The Surreal World: The Demonetisation Denouement

I distinctly remember the night of 8^th November, when a newsflash alerted me to the fact that Rs. 500 and Rs 1000 would cease to be legal tender from midnight. It was early evening as I sat sipping my tea after work, in my London apartment. I was watching the CNN coverage, eagerly awaiting the first results from the US and preparing for a Clinton victory (little did I know, but that’s a story for another day). I quickly changed channels and saw what was transpiring in India. Demonetisation, as it was termed, was indeed a radical step. Mamta Bannerjee called it a “Draconian” move even. I felt a masochistic thrill – chaos is something I avoid, but when it does happen, I do feel that getting out of the imminent chaos is something worthy of getting excited over for the planning and subterfuge it would entail. But I digress.

I rationalised, perhaps too quickly, about the repercussions, with digital transactions and credit cards, reliance on cash has decreased, so on a personal level I didn’t feel concerned. I did feel though that people hoarding tonnes of black money would be lost, and that made me feel great. After all weren’t these the people, with the BMWs and Mercedes with their big houses, dropping money everywhere they went, wreaking a trail of ostentatious havoc? They deserved to have their worldview shaken if not destroyed. A quick phone call home to Delhi, and I realised my mom was panicking since she did not have enough cash, which she thought was necessary since she is a caretaker for my aged grandparents. In emergencies for instance, having cash is a much needed source of comfort. She did manage to get a few hundred rupees from neighbours and friends to tide over the initial hiccups.

I soon turned my attention to the US election, as my Whatsapp kept buzzing every few minutes with several groups sending and sharing jokes and doomsday scenarios relating to demonetisation.

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Fast forward a couple of days, and the mercurial attitude of the government was made evident as far as the rules were concerned. As of December 20^th, 54 rules were offered (in 42 days). Lines in ATMs ceased to abate, and the debates ensued.

People I spoke to – a few that did not have connections with bank officers and such, stood in queues for more than 21 hours over several days. They mentioned there was extreme anger towards the government, but somehow, this narrative got hidden in the charade of the schadenfreude – happiness at the anticipated misery of the black money hoarders.

The driver employed by my family in Delhi told me that he could only withdraw Rs. 10,000 from his Jan Dhan Yojana account in a month. He needed to withdraw atleast Rs. 2000 more to meet his monthly expenses. I asked him what he planned to do, he shrugged and said he would borrow the money and try open another “normal” account next month so he can deposit his salary given by cheque there and withdraw more than Rs. 10,000 at a time.

Meanwhile news of people dying, someone from a heart attack while waiting in an ATM queue, to an infant dying due to delayed treatment, crept up on me, slowly shaking my stance from that of ambivalence to disgust at the attitude the government, and us – the “plastic” elite, had taken at the suffering of others.

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When I reached India in mid-december, I saw serpentine queues everywhere- ATMs, Banks. The ATMs that had no queues, had usually no money.

Meanwhile, people who had the right “connections” – had been able to acquire the new currency in abundance. I met people who had several new currency notes, an obscene amount really, they boasted of their connections in banks and how they had to just make a call to get these monies. I met someone who had managed to get rid of all of their cash in the old currency, without making any loss. I met people who said their business was down because of demonetisation. I met people who had queued for half a day to withdraw Rs.2000, foregoing half a days salary.

Meanwhile, I also read, read about business which were suffering or had to let go of employees (read here and here). I found out about the negative impact demonetisation had on the fish markets, the flower farmers, the silk industry in Odisha, the textile bazaar in Delhi, textile market in Malegaon, tourism in general, employment, consumer spending (For an exhaustive list see appendix).

It would be unfair to not mention the few positives that did arise – an anticipated reduction in real estate prices, reduction in trafficking, and crippling of maoist financing and impetus on digital transactions.

Though funnily enough, when I spoke to a real estate broker, he mentioned that several property deals had been done with the older currency (at a commission) implying that the people with black money had managed to get rid of the cash by undertaking transactions which had in effect made their money “white”. One may lament that these are anecdotal instances at best, but let’s get serious, data about such loopholes and deviances would be impossible to collect and such claims cannot be validated empirically.

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Apart from the news that was coming in, and the reality on the ground, there are other themes that warrant discussion. Firstly, the narrative of the intent of demonetisation has changed from tackling black money, to crippling terrorism, to making India Digital. These can definitely co-exist as far reasons for said move go, but the focus on digital towards the latter half of November, does make one feel that the focus was changed once the realisation sunk in, that this move had done little to deter black money generation or curb terrorist funding.

