Is it truly a path breaker?
Indian opposition parties are really shooting the breeze. They did not expect that Prime Minister Narendra Modi would go against his party’s core constituencies – the traders and the industrialists – and bring in demonetisation of two currency notes, Rs 500 and Rs 1000 which was their staple and thus constitute 85 percent of all transactions in the country. Modi chose to throw in a monkey wrench into exactly that system. This has been not only a hugely popular move on the one level, on another a minor kerfuffle that we witness every day at the bank and ATM entrances.
But considering that this writer had on three occasions – twice in Delhi and once in Kolkata - queued up to get some money from the banking system, he cannot relate even one instance when people have criticised the necessary move of demonetisation. The wait has been long some stretching to five hours, but one griped. This is where the rub for the Indian opposition parties lie.
While in one fell swoop, Modi has robbed their thekedari of the Indian poor, he has also left them huffing and puffing to raise the issue of the people having to toil for their daily dose of cash. What is worse is the case of the daily wagers who have lost temporary employment as their hirers do not have the cash. If Modi government cannot devise a contingency plan quickly to address this issue, of a few of the opposition grouse would resonate. They cannot be called collateral damage in his war against black money. For they have never been the beneficiary of it.
Sucking out Rs 17 lakh crores from an economy the size of India is a seismic shift. It has also opened major avenues of paralegal cash – reportedly the new lakh of rupees in the real estate sector is Rs 65,000. There is a sort of vicarious pleasure in all this: in places like Gurgaon or Bangalore or Mumbai, real estate has been biggest generator of black wealth while also a path to launder funds.
In fact, this writer would have been happier had the Rs 2000 notes been brought into circulation a little later. For, the recent story out of Gujarat, which talks about two port officials getting caught accepting a Rs 2.9 lakh bribe in the new Rs 2000 notes is a case in point. So this demonetisation will surely not remove the scourge of bribery and corruption. But it will slow it down.
Not only does it require follow-on actions as Modi has detailed – benami property and sale of gold – but eternal vigilance is the key. The PM has put the fear of God amongst those who indulge in cheating the majority of the people from their entitlements. But he would be truly a path breaker if he puts an audit process for the Hindu temples which are the akharas of this black wealth.
Returning to the opposition parties, while some of their intransigence is born of being sucker-punched by the decision some of their Parliamentary hullabaloo can reflect the real picture of the economy. This move will shed a one to one-and-a-half percent of the gross domestic product. What would that do to the job scene, which already is quite bleak This, when the weight of the demographics is on youth, the government will need to have a plan ready for generating jobs, if not in the private sector, then the public sector.
China has shown how its State-owned Enterprises (SoEs) do the heavy lifting of the national economy. Why cannot the Indian SoEs? They did it in the past thus creating a middle class for the country. Maybe the time has come to dial back to those days when government reposes faith again in the PSUs.
Instead of reducing Parliament into a shouting chamber, the opposition needs to think creatively about how to push the government into territories it seeks to avoid. One can reasonably say that Modi has gained some enemies within his party by this move. He may need the opposition to keep his party solidly behind him.
(The views expressed are strictly personal.)