the promise RBI had made on the Rupee notes to pay the bearer the value of the denomination. While one has to be remarkably naive to expect anything flattering from the Laureate who exhorted Indians not to vote for Modi, how the simplest of distinctions could escape the erudite Professor is beyond one’s ken: if one deposits one lakh Rupees of demonetised notes in one’s account with a bank, the account gets credited with Rupees one lakh, not a paise less. Now, one can buy jewellery worth one lakh from say, Tanisq, using one’s debit card. One can buy a fancy mobile, an LEE TV from Flipkart; what is denied one is not the value but exchange of the amount into smaller denominations, an inconvenience hopefully ephemeral. Prejudice blinds and antipathy blinds absolutely.

This is an emergency they scream. Now, demonetisation is a fait accompli. There is no turning the clock back. An emergency is precisely the occasion for the politicians of all hues to heed the call of the hour and put the heads together as how to extricate the vulnerable sections with as little pain as possible. Instead, the opposition’s choice is to watch gleefully the discomfiture of the Government from the sidelines. Not a single suggestion, not a single constructive solution, not a single meaningful dialogue. And a former FM joins the league of critics but his famed wizardry did not engender a single worthwhile idea as to what can be done now to mitigate the hardships, alleviate the pain. In sum, vituperation, insouciance and an opportunistic urge to cash in on the impasse inform the conduct of the opposition.

The Government has been criticized for quotidian changes in the limits of money one can draw from one’s account with a bank. Leave alone it would be asinine to stick to consistency in protean circumstances, such changes only reflect the Government is dynamic, alive to the problem and reviews the situation every day and puts in place policy measures according to the needs of the hour.

Having said this, one has to recognise that proper assessment of the impact and putting in place mitigative measures is sine qua non of any initiative of this magnitude.

There can be no two opinions about the laudable objective and urgent necessity of the initiative to curb black money. India would fabulise forever in eulogistic terms anyone who slays the demon of corruption and liberate the masses from the thrall of venal officialdom. But then India is a predominantly cash driven economy. When you try to do with 14% what you did earlier with 86%, far reaching ramifications and crippling disruption are inevitable.  A step of this enormity cannot but leave huge gaps unaddressed. Our ability lies in clearly identifying and alleviating them with minimum loss of time. And if past is any indication, our ability to anticipate and manage the aftermath of decisions affecting the entire country is anything but efficient.

In scenes eerily reminiscent of Grexit, visuals of people thronging ATMs and hopping from one to another and the lucky ones waving in triumph the new 2000 Rupee are the ones you are cloyed with the moment you switch on the news channels. Well into the second fortnight, the crowds have not abated, and banks dish out just a fraction of the amount one is entitled to  as they simply do not have adequate cash and need to ration out what is available with them. This should have the Government worried. Middle class and even lower middle class to a great extent now buy even groceries online. There is, however, a vast segment where only cash prevails. A realistic assessment of the impact would have, inter alia, devoted special attention to tourism, medical care, daily wage earners most of whom are migrants, mass employers like tea/coffee estates in far flung areas, MSMEs etc.

On the 9^th of November, for instance, there were moving scenes at Chennai Central Railway Station and Koyambedu inter-state bus depot. Travellers suddenly found themselves to be penniless in a strange city. A group of tourists from Malaysia stranded at Kodaikanal said they had become destitute overnight, unable to even afford food for the elderly. And they wondered how they would get to Trichy to take the return flight home. Disconcerting reports from hospitals are now par for the course. These include deaths because the family could not buy the medicine or buy blood from any blood bank. Even as a collateral damage, this is unacceptable, the death of an honest citizen who had money legitimately earned which could not get him blood, medical attention or a life saving drug, even as a stray incident, does not advance even a bit the cause unearthing and eradication of black money.

Market corrects itself, it has an inherent self-regulatory compulsion, we have been told. What market forces we were witness to were entirely predictable. Brokers who would accept old notes at a steep discount mushroomed. Employers including educational institutions compelled their staff to deposit old notes in their (staff) respective accounts and took care to take an IOU from them for the amount given. Many booked high cost AC I Class tickets with the Railways using old notes and cancelled them to take back good notes after deducting the cancellation charges, with the staff reportedly conniving. And so on and so forth. Ingenious ways are being constantly invented.    And on the bright side, there was also a report of a few restaurants offering free food to the stranded.

Arun Jaitley, man in the unenviable seat, is undoubtedly brilliant, impressively articulate but mastering the complex world of finance calls for certain intuitive flair, instinctive grasping, not robust intellect alone. The knotty intricacies and the extraordinary reach of finance have eluded him.

As for eradication of corruption, one has to admit the grim reality. Corruption, to borrow Dr. Radhakrishnan’s quote on Hinduism, is a way of life in India. It starts right at my door step. The construction site around the corner has dumped sand and gravel halving the width of the road and the municipal guys have been taken care of. The apartments down the road have authorisation only to build three floors but have built five (with attendant strain on water, electricity and road use) with authorities having been taken care of. Apartments are to be on stilts the ground floor serving as parking space, but parking space is absent and you find flats on the ground floor, with private vehicles permanently parked on public space, the authorities looking the other way. This has to be logically extended to every single sphere of life. Every politician as entitled by his place in the hierarchy is recipient of hafta, be it from the street vendor or the eatery or the commercial establishment.

The pervasive nature of corruption is well captured in an illustrative story told of a reputed jeweller. A powerful politician is reported to have walked into the showroom, picked up a collection of expensive jewellery and then tried to walk off majestically. He exploded when stopped, did they not know who he was. Alarm was sounded, the shutters were down and the jeweller was unmoved. After a fierce argument, the politician left the showroom sans the jewels. During the following days, the Jeweller is reported to have got visits from multifarious Government Departments, sales tax, commercial tax et al. Then the Municipal authorities read the riot act and served a closure notice because of non-observance of numerous regulations. The jeweller had to shut shop. Thereafter, he called the politician for peace talks, and during the polite negotiations, dialled a certain number on his mobile and handed over the mobile to the politician saying someone in Dubai would like to have a word with him (the politician). The shop not only opened the next day, no politician was sighted anywhere in the vicinity of the shop since then. This story academically lays bare the actual state of affairs in India.

In sum, to eradicate black money, the politician has to change and given the parasitical nature of the politicians in India (barring several honourable exceptions, of course), that is asking for the moon. Unless, of course, we emulate Singapore and shed ‘the excesses of democracy.’ If the PM can ensure that an ordinary man is able to work and live and spend his life without having to pay bribe in any manner, he would have accomplished something truly revolutionary.