Demonetisation: Surgical or Furgical ?

More truly, demonetisation is looking for a needle in the haystack and that by any stretch of imagination is not a surgical strike, the principal characteristic of which is precision attack on pre-identified targets . Here every house is a suspect. At the same time, the process of making over and reclaiming one’s own cash savings entails real pain over an extended period. The torment ,therefor,e is anything but ‘furgical’. Lalu Yadav in coining the epithet won ‘rhyming’ points but not much more. Maybe, ‘tragical’ would be a more apt rhyme.

We are now a fortnight into Mr Modi’s fusillade. If the bullets set afire black monies held in withdrawn notes without any significant collateral damage Mr Modi will emerge a global exemplar of a crusader against corruption. Else, the monetary disruption may leave deep disfiguring scalds on the face of our political economy. But we are yet some distance away from the day of  reckoning.

Is the gamble well taken?

First, let’s be clear, ‘notebandi’ is not ‘nasbandi’ that will stop ‘procreation’ of black money. Cupidity is intrinsic to human nature and of all  venal crimes, non- payment of taxes is a relatively innocuous infraction that the intrepid and intelligent sportingly indulge in. Successful evasions and avoidances of tax earn bragging points even for a President elect of USA, Mr Donald Trump. Obviously, ‘honourable’ crimes that essentially breed voluminous amounts of black money are of sterner stuff than demonetisation can handle.

Further, till bills for a politician's walk through public life are footed from cash donations received from dubious sources ,generation and supply of black money and corruption will scarce decline.The just concluded USA presidential election was agog with candidate funding for a quid pro quo. India is no different. The International Money Watch Group estimates that BJP alone spent Rs 23000-24000 crs in the 2014 Lok Sabha elections, most of it unaccounted. The figure may be disputed but the scale and grandeur of BJP poll ad blitzkrieg lends considerable credence. In fact, all political parties are partners in this crime of corrupt poll funding. The Lok Pal, supposed to cleanse the Augean Stables of corruption in high places, including political corridors, is sadly mortuary bound even before it felt the birth pangs. A pure nation with an impure polity is a contradiction in terms. Therefore, staking political fortunes on the plank of demonetisation as an ‘imandari ka parv’ is ab initio a sour bet. It may cause ripples but will fail to enthuse.

Secondly, fear of stigmatisation and prosecution will lead beholders of illegitimate cash to quietly bury it, nothing will flow into government coffers. Existing money stock will get depleted causing a short-term currency contraction with its concomitant deleterious effects on incomes and productivity. If Mr Modi makes good on his resolve not to replace all the notes turned in, the relative currency shortage will perpetuate. In an economy, with an informal sector greased by cash, accounting for 40% of GDP, the gap may not be bridged by e-money any too soon making liquidity woes endemic.

Thirdly, existing counterfeit notes that supposedly finances terror will be guillotined. By Indian Statistical Institute estimates, 250 of every one million bank note in circulation is fake, that puts the stock value of counterfeits at Rs 400 crs , not a significant sum. Besides, while we recalibrate our ATMs for the new notes, a process that some say may stretch over 3-4 months, the handlers of terror too would be retrofitting their printing presses to churn out fakes of our new notes. Till then, a temporary respite at best.

Fourthly, the ‘whales’ of black money don’t hold it in cash, only the ‘prawns’ do. Therefore, if at all, only the prawns will get caught.

Fifthly, economists could never figure out whether money is the cause or effect of economic conditions; if former, we are inevitably headed for an economic slowdown. Prognosis on offer is heavily hedged for political correctness and couched in astute doublespeak, anything but categorical. The one common refrain ,though, is that the economy will contract in the short term.

Sixthly,is the govt equipped to scrutinise all cash deposits of over Rs 2.5 lacs in accounts ex-post demonetisation? Already, it is supposedly looking, on a monthly basis, into a much narrower field of cash deposits of Rs10 lacs or more per annum in bank accounts. Nothing much has come out of it.

Seems the odds are stacked against. 

