The Big Story: Debating demonetisation

Parliament has ceased to debate demonetisation. The government repeats pieties about waging war on black money which funds terror and corruption, and insists the move was was well-planned, while the prime minister maintains a studied silence. The Opposition, so far, has deployed an escalating scale of rhetoric to attack the move. While the Trinamool Congress and the Aam Aadmi Party demand a complete rollback of demonetisation, the Congress’s Ghulam Nabi Azad compared the deaths that occurred in a week of demonetisation to Uri, where 19 soldiers were killed after militants stormed an army camp. Lost in the din is a sober debate on a measure that has caused misery to millions as cash dries up and livelihoods are affected.

In the interests of the people it claims to represent, the Opposition needs to use this moment to ask the government some pointed questions. First, what were the calculations behind the move? The immense disruptive potential of sucking out 86% of the currency must have occurred to those in government. But, beyond a general statement of noble intentions, the gains of such a measure have not yet been explained – why cracking down on cash stashes was felt to be the best way to tackle black money, whether this move will actually force substantial amounts of black money out of hiding, and how the new batch of notes will not be hoarded and counterfeited in the same way. Over the last few days, the government has spoken of Rs 3 lakh crore being deposited within four days of demonetisation. Except, it is not clear how much of this amount is black money and how much of it white money that had to be deposited because of the move.

Second, the government has claimed that meticulous planning went into the move and cited the need for secrecy. But realities on the ground belie its claims, and the oversights cannot be blamed on secrecy alone. A woefully inadequate financial structure is struggling to deal with the current situation, as people line up for cash outside banks and ATMs that are still empty, and the government keeps changing the rules for exchange and withdrawal. It is not clear why it went ahead with such a costly move without strengthening the financial infrastructure first. Besides, it now emerges that there are not enough notes to replace the currency sucked out. Reports suggest that printers were expecting a later deadline. And it now emerges that, though this move had been planned for about 10 months, the new notes were only printed after September 4. It may take months to make up for the shortfall in currency. In the days to come, does the government have a plan to cut through the chaos?

Third, and probably the most important, how will cash reach large unbanked tracts of rural India and unorganised sector? Bank branches and ATMs are yet to reach many remote areas, and the unorganised sector still depends on moneylenders and other informal credit economies. The government’s plan for injecting cash back into the system relies on the formal financial system, leaving out the weakest, most marginalised sections of the economy. Cooperative banks, which finance agriculture in many places, have not been given a roadmap either.

These questions and more are what the Opposition needs to be asking the government. It is imperative, at this moment, to press for accountability and workable solutions to alleviate the distress caused by demonetisation. By reducing the issue to mere theatrics in Parliament, the Opposition does the suffering public a great disservice.

The Big Scroll: Scroll.in on the day’s big story

Girish Sahane takes stock of the highs and lows of demonetisation.

Gautam Bhan explains how demonetisation could cause a “welfare shock” to the poor.

Sruthisagar Yamunan lists five reasons why demonetisation has turned into a policy quicksand.

Sanjay Srivastav on how demonetisation has become a moral project for India’s middle classes.

Ipsita Chakravarty on how Trinamool Congress leader Mamata Banerjee’s chosen style of agitational politics may not work at the Centre.

Political pickings

  1. At a “parivartan yatra” in Uttar Pradesh, Bharatiya Janata Party president Amit Shah takes potshots at the Bahujan Samaj Party and Samajwadi Party on black money.
  2. Notes were printed only after September 4, when the new Reserve Bank of India governor Urjit Patel took over and signed off on the plates.
  3. The Information and Broadcasting Ministry has taken steps to prevent the movie, KaBodyscapes, from being screened at film festivals in Kerala and Hyderabad. The movie deals with a homosexual love story, which plays out against the backdrop of movements for sexual freedom.

Punditry

  1. In the Hindu, G Sampath on how Modi’s opponents cannot succeed unless they construct a powerful counter-narrative that is not about the prime minister.
  2. In the Indian Express, Arbind Singh on how demonetisation has hit the unorganised sector, which depends on wholesalers and moneylenders, the worst.
  3. In the Economic Times, Ajay Chibber on how demonetisation only affects black money, not black wealth.

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