Dr M Binota Ksh
Hailed by some as the ‘’second surgical strike” (the first being “Uri”) Prime Minister Shri Narendra Modi’s November 8th 2016 surprise and immediate implementation of ‘Demonetization Policy has caught every Indian off guard. This Demonetization announcement may perhaps be considered as the most important decision ever taken in the economic history of independent India. This is because it is targeted against two evil forces – hoarders and accumulators of black money and corruption-which have, for too long, had undermined and impeded the growth of not only political development but more importantly economic development. It can even be argued that no Indian Prime Minister in the post-independent era have ever undertaken the fight against black money and corruption with such passion, commitment and intensity as Narendra Modi.
It is not surprising, therefore that sporadic acts of protest against demonetization and demand for re-monetization have followed the November 8th decision. Demonetization of old rupee 500 and 1000 currency notes became the most- talked- about and discussed issue in the National/local media as well as in the day-to-day conversations among the common people. In the last sixty days and the more of post-demonetization, there has been a great deal of talks and debates on the recent move of note ban. Even though episodes of protests against demonetization and demand for re-monetization are waning discussion on demonetization must continue in the larger interest of the nation. If we want to get rid of evils like black money, fake currency and the corruption, demonetization must not be perceived as a simple note ban act, but it should continue as part of the larger progressive movements, even giving more power and new course to movements. Even though demonetization is an economic policy, it has implications beyond financial loss or gain. Therefore, demonetization is not a mere note ban drive. It simply means the act of striping of a currency unit’s status of a legal tender and on the other hand re-monetization is the act of restoring the legal tender status of a currency note or a form of payment. However, discourses on demonetization as an economic policy should be far away from politicking. The naïve description of the policy as understood by the common people and on the contrary, the very multi faceted and long term goals of this economic policy have led to the emergence of arguments for and against the recent move of demonetization. However, if we take the available survey reports into account, it will be a total waste of time to discuss whether public is supporting this policy or not because “public opinion” favoring the demonetization policy has already been depicted by numerous scientific surveys conducted by various independent research agencies, news channels, newspapers etc. in different place and time. The figure sometimes went as low as only 3% of the respondents were not supporting demonetization policy.
Such an appreciation of demonetization policy by the majority Indians is due the very nationalistic primary motive of this policy, which is to wipe out black money, corruption and terrorism from Indian soil. On the other hand, there is an enduring complain over the temporary inconveniences inflicted to the masses due to the lapses in the implementation of this policy. Here, a pertinent question can be raised. Can we have a public policy that will not find its opponents? The obvious answer seems to be a clear “No” as a every public policy when implemented has to face the taste of uncertainties, unanticipated consequences, and the ill effects of miss-conducts committed by implementing officials. It means that we should give demonetization policy enough time and opportunity so that it can prove itself. To judge short term fall outs as the only impact of a policy without waiting for the “long term gains” will be a gross injustice to the policy makers. Therefore, given the unlikely re-monetization (though speculations can be there for re-monetization of Rs.1000 notes) the need of the hour is not disparaging this courageous move against black money hoarders.
The extent of the policy is so vast that it has thrown its impact on almost every spheres of life in the country. Unlike other monetary policies that remain unaware to the common people, demonetization has been understood by public as note ban campaign to fight against black money. Given demonetization policy’s direct bearing on the life of common people and the future of the Nation as a whole, it is a government policy “for the people” in its true sense of the term. Despite this, it is imperative to look into the prevailing optimistic and pessimistic views on demonetization. A pessimistic view on demonetization ranges from people is suffering to slow economic growth of the country. Critics of this policy are of the views that because of demonetization poor will suffer, it may inflict riots, it cannot wipe out black money because black money stashed abroad remains untouched and black money hoarders in India have already engineered loop holes to escape, it will have devastating long term impact on GDP, etc.etc. On the other hand Optimists view demonetization as a means to curve black money and thereby mitigating corruption and terrorism. Supporters of this policy are of these views that demonetization will increase the cast deposits in banks thereby decreasing the lending rates that will ultimately benefit the ordinary customers and the business persons, it would accelerate e-commerce thereby making Indian Economy move towards cashless economy, it will inculcate the habit of banking thereby strengthening the Indian Economy etc. However, the biggest blunder of the opposition was to disrupt the sessions of both the houses of Parliaments asking the Prime Minister of India to explain the nitty-gritty of the demonetization scheme, and the equally serious mistake of the ruling party was allowing the opposition to do so. Without wasting time and money and sidelining the various important bills to be placed in the floor of the house both opposition and ruling parties could have discussed the impracticality of demonetization, if there is any, or expediencies of the same.
Therefore, I should say, let us first discuss “economics of demonetization “.Only then common people can comprehend the different versions of the “politics of demonetization” being played by big political figures. Let us make it compulsory that every arguments for and against demonetization must be supported by empirically verifiable data. For that, we need more scientific research and data. Therefore, debates on the impacts of demonetization should not remain a battle of perceptions and a war of attrition. In this juncture of drastic transformation, academicians across the social science discipline particularly Economists and the intellectuals must chip in with open- minded insides and corresponding fresh research findings. Only then we can end this battle of perceptions over demonetization and have a dissected view on demonetization policy. Never the less, what we need is to evaluate demonetization policy purely as an economic policy through a frame work for analyzing a public policy so that together we can mitigate those a few avoidable and some unanticipated inconveniences to common people.
The demonetization policy of Shri Prime Minister Narendra Modi, which is primarily against black money and corruption, aims, as I see and understand it as a student of Economics, at increasing saving and investment; growing small-scale enterprises; increasing/generating employment in private sectors; increasing work culture; enhancing work efficiency and quality; reducing consumerism. The policy has also brought into sharp focus, once again, the need for transparency in banking system, honesty and sincerity of bankers, prevention of illegal money markets.
And the Yes, not to forget Prime Minister Narendra Modi’s , passion and desire of bringing a cashless economy in India.
*The Author, Dr.M.Binota Ksh, an Economist, is Intending BJP Candidate for Singjamei Assembly Constituency. The views expressed here are personal assessment of the author and not necessarily that of the party.
The author can be reached at – firstname.lastname@example.org
‘Economics of Demonetization’ Vs ‘Politics of Demonetization’
Dr M Binota Ksh