Need for calm reflection

If so much is uncertain of outcome, the time to sing hymns and hosannas of triumph and euphoria reminiscent of our surgical strike into Pakistan, or for that matter, even to pronounce demoniac presages ,has not yet come. The aims of demonetisation are indubitably and eminently desirable but it comes with several caveats. Consider these two.

First, the carrot of amnesty dangled for voluntary disclosure of unaccounted assets met with limited success. The ’Black and White’ scheme for foreign assets netted just Rs 4000 crs, a total whitewash, and the ’Fair and Lovely’ scheme for domestic assets found 64275 declarants with Rs 65250 of undeclared assets, a measly Rs 1 crore per head. The big fishes were, clearly, not enthused. Will the ongoing cash purge smoke them out this time around?

Secondly, withdrawal of currency for the purpose of eliminating black money has met with limited success, rather in some countries it led to violent disruptions. BRICS nations are broadly in the same economic boat. So, the 1991 demonetisation of 50/100 rouble note by Mikhail Gorbachev may provide instructive insights. And the one unpalatable lesson is that it drove the last nail in the coffin of a crumbling USSR and the USS left USSR and Gorbachev with just Russia. Burma faced violent student unrest when the military rulers cancelled its currency. In other countries too the experience has been sub-optimal.

Demonetisation a bitter pill

Given the blemished history of demonetisation, one wonders, is it a compelling imperative for an economy flaunted as the one bright spot in an otherwise bleak global scenario? If winter has not set in why the need to administer ‘kadak’ chai to all and sundry? The state has sufficient instruments to prise out ill-gotten wealth and concealed incomes in a pin pointed manner instead of casting its net over all citizens, most of whom are law abiding.

Cash holding per se is not insidious. The poor hold it close to their chest because it is tangible and money in hand literally. Besides,the nation has a large and legitimate parallel cash economy constituted by small businesses contributing 40% of GDP. It is suffering the most. disruption as currency contraction.comes as a huge restraint in its most busy season.- marriages, harvesting of kharif crop and preparatory farm operations for rabi sowing. Much of our economic edifice rests on consumption arising from marriage festivities and farming. The fact that concessions had to be made for both these activities post implementation betrays lack of planning foresight and poor timing.To identify this informal cash economy with circulation of black money does not do justice to the diligence and entrepreneurship of millions of small businesses contributing legitimately to national wealth. Bear in mind that cash in Japan is 20% of GDP ,ours is less than 12%. Cash is not the devil made out to be.

Further, demonetisation icomes against the backdrop of a visible  upturn in manufacturing and farming. Will it not abort this resurgence in economic activity. Likely, most financial wizards say.

Cost benefit equation.

Then. there is the question of cost- benefit. The Centre For Monitoring Indian Economy ,CMIE has pegged the cost of the official 50 day currency disruption at RS 1.28 lakh crores .That's huge. There's a human cost too. More lives have been lost ,unsung, due to demonetisation related causes than at the borders since the Sep surgical strikes , estimates varying from between 25 to 50.

One indisputable benefit from currency contraction is the leg up it gives to electronic payment system.That should result in better tax collections. Also, lower currency circulation reduces currency replacement costs.

Meanwhile, masses line up in long queues to reclaim their legitimately earned money; those not having accounts or more money than the state is willing to exchange out rightly look for jugaad to overcome the handicap. They aren’t complaining, not yet, for they want to believe that Mr Modi is playing Robinhood and that they stand at a crossroad in nation building when, ignoring all personal trials and tribulations, they must tread a path charted by him “In a country’s history, there come moments when every person feels he too should be part of that moment – that, he too should make his contribution to the country’s progress. Such moments come but rarely.” Demonetisation is  thus cloaked in tiranga and administered to the lay as a patriotic pill. Besides the national interest  pitch, we may be seeing the manifestation of an age old weakness of humans living in communities - concealed delight in the misfortune of better off  neighbour..

The crooked whose misdeeds foisted this agony on masses, though, do not line up i queues; not one of them figure among the 25 reported dead (some put the toll at over 50) from demonetisation related causes. They don’t lose sleep for ill-gotten wealth is ‘easy come, easy go’. The future will again give them chances to recoup their losses. For the moment, the common man endures all the pain with no gain in sight.. Nobody has explained to him how the measure benefits him.,So nothing to him looks , poor friendly..

