Nearly a week on, the decision to demonetise the Rs 500 and Rs 1,000 notes — on November 8, Prime Minister Narendra Modi declared these would cease to be “legal tender” from midnight that date — mocks India. For a start, they are still “legal tender”. They can be used for buying railway and airline tickets, milk from government outlets, paying for petrol and medicines, and tendering tax. The government had obviously anticipated adjustment pains, but nothing on the scale that is being reported. It is evident people cannot yet exchange their old notes for new ones. The RBI hasn’t supplied new paper money in adequate quantities. In fact, enough haven’t yet been printed. The finance minister has admitted that the misery will continue for three more weeks. On current evidence it’s likely that Arun Jaitley will be proved wrong.
Trade in everyday goods for ordinary people has, meanwhile, shrunk to a fraction because people don’t have cash. Farmers can’t buy seeds as they can’t pay for them. The country has slowed down. There have been a few deaths of people waiting in queues. When all these problems are pointed out, BJP president Amit Shah says the Opposition leaders have been “exposed” for supporting black money. Speaking to NRIs in Japan, the PM said more steps to cause pain to holders of black money aren’t ruled out. The BJP used to oppose demonetisation while in Opposition. But now, before the crucial UP Assembly elections, the device is being pitched as a moral crusade which only a resolute and clean government could unfurl. There is sanctimony abroad. Propaganda has upended facts.
The facts are, of course, revealing. According to the data, only two or three per cent of money that has escaped taxation — in other words “black money” — is in the form of '500 and '1,000 currency notes. A good part of this is likely to be with ordinary citizens, such as farmers, labourers, small shopkeepers and traders, teachers. This suggests that the drive initiated by the government with a messianic message is a dud. If it doesn’t know this, ignorance has crossed all bounds. Away from the drama, almost all black money has already been converted into real estate, gold and jewellery, and siphoned off as foreign currency — away from the prospect of demonetisation. Most of the stashed demonetised notes are with politicians and their parties. The allegation is that the BJP had advance intimation and converted its share into acceptable notes well before November 8. How’s that for operating smartly?
