The Big Story: Broken promises
Six days after announcing the sudden demonetisation of large banknotes, the prime minister made an emotional plea asking for time to implement his anti-corruption measure. “I have only asked for 50 days,” Modi said on November 13. “Give me time till December 30. After that, if any fault is found in my intentions or my actions, I am willing to suffer any punishment given by the country.”
From Saturday, demonetisation kicks in well and truly. If people have old notes, they can only be deposited in a few Reserve Bank of India branches, until March 31. In fact, the very act of holding on to more than ten old notes has been criminalised.
These 50 days have seen a barrage of government announcements. It was clear that the government had barely thought through this move: every day brought new rules and regulations. Some of the rules were so complex and byzantine that explainers on individual rules become a standard feature in newspapers. As Raghav Bahl points out, demonetisation marks India’s return to the era of overwhelming state control.
The scale of the government’s confusion on the matter can be seen from that manner in which it kept changing goalposts on even the objective of this exercise. On November 8, the move was announced as a strike against black money. Soon, making India a cashless economy became the main target. In fact, black money holders were even given another chance: on November 28, the government introduced a bill in the Lok Sabha to create a new amnesty scheme for black money holders. By paying a 50% charge, black money holders will be able to convert their wealth into legal money. On one instance, the government even announced that demonetisation had been carried out to force Indians to put “domestic savings lying idle at home” into the banking system to lower interest rates.
But by Thursday, no reasons were forthcoming. The Reserve Bank of India refused to answer a Right to Information Query on the reasons for demonetisation, arguing that disclosing this would harm India’s interests.
Moreover, it seems the 50-day deadline for normalcy set by the prime minister himself was in itself is inaccurate. The actual harm that demonetisation has caused will be felt for much longer, say experts. One report by ICICI Securities estimates that only 64% of the value of older high denomination notes would be in circulation by January 2017. Normalcy then might not be restored till at least March.
The cash crunch means withdrawal limits for people on their own money will continue. In fact, till now, most bank branches are unable to even meet the current withdrawal limits of Rs 24,000.
The government bungling has been exacerbated by confused messaging. While demonetisation cannot be undone now, the passing of the 50-day deadline should act as a wake-up call for the government to at least announce its intentions clearly to reduce the pain its confusion is causing India.
The Big Scroll
- Why isn’t the RBI declaring how much money has come back into banks, asks Saikat Datta.
- Why the chattering classes can’t fathom the vast support for demonetisation, explains Anjali Mody.
- Akhilesh Yadav revolts against his father and issues his own candidate list for the upcoming Uttar Pradesh Assembly elections.
- Government plans a two-day public relations blitz to highlight the gains from demonetisation.
- The chief minister of Arunachal Pradesh has been suspended from his party and stripped off his status as leader of the legislature.
- Mayawati might find it tough to pull off a victory in Uttar Pradesh by depending only on Dalits and Muslims, explains Ashutosh Bhardwaj in the Indian Express.
- Sasikala would find it tough to fill Jayalalitha’s shoes in Tamil Nadu, argues this edit in the Hindustan Times.
- In the Diplomat, Saurav Jha explains how the Bay of Bengal is seeing a naval arms race with India, China, Bangladesh and Myanamar joining in.
Ajaz Ashraf explains how demonetisation made this small business owner a Modi supporter, but not for long
“It is the evening of November 8 and I am thrilled at Prime Minister Narendra Modi’s decision to invalidate high-denomination notes of Rs 1,000 and Rs 500. Mind you, I didn’t vote for his party in the 2014 Lok Sabha elections. But now, I robustly applaud him, I am the new Modi bhakt.”
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