Alternatives

The government has stated to the Supreme Court that demonetisation aims to boost electronic payment of goods and services. Eminently laudable objective with the caveat that a cashless economy is a fanciful thought. Even a most electronically connected economy like USA has cash to the tune of 8-10% of its economy. Its highest currency denomination $100 is at the current exchange rate, 3.5 times our highest denomination ,Rs 2000. But undeniably we must move firmly in that direction.

Could this switch over be catalysed without going through the torture of demonetisation? If boosting e-payments is  the predominant motive,I believe Yes,it can be done.One way is to forewarn the nation and give people sufficient time ,say six months, to accept and internalise a regimen where all contracts above a cut off limit would be legally valid only if paid electronically. Both the avowed aims, encouraging e-money and eliminating black money would thus be attained without the damages inflicted by a shock and awe demonetisation. Not death by guillotine (that anyway isn't feasible) but  the slow, yet sure, attenuation and de-fanging of black money through exsanguination.

Between the lines...

As the days pass by, the measure increasingly morphs into a political narrative in economic script. Allegations of treasurers and friends of BJP being forewarned of the move are rife. In evidence is cited the abnormal rise in bank deposits between July and September this year.That the  government is not willing to rebut, adds grist to the rumour mill. If true, it does give an unfair advantage to the party over its political opponents in their financial preparedness for the ensuing polls. But more likely is that it rounds up BJP's armoury of poll battle cries. To Kairana, Bharat Mata Ki Jai, and surgical strike (lost some sting as Pak remains firmly belligerent and unrepentant) has been added an anti-corruption pitch. That is a formidable quartet of goodies to sway voters.

When the history of this period is written, its one abiding remembrance will be of long serpentine queues of puzzled, frazzled and tense, yet mostly disciplined people, lined up before ATMs in enclosures with downed shutters across the length and breadth of the country, hoping against hope that the shutters will lift, and it will, like before, start dispensing cash, and even more importantly, praying that by the time their turn comes it won’t run dry.

Demonetisation Googlies

Muthiah Murlidharan bowled only a DOOSRA, Mr Modi went one ahead, spun a TEESRA. Demonetisation is his third assault on black money. How many demons, if any, will it slay, the jury is still out on that. But the measure is reinforcing what every chronicler of ‘money’ has chorused. ‘A constant in the history of money is that every remedy is reliably a source of new abuse.’ Man’s cupidity is unbounded. This measure to ambush ‘black’ cash too is ending up creating more of it. So, the ‘imandari ka parv’, as Mr Modi describes demonetisation, has so far struck many different strokes.

(i)               Many a hapless traveller stranded with only the trashed notes and staring at starvation was tipped to go to the note-changers for succour who deigned to offer- Rs 400/700 for each proffered Rs 500/1000 note. Good Samaritans too risk-reward their munificence. Doubt if that extra rupee will be reported to the taxman.

(ii)              Petty bank account holders were pleasantly surprised to find their unfancied accounts could earn ‘rent' in addition to interest. They merrily ‘rented’ their accounts for depositing others’ banned notes, the rent rising as high as 25% of the amount routed. Mr Modi’s instrument for financial inclusion, the Jan Dhan accounts are said to have been particularly seduced.

(iii)            The grey market in bullion, for a while, did brisk business, exchanging gold for cancelled notes at premiums ranging from Rs 10000 to 20000 per 10 gms over the official gold rate. One report speaks of 25 tons of gold sold in the first four days of the ban order. Most busy was the grey market in the PM’s own state, Gujarat.

(iv)            Even Gods are making hay; donation boxes in temples overflow with cancelled notes. Defunct notes worth Rs 4.4 million made its way into the temple hundi at Sri Jalakanteswarar temple in Vellore. Ironically, the worthless, untaxed hoard in the donor’s hand now becomes legit tax free. In the God’s earthly realm even impure notes get laundered white. Ganga Maiya too found herself awash with banned notes near Mirzapur.