Moreover, I also feel that considering the number of illiterate in India -287 mn (the largest population of illiterate people in the world), and the fact that only 220 mn people in India have smartphones, the discourse on going “digital” is slightly naïve and premature.

I asked a worker in the city who can read and write in Hindi but not in English, if he would like to use Paytm – he did have a smartphone incidentally, he said he does not want to download it, - he was wary of the encumbering process and that he would have to file taxes. I told him he was below the taxable income threshold – but that did not assuage his nervousness. Again, I admit, this is anecdotal evidence, but such resistance to technology among people who are not “digital natives” will be something that needs to be addressed before sweeping declarations of going digital can come to fruition.

Second, many, like me were tempted in supporting the move, since any stand to the contrary meant either you supported black money or you had it. A classic case of cognitive dissonance. The government had effectively made this about the good guy vs the bad guy and that had worked wonders in garnering public support for the move. I mean who in their right frame of mind would oppose a purge of black money and all the people who evade taxes? This moral high ground perhaps prevented many from logically comprehending the severe limitations of the policy in its very genesis and implementation.

Third, a lot of people have been bolstered by the fact that the people who have evaded taxes will finally be punished. The deadline has come and passed, and now we expect that swift action will be taken against those who have deposited untaxed incomes into their accounts, and the IT department would deliver justice, and all the waiting for the “greater good” would finally be worth it. Considering the number of accounts each individual with a certain “income” may have - how difficult would it be to deposit amounts less than Rs 2,00,000, several times over, in different accounts within the family even? Would the IT Department ever be able to track this chain down?

I hope for the sake of all those who stood in queues waiting to get their share of Rs 2500, thinking that some good will come off this entire exercise, that the answer is yes. If not (which seems to be the likely outcome considering the way things go and of course the lovely duo of jugaad and corruption), then I wonder who will have the courage break it to all the good samaritans that all their waiting and sacrifice was just a play in the game of political grandstanding?
In the words of Nobel laureate, Bob Dylan -

"Yes, and how many years can some people exist
Before they're allowed to be free?
Yes, and how many times can a man turn his head
And pretend that he just doesn't see?

The answer, my friend, is blowin' in the wind
The answer is blowin' in the wind"

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* Below is a list of articles that I have collected in the last month or so related to demonetisation. To maintain fairness, I have included articles which highlight the negatives as well as the positives, although the negatives far outweigh the positives. I would be foolish to claim the credit for all of this research and thus must mention the effort of a certain Mr. Oberoi (Tweet @varun_oberoi) in development of these archives!

Appendix

Raymond Demand : http://www.outlookindia.com/newswire/story/demonetisation-raymond-sees-about-30-fall-in-demand/962538

Foxconn : https://twitter.com/sjha1618/status/810352373780582400

Fish: https://www.thequint.com/blogs/2016/12/17/neither-fish-nor-cash-a-day-in-the-life-of-a-demonetised-bengali-cash-crunch-after-prime-minister-modi-announcement

Flower farmers : http://wap.business-standard.com/article/economy-policy/note-ban-frontlines-flower-harvest-income-falls-70-year-lost-a-farmer-s-story-116121700115_1.html

Odisha Silk: http://www.outlookindia.com/newswire/story/demonetisation-weavers-in-odishas-silk-city-feel-the-pinch/962546

Pune non perishable goods: http://indianexpress.com/article/cities/pune/cash-crunch-in-pune-trade-in-non-perishable-items-falls-by-30-per-cent-4432848/

Sex trade: http://indianexpress.com/article/india/india-news-india/kolkata-sex-workers-in-sonagachi-feel-pinch-of-demonetisation-too-4379833/

Bank Loans: http://m.firstpost.com/business/demonetisation-for-banks-lending-has-virtually-stopped-credit-growth-may-hit-54-year-low-3162840.html

Pension in Andhra: http://scroll.in/article/824271/elderly-left-without-pensions-in-demonetised-chittoor

Mayapuri manufacturing: http://indianexpress.com/article/india/demonetisation-effects-labour-jobs-currency-ban-jobless-4434323/

Human cost: https://www.scoopwhoop.com/SBI-staffer-hangs-self-wife-blames-work-pressure#.gux19jn3r