note demonetisation

Three key letters missing in Arun Jaitley’s latest defence of demonetisation: GDP

From expectations of a ‘V-shaped recovery’ the government is now only speaking of a ‘cleaner’ economy.

Finance Minister Arun Jaitley put out a note on Tuesday in defence of demonetisation, ahead of the first anniversary of the decision. In his piece, Jaitley insists that the note ban, which resulted in 86% of currency being withdrawn and replaced with new notes, has been a major success and was “a watershed moment in the history of Indian economy”. But while Jaitley covered a number of topics in connection with the currency withdrawal scheme, he failed to touch one subject that supporters of the decision had been vocal about: India’s Gross Domestic Product .

“In an overall analysis, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system,” Jaitley wrote. “The next generation will view post November, 2016 national economic development with a great sense of pride as it has provided them a fair and honest system to live in.”

His post touches on a number of subjects, insisting that demonetisation was successful at reducing the amount of currency in circulation, that the Income Tax department now has much more data with which to investigate illicit activity and that the note ban led to further financialisation of savings. He even returned to the argument that demonetisation somehow reduced instances of stone-pelting, protests in Jammu & Kashmir and Maoist activities.

Whither GDP?

But Jaitley did not mention the GDP or economic growth. The only reference to growth in the piece, in fact, is to say that life insurance companies are collecting more premiums. This might have something to do with the fact that India’s numbers on that account are not looking particularly positive at the moment.

In the aftermath of Prime Minister Narendra Modi’s announcement of demonetisation it was apparent that the move had caused tremendous economic distress across the country. The effect was particularly acute in rural markets and the informal economy, but since India’s growth metrics cannot directly measure that, it took some time to begin reflecting in official statistics. The government initially refused to acknowledge any sort of distress and later, after admitting that there had been some short-term pain, insisted that it would disappear soon enough.

Jaitley, in a similar Facebook post in January, insisted that, following demonetisation “the size of the banking transactions and consequently the size of the economy is bound to increase. In the medium and long run, the GDP would be bigger and cleaner.”

V-shaped recovery

Others went even further. Reserve Bank of India Governor Urjit Patel, criticised for simply toeing the government’s line on the note ban, said there would be a “sharp V-shaped recovery”. Jaitley said in March that the worst effects of the move had played out with a 7% GDP growth in the quarter from October-December 2016, and that he expected “in the future quarters this figure itself will grow further”.

By August, that tune had changed entirely. Data that month showed that GDP growth had slipped to 5.7% in the April-June 2017 quarter, which also meant India had registered six consecutive quarters of slowing growth. Far from bringing up a “V-shaped recovery”, Jaitley and others were now trying to insist that this had nothing to do with demonetisation or the other badly implemented policy that came after it, the hurried rollout of the Goods and Services Tax.

In October, the Finance Ministry made another admission that it expects GDP growth to continue to fall, accepting the International Monetary Fund’s projection that India will only get back to 8% GDP growth (under the new series) by financial year 2021-’22. All of this might explain why Jaitley’s latest post speaks only of an “honest” and “clean” economy, and not one that can expect tremendous GDP growth anytime soon.

We welcome your comments at
Sponsored Content BY 

“My body instantly craves chai and samosa”

German expats talk about adapting to India, and the surprising similarities between the two cultures.

The cultural similarities between Germany and India are well known, especially with regards to the language. Linguists believe that Sanskrit and German share the same Indo-Germanic heritage of languages. A quick comparison indeed holds up theory - ratha in Sanskrit (chariot) is rad in German, aksha (axle) in Sanskrit is achse in German and so on. Germans have long held a fascination for Indology and Sanskrit. While Max Müller is still admired for his translation of ancient Indian scriptures, other German intellectuals such as Goethe, Herder and Schlegel were deeply influenced by Kalidasa. His poetry is said to have informed Goethe’s plays, and inspired Schlegel to eventually introduce formal Indology in Germany. Beyond the arts and academia, Indian influences even found their way into German fast food! Indians would recognise the famous German curry powder as a modification of the Indian masala mix. It’s most popular application is the currywurst - fried sausage covered in curried ketchup.