(v)             But the parsimonious housewife will be unforgiving of Mr Modi. Her instinct for thrift has been sadly abused. She had painstakingly cut corners to squeeze some savings out of the house keep money and stashed it away from the prying eyes of her husband for a rainy day or more likely, a visit to the jeweller. All of it for ease of concealment had lain hoarded in Rs 500/1000 notes. Alas! just when the family needed it most, she found her savings stripped of immediate purchasing power. Not only did she lose control over her savings, she also lost face, and had some explaining to do as to its source. Anyway, the husband had the last laugh.

(vi)            Mr Modi enthused congressmen when he mocked them "those involved in big scams, like 2G and coal scam, now have to stand in queues to exchange Rs. 4,000". Congressmen didn’t know they were so many across the country, the only prominently identifiable congressman standing in a queue was Rahul Gandhi.

(vii)          A day later ,a 96-year-old lady escorted by relatives exchanged annulled notes at Oriental Bank, Ahmedabad under the full glare of camera lenses and TV crews. She was PM, Mr Modi’s mother. 

(viii)         Media was agog with wild rumours. One fancied a Rs 2000 note embedded with NANO GPS chip that terrestrial satellites could locate even deep down to 120 mt. below earth’s surface. At that depth why bury notes when one can extract coal instead at some places.

(ix)            counterThe ‘sanskritization’ of economic footprints begun with the new symbol for the rupee was carried a step forward. The 2000 note for the first time carried numerals in Devanagari script.

(x)             The famed Indian art of jugaad too was brought into play to ease somewhat the leg-aches of those standing in long queues for hours to reclaim their savings. A website ‘book my chotu’ offered to hire out a stand-in for queueing up before bank counters or ATMs . Not many of the proxies ,though, were kids, that is, chotus, but fully able-bodied men out of work.

(xi)            An example of a jugaad that was simplicity personified surfaced in a PSB. An innovative cashier started entering Rs 100 note deposits by people as deposits in Rs 500/1000 note tenders, then made ‘out of court’ swaps with Rs 500/1000 note holders at a discount of 20%. As simple and fool proof a jugaad as can be.

The demonetisation measure is hailed as bold and innovative. But are these any less so? Time is not up, as we go along I am sure more creative strokes will be struck against Modi’s TEESRA. 

Today NDTV,tomorrow WHO ?

Let me begin this piece with an obituary picked up from an article by Ashok Mahadevan in Reader’s Digest (date changed).

O’CRACY,D.E.M., beloved husband of T.Ruth, loving father of L.I.Bertie, brother of Faith, Hope and Justicia, died on November,9

It was meant to draw the attention of world at large to the prevailing stifling smog of dread and distrust hovering heavily over a nation suffocating under Emergency. To hoodwink censors the text was morphed and, says the writer, surreptitiously inserted in TOI. Today, I have chosen to reproduce it as nothing better describes the depth of my dismay, distress and deep anguish at I & B ministry’s punitive direction to NDTV to be off air on 9^th November and as because the freedom to overtly rebel and bewail assaults on right to expression and information still exists. Tomorrow, maybe not. Already, a debate has germinated whether questioning or doubting state action or failing to be supportive of it is sedition qualifying for quarantine in Pakistan, or in the least, to be pointed out and stigmatised as anti-national. No less than Mr Kiren Rijiju, an Hon. Minister of State adds mite to this debate by defining what does not constitute right culture at Home;

“We should stop this habit of raising doubt, questioning the authorities and the police. This is not good culture”.

So, there is a present and imminent danger of such thoughts mainstreaming. Having breathed the malodorous air of Emergency, even a whiff of censorship in any form, be it dress, food, the choice of slogans, access to information, or religious practices, raises hackles and makes one cry wolf. The Hon minister more than ruffles feathers, in fact, strikes at the very roots of democracy- right to question. I see not a whiff but a gale of authoritarianism and thought policing reminiscent of Joseph Goebbels’s infamous Ministry of People’s Enlightenment and Propaganda aiming for ‘Gleichschaltung’, achievement of uniformity. The world has moved more than 30 years past 1984., and here we have a state still striving to suppress ‘deviant’ views.

