One month of demonetisation has presented two dominant narratives -- one is centred around ex-Prime Minister Manmohan Singh's assertion that note ban is a "mammoth tragedy", the second is championed by Prime Minister Narendra Modi
One month of demonetisation has presented two dominant narratives — one is centred around ex-Prime Minister Manmohan (MaMo) Singh’s assertion that note ban is a “mammoth tragedy”, the second is championed by Prime Minister Narendra Modi (NaMo) that says note ban is a “short-term pain for long-term gain.”
Singh says the surprise demonetisation has “shattered the faith and confidence” of over a billion people of the country in the Indian currency and the government. To support his claim in an article in The Hindu, Singh quotes a saying “money is an idea that inspires confidence”. However, there is no evidence to show people have lost their faith in the Indian currency or the government. Had it been so, there would have been riots across the country by now.
As an economist, Singh is expected to supplement his claim with data. As a politician, however, he can afford to deal in anecdotes and hyperboles.
While announcing the decision to demonetise old Rs 500 and Rs 1000 notes, Modi had said, “There comes a time in the history of a country’s development when a need is felt for a strong and decisive step.”
Modi didn’t ignore the possible hardship citizens would have to endure because of the decision. He anticipated the trouble and appealed to people to bear the pain. “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.”
The last big reform that liberalised the Indian economy happened in 1991 when Singh was the Finance Minister. While reading the historic speech in Parliament then, Singh had also foreseen the troubles people faced because of the liberalisation of the then mostly state-controlled economy.
“Sir, I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, ‘no power on earth can stop an idea whose time has come.’ I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail,” Singh had said. Ironically, that optimism of Singh seems to have been lost somewhere.
In The Hindu article, Singh points out two “primary reasons” for the note ban: a) to check terrorists from Pakistan, b) to break the grip of black money and corruption. Readers may find it interesting that Singh says these two evils “deserve to be extinguished with all firepower at our disposal”. But he doesn’t find demonetisation as one one such firepower. He says something, contradicts himself and warns “road to hell is paved with good intentions.” Singh may be right in saying this as he has witnessed how corruption became a popular culture in the years following economic reforms of 1991.
Modi continues to maintain that demonetisation would yield long-term gains, take India towards a digital, cashless economy and ensure the financial inclusion of all sections of society. He says the government is doing everything in its capacity for the proper implementation of the note ban.
The frequent Income Tax raids and seizure of hundreds of crores of new currency notes from different parts of the country show the government machinery is functioning. But then the queues outside banks and ATMs, loss of jobs and maybe lives, as reported by media, due to note ban shake people’s faith in the decision.
The situation could have been better had the majority of the country including the banks, police and general administration been honest. As an economist, it could have been better if Singh had proposed ways to solve these problems and show a path out of what he calls a “mammoth tragedy”.
Instead, Singh warns, from his own experience perhaps, “most policy decisions have unintended consequences”. He also argues that fighting a war against black money “may sound enticing. But it cannot entail even a single loss of life of an honest Indian.”
India has a very bad record at implementing any policy or programme. Singh knows this better than everyone. For corruption is a part of the popular culture in the country. Modi promises to break it. And he says this is just the beginning. Should one be hopeful and look towards the future or live in the decadent past or the rotting present?
The NaMo narrative is the future — for it bats for the cashless digital economy, MaMo is the past — for it argues for status quo. A civilisation that stops walking towards the future rot early.
People may choose between the two and decide their fate. While doing so, they can take inspiration from what Singh said in 1991: “But as Victor Hugo once said, ‘no power on earth can stop an idea whose time has come.’”