INCREASE SUPPLY
It is next to impossible that the entire rubbished currency will be replaced by the proposed deadline of 30 December. And, if not, there could be unrest in some pockets of the country. Even without the Opposition fuelling trouble, ordinary people are genuinely hurt. It will not be surprising if they emerge on the streets at the end of the 50-day period the Prime Minister has sought to remonetise.
Members of the ruling party themselves are beginning to have misgivings about the impact of notebandi. Rural, and largely informal, economy is nearly paralysed due to the famine of notes. Unorganised sector, which accounts for over 80% of the jobs, is in crisis. Tens of thousands of daily wagers have been rendered jobless with many returning to their native villages.
In UP’s hinterland things are so bad that several ruling party MPs are afraid to venture out, fearing embarrassment at the disappearance of legal currency. The initial euphoria felt by ordinary people at the assault on black money is now slowly yielding to scepticism about the all-intrusive exercise, especially when the poor are suffering, while the neighbourhood trader shows no apparent sign of personal discomfort and hardship.
It is natural for the have-nots to draw comfort if the haves are in trouble. Daily reports about some people found with crores in new currency when juxtaposed with the sight of millions lined up before banks and ATMs, very often in vain, fuel popular anger at the whole notebandi shindig.
The BJP might have to pay a huge price in the coming UP poll, particularly if there is no adequate supply of new notes by the end of the 30 December deadline.
DIGITAL IS A LONG WAY OFF
There is little doubt that governments everywhere would like to expand the tax net and, therefore, try and digitise more and more of the economy. But contrary to the popular impression that the western world has shunned cash in favour of digital money, the truth is that cash still rules the roost even in the most advanced economies. Ajit Balakrishnan, a successful digital entrepreneur and columnist, has sought to impart some perspective to the ongoing debate.
It seems Germans and Austrians buy 80% of the things with cash; Australians 60%; and, significantly, Americans 45% of the time. In fact, both in Europe and America anything costing ten dollars or below is mostly paid for in cash. It is only in relatively small Sweden that a mere 2% of the transactions take place in cash. Yes, cash, especially in high-value notes, also fuels terror, drug and other crime syndicates. But it cannot be altogether vanished from any economy.
A point which seems to have escaped most commentators in the debate is that should the new mobile-phone-based apps to transact business gain universal acceptability, the balance-sheets of the established banks would be stressed. The success of mobile payment platforms can spell trouble for big banks. Given Balakrishnan’s domain experience and his intellectual depth he ought to know what he is talking about.
DEBROY DEMOLISHES SINGH
Poor Manmohan Singh. We think he is better off keeping silent than holding forth on any controversy. Because his record as a politician and, before that, as a career bureaucrat belies whatever he might choose to say.
The other day the Congress Party fielded him to debunk demonetisation, hoping that his degrees in economics would lend weight to the criticism. But someone equally equipped with academic accolades and, unlike Singh, unencumbered with the deadweight of a yes-man both as a bureaucrat and politician, immediately demolished the former PM’s case.
Responding to Singh’s article in a leading English daily, Bibek Debroy, a member of Niti Aayog, offered a strong, point-by-point rebuttal, and a very convincing one at that. A true polymath if ever there was one in our public sphere, Debroy summoned his elephantine memory to throw Singh’s own record back at him. He reminded how Singh as Finance Secretary in 1978 was a party to the demonetisation decision. “…Circumstances and contexts may have changed, but what was logical in 1978 should continue to be logical in 2016”, wrote the most authoritative translator of ancient scriptures into plain, everyday English.
Again, as a bureaucrat-economist, Singh was party to the nationalisation of banks in 1969 and 1980, avowedly undertaken to take banks to rural communities. Therefore, it does not lie in the mouth of Singh to say that, in 2016, there is hardly financial inclusion and, therefore, the emphasis on digitisation is misplaced.
A dispassionate reading of Singh’s critique and Debroy’s response cannot but leave one with the impression that the former PM’s abiding faith in careerism has eroded both his academic and political achievements, if any.
I-T RAIDS HIT U.P. POLITICO
The buzz in the political circles is that the Ghaziabad builder, whose money a little known Delhi lawyer was recently caught laundering, is the brother of a prominent UP leader. The said builder was unemployed till the surprise victory of his relative saw him become a lower division clerk in the UP government. But he soon realised that really big more money can be made exploiting political connections and in laundering his sibling’s black money. Soon he quit government to become a freelance businessman, floating companies in which moneybags invested, paying a premium of Rs 4,990 on shares with a face value of Rs 10. He is now into five-star hotels, shopping malls, commercial buildings and many other things. And that is where the services of crooked lawyers who buy prime pieces of real estate and generally help laundering black into white money come in.
ADVANI’S SELF-GOAL?
After public outbursts against the way the winter session was paralysed, L.K. Advani might have forfeited whatever chance there might have been of the incumbent party leadership fielding him for the President’s post on Pranab Mukherjee’s retirement in July 2017. As it is, Modi was not likely to gamble on Advani in Rashtrapati Bhawan, given the bitter resistance the latter had put up against his being made the party’s prime ministerial candidate ahead of the 2014 polls. Though he is always correct and even deferential towards the party veteran, his services as a Marg Darshak have hardly been used. Should the NDA have a free hand, and that would depend on the outcome of the UP Assembly poll, trust Modi to spring a surprise on the country.
HEARD IN CENTRAL HALL
TV ratings of Kapil Sharma’s comedy show have slipped badly ever since Rahul has begun to appear on television.