Before Mr Rijiju’s proselytising zeal for true culture ensnares us all into re-defining democracy, it may be worthwhile to bear in mind how USA’s founding fathers of democracy conceptualised the term.

“The duty of a patriot is to protect the country from its government”, Thomas Paine

“It is the first duty of every citizen to question its government “, Benjamin Franklin

Though the Americans have done well for themselves living by this understanding of the term, the current ruling elite in our country have turned a page different  from them or reading some other book.

And what a rotten day to sound ‘quietus’ - 9/11.Granted 9/11 occurred on 11^th Sep but the ban on 9^th Nov is too numerologically close to invoking dark memories of 9/11. If an important edifice of global democracy -twin towers of World Trade Centre was obliterated on the American and 9/11 and Democracy served its heaviest blow since Pearl Harbour. .Is GOI’s intending something similar on Indian 9/11,an equally grievous blow to Indian democracy ?

The unease with the ban arises primarily from what it shows up in bold relief- covert building up of a paradigm of non-acceptable forms of information seeking, expression and speech in public discourse, social interactions and media projections. Information on security operations,surgical strikes, excesses committed by security forces, violations of human rights by armed forces, or pointing out lapses in policing of army camps in JK that lead to its repeated breaches by terrorists, is now deemed prejudicial to national security. Security is truly a daintier damsel in distress in peace times than she was in war. Today a touch and she stumbles. Caricaturing and lampooning are non-approved expressions, more so, if it relates to prominent political personages from the establishment. Chorusing of Bharat Mata ki Jai is sought to be made mandatory. 

An ‘Outlook’ editor gets the sack for an expose on RSS. P. Chidambaran’s interview is spiked by NDTV because it asked questions of surgical strikes.  Reporters of ‘Scroll’, an online magazine get jailed in MP for raising inconvenient questions about anti- Naxal operations by forces. Such instances have multiplied alarmingly. 

That channels will discuss to eternity a shoe flung at Rahul Gandhi, interviewing and focussing on the ‘hero’, but not find time to debate alleged fake encounter killings of SIMI fugitives of Bhopal jail or the mysterious disappearance of a student at JNU can’t all be incidental. It stinks of an unholy nexus between the media and the state, the durban feasting with the thief. The fourth estate has voluntarily entered a self- imposed regimen of doing the bidding of the state under editorial prodding of its owners whose sympathies unabashedly lie with the ruling elite.One fears the Nazi dictum of who controls expression controls the people being actualized.

Why then should a need arise to single out NDTV for ‘treatment’. Let’s defer this question for a while. First why the ban is rotten. GOI has powers under Sec 20 of  Cable Television Networks Regulation Act 1995, to prohibit transmission of any channel in the interest of security. And as Venkiah Naidu says, GOI took TV channels off air 21 times during UPA regime. Right, yet I see three gaping holes in state’s justification. 

First, competitive sinning is not NDA’s popular mandate. People voted this government for change ,not perpetuation. So ‘me too’ is poor politics. Secondly, those UPA instances relate to broadcast of adult content, easily spotted. On the hand, NDTV case is a first-of-its-kind penalty for what essentially is, in the subjective judgment of GOI, prejudicial to security of the nation. What is porn is porn indisputably; the ideological predilections of a regime decide whether it goes on screen or not. But what is prejudicial to security is a subjective assessment in the absence of actual harm or damage hence pregnant with alluring possibilities for abuse for partisan ends. The state should not be the sole arbiter of subjective judgements in matters relating to a the fourth pillar of democracy. Precisely for this reason there exists a state recognised self-regulatory body, Broadcast Editors Association, duly constituted under the relevant government guidelines, for oversight of visual media. TV does not have a statutory regulator like the Press Council of India for print, hence the Editors Guild fills in. For reasons, best known to it, the state ignored it. That’s what makes the order bad and capricious.

