Demonetisation and its aftermath

If millions were invested in TV ads arguing that a certain toothpaste cleaned black
teeth, would one buy that brand? What is less understood is that although positive
ads are usually necessary for a brand to stay competitive, they are rarely decisive in
campaigns. It is this principle that is being tested in the current imbroglio on
demonetisation. The recent step taken by the government to demonetize the
currency has become a matter of intense debate. Clashes have been witnessed in
both the houses of parliament between the government and the opposition, bringing
both houses to a halt.
The recent step taken by the government to demonetize the currency has become a
matter of intense debate. Corruption has become endemic to the system and it has to
be fought has become a constant refrain. Corruption, however, does not affect
everybody the same way. It has created an asymmetrical society. On the one hand we
have the beneficiaries of the corrupt system, the traders, the politicians, the
bureaucrats and their cronies. On the other, we have the general mass of people
(euphemistically called the cattle class), who are victims of the corrupt system. And
one taking side depending on which side of the fence one is. Demonetization is akin
to chemotherapy in a cancer patient in an advanced stage. It is anybody's guess how
long will the euphoria last and will depend on how resilient the parallel economy is.
Unable to cope with the stress caused by demonetisation, fifty people have been
reported to have lost their lives. In a stunning revelation, Prof. Sen, the Nobel
Laureate, has removed a widely held misconception that the major cause of the
Bengal famine of 1943 was the shortage of food. It was, in fact, peoples inability to
buy food because they had no money. We are now witnessing a similar famine like
situation where markets are full of food items of every sort but people are facing
starvation, unable to buy their groceries because they have been robbed of the
purchasing power of their money. It is absolutely scandalous that the car owners are
free to use their demonetised money to buy gasoline, but people cannot buy food for
survival. Why this laxity to car owners who, presumably, use plastic money, and no
such relief to a common man who doesnt. It is anybodys guess to estimate the
dimension of the conversion of black money into white by the exemption to buy
gasoline with the junked currency notes, given the chaotic traffic conditions on the
roads oversaturated by the fleet of motor vehicles of all types. Yet the constant
refrain of the government is to promote the use of plastic money even for vendors
and labourers. At the same time the penchant to convert black money into white goes
unabated. The deposits in Jan Dhan yojna accounts belonging to BPL category have
suddenly swelled after demonetisation to a staggering 21000 crors of rupees. The
conversion of currency has yielded another 35000 thousand crors in a period of ten
days. According to SBI chief, the bulk of the people who had lined up for the facility
were suspected to be agents of the tax evaders. Thousands of crors worth of black

money was invested in buying gold and ornaments within hours of the
announcement of demonetisation.
Meanwhile there is no let-up in the harassment the public is facing. Millions of
workers, country wide, have lost their jobs due to cash crunch in the economy. The
spin doctors of the government are offering band aid solutions to prevent the press
vary public from being swayed by the unfavourable coverage by the media, projecting
the aftermath of demonetisation look horrible. Added to their discomfiture is the
rebuff the government got from the SC, who warned of the impending riots in the
country over the issue.
Initially, the criticism centred round the fault lines in the implementation, leading to
painful and disruptive experience of the people. But, now the opposition is openly
challenging the credentials of the government, so much so Kejriwal has denounced
demonetisation as the biggest scandal in post independent India. He has alleged that
the motivation of the government to demonetise the currency was not to unearth the
black money as projected, but to tide over the liquidity crunch faced by the banks due
to whopping NPA to the tune of eight lakh crores of rupees. On the SC courts order
the government has filed a confidential list of 57 defaulters who alone owe the banks
Rs. 85000 crores in bad loans. The former PM Mr. Manmohan Singh has called
demonetisation a monumental disaster and its implementation as a case of
organised loot and legalised plunder.

Who will call whose bluff, only time will testify. But we must not lose sight of the fact
that black money is the product of the system and a lasting solution will emerge only
by rewiring the system, and not by tinkering, no matter how bold. Demonetisation
should not be misconstrued as be all and end all of the struggle. It has to be taken to
its logical conclusion of cleansing the very system which gives rise to illicit money in
the first place. Maladies like, bribe, nepotism, land grab, should not be seen as topics
but as facets of the larger issue of polity and the system around which it is structured.
The government should come out clean and take immediate steps to appoint the JanLok-Pal and Lok- Ayukts, which so far has merely been reduced to only attentiongrabbing cosmetic. The Supreme Court has warned the government that if they
continue to drag their feet of the issue, they will appoint the Lokpal. Two crucial
steps needed to push such a reform process are funding of political parties and
donations in the spiritual super market, two major black money spinners.
It is heartening to note that political outfits are veering round to such a realisation
and talking of wide ranging reforms, including electoral reforms, to cleanse the
system. The authority of the democratically elected leaders draws on nothing more
substantial than a contract with the people: legitimacy hangs from a single skein of
public trust. It is time that the representatives of the people win the trust of the
people by preserving the core attributes of democratic culture. Otherwise, the grim
scenario of a corrupt oligarchy at the heart of Indian public affairs would continue to
appear utterly credible to the people.

V P Jain