Apart from the Emergency (1975-77), common Indians never had to face as much difficulty as made inevitable by the demonetisation of high-value currency notes announced on November 8. It instantly made most of the ATMs redundant, banks cashless, and banking transactions capped with a limit. The government did this arguing that demonetisation of 86 per cent of high-value currency notes in Rs 500 and Rs 1000 denominations would hit black money holders hard and force them to come clean.
Whether this objective has been fulfilled or not is yet to be seen as over Rs 12 lakh crore of demonetised money out of a total Rs 14 lakh crore in circulation (nearly 90 per cent) has come back to the banks by way of deposits. There is a growing feeling in the world of banking and finance that the government was grossly mistaken in its assumption that there existed a huge amount of black money in cash. And, the government was also far off the mark in its assessment of the problems that the demonetisation will bring about for the common people. It also failed to take into account especially the problems that the poor, the farmer, and the people in remote areas will have to face due to the sudden demonetisation.
The most vocal critic of demonetisation, Bengal Chief Minister and Trinamool Congress Chief Mamata Banerjee termed the move a super-Emergency. She successfully brought to attention the problems being faced by the common people in remote areas due to demonetisation. At a time when the opposition stands weak and demoralised in Parliament due to their small numbers, Mamata taking up the issue and trying to unite and resuscitate the opposition is electrifying.
With no business having taken place, the just-concluded winter session of Parliament has been a complete washout. The opposition demanded a debate on demonetisation and the presence of Prime Minister in the House, the ruling dispensation was least prepared, and certainly without a strategy, to face the opposition in the House. The moot point is that whoever speaks in the House will be heard widely throughout the country on different news channels. Given the sensitivity of the issue and the weak arguments that the government had in favour of demonetisation, it was safer for them to not allow a discussion in the House at all.
But, that may very well sound the end of Parliamentary democracy in the country and has been lamented by BJP stalwart LK Advani. As the black money theory is evaporating in thin air, the government tried to camouflage its failure by introducing fanciful ideas of the nation going cashless in favour of digital and mobile payments, and so on. If this was the idea, then there was no need of sudden demonetisation. The ideas of a cashless and digital economy can be implemented in a more sensible and practical way, in phases and by giving time to the people to adapt to the new mode of transactions. There was no need to wipe out 86 per cent of the currency overnight and the leave the country to face the consequences.
Demonetisation was a radical decision and a weak government could not have afforded it. That people have not taken to the streets on the matter goes on to prove that PM Modi still enjoys a considerable support among the people. It is the strong mandate in his favour given by the people in the last general elections that makes him so confident to make a decision as brazen as the demonetisation. But the way people have suffered and the public anger that the decision has generated make PM Modi’s position substantially weaker. He can’t afford more such adventures without risking his credibility and popularity.
Even after more than a month of the decision, people still have to wait outside ATMs and banks for hours to draw small sums of money, which in most cases is insufficient to meet one’s basic day-to-day needs. But this is only a more apparent scenario of the big cities. In remote villages, where banks and ATMs are non-existent and where people hardly care for news broadcast on news channels or published in newspapers, the announcement of demonetisation has wreaked havoc on the toiling, innocent masses. Daily wage earners and farm workers were instantly taken out of the jobs. Workers in tea gardens, construction sites, small factories stopped getting their wages on time.
For weeks after demonetisation, half of the neighbourhood shops were shut as business was down. Those open were refusing customers with old notes. Housewives were not able to purchase things of daily needs and schools wanted the parents to pay the fees in cash. Small businesses suffered because of the cash crunch. It seems, India, the country of 125 crore people as PM Modi often describes in his speeches, has come to a grinding halt. In short, normal life had gone for a toss.