It is no wonder then that German travellers in India find a quite a lot in common between the two cultures, even today. Some, especially those who’ve settled here, even confess to Indian culture growing on them with time. Isabelle, like most travellers, first came to India to explore the country’s rich heritage. She returned the following year as an exchange student, and a couple of years later found herself working for an Indian consultancy firm. When asked what prompted her to stay on, Isabelle said, “I love the market dynamics here, working here is so much fun. Anywhere else would seem boring compared to India.” Having cofounded a company, she eventually realised her entrepreneurial dream here and now resides in Goa with her husband.

Isabelle says there are several aspects of life in India that remind her of home. “How we interact with our everyday life is similar in both Germany and India. Separate house slippers to wear at home, the celebration of food and festivals, the importance of friendship…” She feels Germany and India share the same spirit especially in terms of festivities. “We love food and we love celebrating food. There is an entire countdown to Christmas. Every day there is some dinner or get-together,” much like how Indians excitedly countdown to Navratri or Diwali. Franziska, who was born in India to German parents, adds that both the countries exhibit the same kind of passion for their favourite sport. “In India, they support cricket like anything while in Germany it would be football.”

Having lived in India for almost a decade, Isabelle has also noticed some broad similarities in the way children are brought up in the two countries. “We have a saying in South Germany ‘Schaffe Schaffe Hausle baue’ that loosely translates to ‘work, work, work and build a house’. I found that parents here have a similar outlook…to teach their children to work hard. They feel that they’ve fulfilled their duty only once the children have moved out or gotten married. Also, my mother never let me leave the house without a big breakfast. It’s the same here.” The importance given to the care of the family is one similarity that came up again and again in conversations with all German expats.

While most people wouldn’t draw parallels between German and Indian discipline (or lack thereof), Germans married to Indians have found a way to bridge the gap. Take for example, Ilka, who thinks that the famed differences of discipline between the two cultures actually works to her marital advantage. She sees the difference as Germans being highly planning-oriented; while Indians are more flexible in their approach. Ilka and her husband balance each other out in several ways. She says, like most Germans, she too tends to get stressed when her plans don’t work out, but her husband calms her down.

Consequently, Ilka feels India is “so full of life. The social life here is more happening; people smile at you, bond over food and are much more relaxed.” Isabelle, too, can attest to Indians’ friendliness. When asked about an Indian characteristic that makes her feel most at home, she quickly answers “humour.” “Whether it’s a taxi driver or someone I’m meeting professionally, I’ve learnt that it’s easy to lighten the mood here by just cracking a few jokes. Indians love to laugh,” she adds.

Indeed, these Germans-who-never-left as just diehard Indophiles are more Indian than you’d guess at first, having even developed some classic Indian skills with time. Ilka assures us that her husband can’t bargain as well as she does, and that she can even drape a saree on her own.

Isabelle, meanwhile, feels some amount of Indianness has seeped into her because “whenever its raining, my body instantly craves chai and samosa”.

Like the long-settled German expats in India, the German airline, Lufthansa, too has incorporated some quintessential aspects of Indian culture in its service. Recognising the centuries-old cultural affinity between the two countries, Lufthansa now provides a rich experience of Indian hospitality to all flyers on board its flights to and from India. You can expect a greeting of Namaste by an all-Indian crew, Indian food, and popular Indian in-flight entertainment options. And as the video shows, India’s culture and hospitality have been internalized by Lufthansa to the extent that they are More Indian Than You Think. To experience Lufthansa’s hospitality on your next trip abroad, click here.


This article was produced by the Scroll marketing team on behalf of Lufthansa as part of their More Indian Than You Think initiative and not by the Scroll editorial team.