What Manmohan Singh called “monumental mismanagement” looks like the Chinese strategy of death by a thousand cuts. Allow exchange in the morning, ban it in the evening. Forbid withdrawals at dusk, welcome them at dawn. Encourage deposits when you are leaving for a bank, prohibit deposits when you reach the bank. Set a limit today, revise it yesterday.
It began with the quickly abandoned pre-election promise of Rs 15 lakhs per taxpayer from repatriated black money. Constant changes keep victims of the latest surgical strike on their toes. But why? Surely the middle, lower middle and working class folk massed outside banks aren’t the enemy? They can’t possibly be suspected of forging notes and playing footsy with Pakistani agents, Kashmir terrorists and Maoist guerrillas.
Everyone agrees the surge of black money that made the 2014 Lok Sabha election the most expensive ever must be curbed. The Bharatiya Janata Party may claim a special responsibility for this since Atal Bihari Vajpayee first warned that every legislator starts his parliamentary career with the lie of the false election return he submits.
Naturally, the poor support the campaign, expecting demonetisation to destroy the rich. But when Rahul Gandhi noticed the absence of crorepatis in ATM queues, it wasn’t only because he didn’t recognise a soul. He knows the rich don’t stuff their mattresses with wads of endangered notes. The cash that politics and films spare goes into gold and property. Thanks to the National Democratic Alliance generously increasing overseas remittances to $250,000, capital also goes abroad.
Money never fails to fuel intense speculation among other-worldly Indians. It was rumoured during World War I that the government was circulating currency notes because it had run out of funds. The same reason might explain the withdrawal of high-denomination notes which forced panicky citizens to enrich the government with a $88-billion bonanza. No one should be surprised if surrendered notes trickle back into circulation. What is demonetised today can be monetised tomorrow. After all, no one expected to see again the crushed and crumpled hundred-rupee notes that bank tellers, who changed them for crisp ones, said had been sent to the Reserve Bank of India (RBI) to be pulped. Instead, like Perry Como’s falling star, the RBI carefully saved them for a rainy day.
India is no stranger to convertibility. I once asked a young Naga militant with a jaunty green feather in his head band what an independent Nagaland would do for funds. “What is money?” he retorted scornfully, picking up a leaf. “If Phizo says this is ten rupees, it’s ten rupees!”
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The Robert Lindsay, son of the Earl of Balcarres, who represented the East India Company in Sylhet, discovered that the district’s revenues were collected in cowries, 700 million of which were remitted annually to headquarters (HQ). The canny young aristocrat decided to spend the cowries in Sylhet and send HQ their value in limestone. In today’s terms, cowries were US dollars and limestone Indian rupees.
Many are the uses and abuses of demonetisation. It is said to have deterred Pakistani sabotage. With no money to pay rioters, it has brought calm to Kashmir. Mamata Banerjee might credit three by-election wins to anti-demonetisation fervour. Shivraj Singh Chouhan can attribute two electoral victories to pro-demonetisation zeal. The cancellation of two Tamil Nadu elections on the grounds of massive bribery indicates demonetisation can be strategically timed. Bollywood wonders how elections can be held at all when the cash crunch has killed so many films.
We don’t know what the government is up to or why it didn’t have new currency notes ready before withdrawing the old, as European Union members did without any hitch. We do know that like Indians suffering starvation although India was self-sufficient in food, people are dying, agriculture is languishing and the informal sector is threatened because of the contrived scarcity of funds.
Money may not be the root of all evils but is politically hazardous in unauthorised hands. And so it’s being withdrawn for hoi-polloi’s own good. What Manmohan Singh deplores as “organised loot and legalised plunder” is uplifting selective poverty. The only way of erasing the writing on the wall is to demolish the wall. The only way of achieving a cashless society is to confiscate — demonetise by another name — the cash.
But there’s life after death. Bankers say the banned notes are still sold at a discount. The new two-thousand rupee notes will also be available for those who don’t disclose earnings, pay no taxes, hoard cash and finance terrorists. I am told the notes ooze black dye.