 Lastly, government failed to rebut NDTV assertion that "its coverage was sober, and did not carry any information that had not been covered by the rest of the media and was not in the public domain”. Another channel ‘News Times Assam’ too is ordered off the air on the same date for a footage that some other channels also aired. Discriminate brandishing of state power is ominous for democracy. Putting all together it is crystal clear that the order smacks of malafidy and arbitrariness with the intent to put nooses on 'errant' channels.

Now the why NDTV. NDTV (Hindi) is the one channel that has held alternate viewpoints on several policies and events, at times embarrassing the government and its ministers. One can find no other reason for government picking on NDTV while condoning others for identical infraction. Obviously i t is being arm twisted to toe the government line and no other. Dissonace with official views is no reason to snuff it out a news channel. If democracy can’t live with dissent, debate and ambiguity what will ? Intolerance is not only bad governance in a functioning democracy ,it is suicidal for the social fabric of a pluralistic nation.

Dissent is the highest form of patriotism, Thomas Jefferson rightly said. Uniformity of thought -my way or the highway, is anathema to democracy. It follows that state must enable citizens to do its patriotic duty of creating various shades of opinion based on unimpeded access to all sources of information including media channels. The state has no inherent right to paint the nation only in black and white, it must allow for shades of grey. As citizens, we too need to be reminded that eternal vigilance is the price we must pay for preserving our individual liberties. If an elephant has its foot on the tail of a mouse, and you say that you are neutral, the mouse will not appreciate your neutrality. I agree, Mr Desmond Tutu

These words of Pastor, Martin Niemoller resonate with me as I see its increasing relevance in the present state of the nation.

First they came for the Jews and I did not speak out because I was not a Jew.

Then they came for the Communists and I did not speak out because I was not a Communist.

Then they came for the trade unionists and I did not speak out because I was not a trade unionist.

Then they came for me and there was no one left to speak out for me.

who are the 'martyrs' ?

A democracy, by definition, is liberal in thought and deed. And India is among the very few former colonies that steadfastly and exuberantly has been a vibrant one for the last 70 years or so. Naturally, ’conferring’ martyrdom comes easy, more so, when it is liberally buttered with nationalistic fervour for political dividends. Soldiers killed in cross border fire; or terrorist attacks on army camps; or Siachen landslides; or OROP suicide; or in Naxal attacks; or a cop garroted by undertrials in Bhopal jail, all such tragic deaths, depending on newsiness or capacity for milking partisan gains, are opportunities for thrusting martyrdom on the slain.

Soldiering or copping is an occupation like any other, only one with heightened life risks. In peace times, the risk abates. Still, in the performance of duties some, inevitably, do get killed by inimical forces. its an occupational hazard .We feel the loss and grieve with the victim families.

Does their death in harness automatically confer martyrdom, merely because the victim is a soldier or a cop? I may sound irreverent or profane or in the current mood of the nation, seditious. But do ponder. What should one say of the truck driver who carries a daily life risk on road, and many times more of them die every day in road accidents. Is he less exalted or beholden of an inferior genre of life risk ? Whether a cop or a soldier or a truck driver, all voluntarily choose the risk-reward inhering their jobs.

So, do we call them martyrs or reserve the term for one put to death for not renouncing his faith, or one persecuted for adhering to a principle or a cause. The Dictionary unequivocally says, the latter. Yet, across the political spectrum one sees a competitive race to glorify soldiers, cops losing their lives in course of discharge of duties as martyr. Like never before.

In earlier times, we paid our respects and homage, solaced the mourning families and endeavoured to provide good lives to the families they left behind. Things have changed indeed. Suddenly slain security men have become handles for political posturing and whipping up jingoistic hysteria. The nation has fallen into the trap of worshipping form and ignoring content. That an ex-service man had to commit suicide, for whatever reasons, setting aside the issue of his mental state deemed questionable by V K Singh, is proof enough.

Let us not debase true martyrs by a politically expedient reading of martyrdom. The rightful claimants are the few who lay down their lives for noble causes. Slain security personnel deserve our heartfelt homage, empathy and a befitting financial package, may be even handholding, to enable their families to walk through life with their head held high. But martyrdom, only with due circumspection.