SHOCK AND AWE
There is no denying that the ongoing demonetisation exercise for trashing high-value currency notes could have been handled better, even after making due allowance for complete secrecy. Ordinary people would have been spared much hassle had the banks been provisioned sufficiently with new notes, especially when their introduction was to be an integral part of the campaign to rid the system of black money.
Why they could not have printed enough new notes without giving an inkling to anyone that the old ones were to be delegitimized defies common sense. Over 85% of the currency in circulation being in the high denomination notes, junking them in one fell swoop without ensuring plentiful alternative supply is proving irksome to ordinary people.
Maybe the element of shock and awe following the Prime Minister’s announcement last Tuesday would have been muted had the new notes been in plentiful supply. Or if the banks and other specially-created outlets were stocked fully to meet the ensuing panic. Or could it be that the widely-felt inconvenience is considered necessary to drive home the point about the extent of the black money in the system and how the government is trying to flush it out?
Yet, there is no question that the very people who have stood in long and seemingly unending queues for hours, and often in vain, in banks and outside ATMs are the ones who have unhesitatingly approved the bold move. The poor and the middle classes never stint in supporting good causes. That is the prerogative of the vested interests, the money bags and the viscerally anti-Modi media. They invent new ways to pick holes in anything that the government does.
Notice how after recovering from the strike in its collective solar plexus the entire Opposition has now sought to undermine demonetisation, arguing that it hurts the common man. Frankly, if it hurts anyone, and hurts badly, it is the likes of Mayawatis and Mulayam Singh Yadavs. Arvind Kejriwal, the phoney, 50% of whose Cabinet had had to be sacked following criminal/corruption charges, too feels obliged to criticise the pro-people move because his own small war chest for Punjab might be in jeopardy. Do remember how AAP was caught red-handed laundering crores on the eve of the Delhi Assembly elections.
Let us be clear. The BSP and the SP have added reason to be worried. Their currency hoards for the coming polls have been rendered plain raddi. Whether or not the timing of the demonetisation was fixed with an eye on the Assembly polls, its impact is set to be considerable on the outcome, especially in UP. Not for nothing, then, is Mayawati wailing loudly at the broad-daylight raid by Modi on her war chest.
As for Rahul Ganndhi, well, he can be forgiven for knowing not what he says. And you feel sorry for people like Chidambaram and Sibal, who despite knowing better, feel obliged to second the Leader’s “stray thoughts” at the pain of marginalisation. For, the truth is that only a small fraction of the black money now lies dormant in secret Swiss or other accounts in tax havens. It is so for three reasons. One, post-9/11 there is rigorous policing of the global money movements. Two, you never know when a conscience-stricken individual might out such account-holders a la HSBC or the Panama Papers. And, finally, those who generate black money would not like to see it lying dormant. They would rather put it to productive use by bringing it back through the Mauritius or Singapore or some such route and invest in share markets, real estate, even new industry and businesses. It is what they call the round-tripping of illicit money.
Notwithstanding the bombastic claim from the electoral pulpit of bringing back black money to give every Indian Rs 15 lakh each, the truth is that there is not much black money abroad. A huge bulk of it is here in India. Bear in mind that foreign banks barely give even 1% or less interest even on long-term deposits. And property prices even in the best parts of London have come down by some 15-20%. In short, black money is not only generated in India but is also consumed in India.
Again, business and industry generate black money because of a corrupt system. The introduction of GST, even in a half-decent manner, from next April ought to curb this malaise somewhat. Electoral reforms will help only if politicians do not close their eyes to the perfidious practices of businesses when they systematically evade taxes. If more than half of the economy is below the taxman’s radar it is due to the complicity of the corrupt leaders, bureaucrats and, of course, ordinary citizens who in their everyday transactions do not insist on taking the all-important bill.
But to revert to demonetisation, it is not sufficiently appreciated that Modi in the last 30 months has taken the big axe to some of the more obnoxious sources of black money. No other government in free India has gone about attacking the parallel economy the way Modi has. From widening the digital platform for the disbursal of social welfare funds, to the merciless assault on the HSBC/Panama Papers guilty, to the mopping up of black money after charging a stiff penalty, and now the demonetisation of big notes are all steps aimed at extinguishing the challenge of a vast parallel economy.
Modi’s single-minded assault on black money is courageous given the fact that his party’s core support comes from the business classes. The trading community is doubly angry that a BJP government has criminalised the generation and possession of black money. Earlier, if caught, you could get away by paying a penalty. Now you can be locked up for up to nine years. That a right-of-the-centre government is engaged in cleansing the system, while the professedly left-of-the-centre governments that preceded it had created the problem is the ultimate irony of the Indian situation. But neither the political class nor the so-called liberal media has the decency or the moral courage to acknowledge Modi’s willingness to court unpopularity among his own core supporters for the sake of the larger national good.
Saying Ta-Ta to good sense Apropos of the ongoing public fight between two factions of the Tata Group, must the most respected industrial conglomerate in the country emulate one of the least respected business houses which not long ago was engaged in a messy succession war within the family? Frankly, neither side in the Tata slugfest is blameless. But, all things considered, Ratan Tata ought to have displayed better sense than to go about dislodging his own pick Cyrus Mistry in such a crude and humiliating manner. You don’t do that even to a professional manager caught with his hands in the till. And Cyrus was not only a fellow Parsi but he had 18% equity in the controlling entity.
Meanwhile, Nusli Wadia, the one with vast political networks who instead of growing his own legacy businesses has squandered much of his time and energy meddling in others’, has not played a healthy role in the Tata-Mistry spat. Indeed, instead of Wadia playing a peacemaker, his surrogates have taken to making anti-Ratan noises. And where, by the way, are the elders of the Parsi Panchayat? Why cannot they intervene to stop two of the richest Parsis from dragging the widely-respected Tata name through the mud? At 78, Ratan seems to have lost it.