Anti-black money day or black day? DeMo, one year on

Any involved observer of Indian affairs will realise that demonetization was less about economics than about the theatrics of power. A year later, with the slugfest over, what was undoubtedly one of PM Narendra Modi’s boldest moves is nowhere close to a conclusive outcome. While the government celebrated November 8 as ‘Anti-Black Money Day,’ the Opposition called for a national protest to mark it as a ‘Black Day.’ Not surprisingly, our divided polity was nowhere near a consensus on this unprecedented, if controversial, measure.

Why can we never agree? Shouldn’t the data, so plentifully bandied about by both sides, give us a decisive answer? Yes and no. “Yes” in that some tangible outcomes of the move are clear, but “no” in that many, especially long-term implications are not quite so. But the real deduction from all the drama and trauma is that DeMo, like much else about us, was much more about politics than economics. In that sense, we certainly confirm what Lenin considered the “ABC of Marxism” — “politics is a concentrated expression of economics.” He was speaking on Trade Unions on January 25, 1921, when he made that remark, declaring “politics must take precedence over economics.” Ironically, none seems to have understood this better than our Prime Minister.

To give its critics their due, DeMo, in retrospect, didn’t quite come off as expected. Many people, especially, our poorest suffered job losses and untold hardships. Daily-wage earners returned to villages because their employers had no cash to pay them. Several small businesses, which depended entirely on cash, also shut down, at least temporarily. Informal manufacturing was badly hit too. Statistics now show that the economy did slow down, with our growth rate reducing at least one per cent on a year-on-year basis. But the damage to the parallel economy was probably much more; some estimate that almost half of it got wiped out.

The collateral damages of DeMo were also tremendous. Returning old notes, even legitimately earned, was an adventure, if not ordeal. New notes, on the other hand, were very slow to come into circulation. This scarcity created its own opportunities for corruption. There were humongous queues at banks and ATMs. Quite sickening then that a small coterie of the rich and powerful seemed to have a plentiful supply of cash while the common people were utterly deprived of it.

How did such huge stashes reach the former is a mystery not yet cleared. Rumour had it that the nexus was right up to the Reserve Bank of India (RBI); certainly, several officials of private, nationalised, and cooperative banks were caught both diverting new notes to interested parties and facilitating fake accounts to absorb the old ones. Moreover, the main purported benefit, which was the evisceration of massive piles of unaccounted cash never quite happened. Most of it returned to the system through one means or the other. What is also ironic is that smaller amounts of undeclared money, which millions of middle-class people also hoarded, became “white” by being returned into their and their relatives or friends’ accounts.

While all this must be granted, it is equally true that the formal economy received a huge boost, as did credit card, mobile, and other cashless transactions. Real estate prices, artificially propped up by illegal money, came down as much as 20 per cent across the country. Huge amounts of money returned to our banks, which were already beleaguered by NPAs. In addition, hoards of fake currency were detected. Terrorist funding also received a body blow.

Consequently, stone-pelting in Kashmir declined, as did Maoist violence. Money trails leading to the North East, some of whose states are income-tax exempt, were detected. What is more, many fake accounts were exposed and thousands of shell companies came under the scanner. People who deposited mountains of cash were sent notices; accounts which showed unusually high deposits come under scrutiny. Tax compliance increased significantly while cash transactions declined drastically. There are several other less tangible benefits which will take a longer while to kick in. We have certainly become a more law-abiding if not more honest nation. In a word, black is no longer beautiful; it’s just bad news.

But one thing is indisputable. The people who suffered the greatest also supported Modi the most. The BJP won UP with a landslide after DeMo. Whether economically successful or not, DeMo was a huge political triumph. Now one year later, the battle over what really happened is not so much about facts as about the narrative war. The actual battle was won not by politicians but by the common masses who once again showed their enormous resilience, resourcefulness, and capacity for survival. As to the political circus, it will definitely continue. Whichever side we may be on, we may as well join the carnival.

The author is a poet and professor at JNU. Views expressed are personal.