The late Meera H Sanyal was not just a cogent banker, but also an advocate of civil society.
The late Meera H Sanyal was not just a cogent banker, but also an advocate of civil society. Her political inclinations bore testimony to her commitment. She had her eyes set to the ground and understood the common man and worked towards her betterment. Demonetisation was an act that, she believed, hurt the common man and did not quite deliver what it sought to achieve. In her very down-to-earth book, The Big Reverse, she provides a lowdown on how the scheme worked, or rather did not work, and the travails that the people were subjected to. It does not have the esoteric touch of other books written by experts like Arun Kumar (from JNU) and Rammanohar Reddy (Economic and Political Weekly), but presents a lot of facts and data to buttress the same view.
Sanyal is quite singular in her approach and steers away from theory, attacking the concept at the ground level. It adds to the credibility that this book was written by a very respectable practitioner who headed a foreign bank. The book has cogently-crafted arguments that are presented based on both data and her practical experience as a banker and ‘citizen of India’ to deliver a scathing report on demonetisation. Her starting point is that while, as a patriot, anyone would be against black money and would like to bring to book all people involved in its generation, the idea of demonetisation being the appropriate tool is flawed. Also, she says upfront that if the PM said it was a planned operation that was in the works for 10 months, then it is quite shameful the way it was carried out. In this context, she also places on record the statement made by a deputy governor of RBI, who claimed that everything was planned well in advance, even though incumbent RBI governor Raghuram Rajan declared that while he had given his opinion on the subject, it was never taken forward even for discussion. If this is true, then it appears odd that a deputy governor knew what the governor did not.
Accordingly, the author has a chapter dedicated to the RBI in which she concludes that the reputation of the central bank took a hit and its credibility came down, given its unpreparedness. The number of changes that were made in the two-month period clearly exposed the central bank, which was reactive rather than in command. She gives an example of the sizes of notes not being the same, which should have been known in advance for recalibrating the ATMs if it was a planned operation. Evidently, it was not something the RBI was prepared for, which led to disastrous consequences at the ground level.
After analysing the rather weak performance of the establishment, she analyses the economic impact of the move, which is hard-hitting. The economy was affected negatively notwithstanding claims made by the supporters of the government. She gives various estimates of how GDP growth slowed down. More importantly, she highlights how smaller economic participants like farmers and the self-employed witnessed fall in business and income. Here, she gives examples of several cases, which, as a banker, she had collected to prove how the farmers and the SME sector, in particular, were impacted. She also takes readers down memory lane, outlining similar moves in the past, concluding that economic conditions did not warrant such a move and a well-functioning economy was ‘pushed back’. Hence, the book’s title.
Next, she goes over all the objectives that were put forward by the PM when implementing this policy, as well as the add-ons mentioned by officials and spokespersons of the government more as an afterthought. These ranged from black money and terror financing to digitisation and expanding the tax base. There are eight objectives that she has critically examined in terms of whether or not they were achieved even to any discernible effect. Quite clearly, all these objectives were not met, which means that they were built on false premises and looked more like justifications of a scheme that failed. There is a lot of data to prove her point, which does look convincing.
The book has been written from the heart and, hence, while Sanyal’s political affiliations may tempt the reader to argue that it clouded her judgment, she has steered clear of political views and presented facts and drawn conclusions from them. Her view has been presented more from the point of view of a citizen of the country, who had to go through the pain of not having access to currency and the turmoil that had to be undergone to meet daily needs. All talk of digitisation was an elitist view that was not accessible in the real India. This can’t be contested.
The important issue is whether or not all this was worth the trouble in terms of the objectives that were brought about in the course of the discourse. There, surely, were other ways to do it—the choice of removing high-value notes and replacing them with higher notes was logically flawed. This is the message one could take from this book. In her conclusion, Sanyal states quite ironically through a quote of Milton Friedman that “the government solution to a problem is usually as bad as the problem and often makes the problem worse”. One may tend to agree with this view when ruminating over demonetisation.
Madan Sabnavis is chief economist, CARE Ratings