On 26 November, Modi crossed the half-way mark of his term. No one seems to have noticed it. Compared to the hoo-ha over his completion of 100 days, then one year, then two years, this milestone passed unobserved. Perhaps the unusual silence reflects Modi's concern over whether demonetization has proved a self-inflicted surgical strike on his own government. Certainly, there is an air of panic in all his statements since 9/11. He has twice shed copious tears in public, talked of people threatening him with burning, drowning, shooting - when there is nothing to show that anyone has any such intention - and even held out the delightful prospect of his picking up his
jhola and walking into the sunset as a
fakir. Why such depression as he embarks on the last one thousand days of his reign? Is it that he recognizes that what the Opposition has failed to do to him, he is doing to himself?
Modi being Modi, and Amit Shah being Amit Shah, the duo, I am sure, have plenty of tricks still in their bag. The present gnashing of teeth and beating of breasts might be but an attempt to divert the attention of people from their own misery to the misery of the Prime Minister, while hyping up the outcome of this alleged attack on black money far beyond the actual achievement, and then topping it off with a generous budget with lots of freebies, and perhaps a tip of a thousand or two in each Jan Dhan account to get people to believe that Robin Hood has robbed the rich to pay the poor. (And if people actually follow the PM's extraordinary advice to not return money deposited by others in their Jan Dhan accounts, then how will they answer the IT sleuths who will demand to be told where the poor secured these "assets beyond their known sources of income"?)
Will any of this compensate for the damage being wreaked on the economy? For most independent expert estimates endorse former Prime Minister Manmohan Singh's dire apprehension that GDP growth might suffer a loss of up to 2%, that is, some 300,000 crore rupees. Much of this loss will be borne by farmers,
khet-mazdoor, that vast army of about 92 per cent of the Indian work-force in the so-called informal sector, small traders,
rehriwallahs, daily wage workers, particularly in construction, and extend to workers in the formal sector retrenched because of the collapse in manufacturing. The economy is gearing itself towards a recession and it will take time for the realization to dawn that this is the fateful outcome that awaits them in exchange for the dribs and drabs that Modi will attempt to dazzle the electorate with on the eve of the upcoming state assembly elections, including in such key states as UP and Punjab. (Is anyone in the Election Commission paying attention to this danger?)
The latest
Economist has pointed out that comparable massive demonetization in Burma in 1987 led to revolt against the state; in the Soviet Union in 1991, it led to disintegration; and in North Korea in 2009, it led to widespread hunger. The Economist also recalls the famous saying of John Maynard Keynes, possibly the greatest economist of the 20th century: "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency". Whatever Modi might be planning to "reward" the unwashed masses for standing in queues and not being able to access their own money, besides dislocating their livelihoods, once people begin to suffer the ravages in store for us as a country, their enthusiasm for those who have made them suffer for no fault of theirs will come raging back at the perpetrators.
For make no mistake, although many have been fooled into thinking that demonetization spells the end of black money, it will soon become apparent that it does nothing of the kind. Professor Emeritus at JNU, Arun Kumar, who has devoted a lifetime to researching black money,
estimates that on average, the richest 3 per cent of Indians, who own the lion's share of black money, do not hold much more than Rs 1.5-2 lakh per person in cash. The rest of the black money stock, estimated by the CBI at $500 billion held abroad, apart from gold, jewellery, real estate, art treasures, and recycled money through Mauritius and similar routes, remains untouched. That is why the Modi/Jaitley "income disclosure scheme" has yielded only Rs 65,000 crore or just 0.7 per cent of the estimated black money flow, while the capture of black stocks abroad, some Rs 4,000 crores, has given but an infinitesimal share of the wealth illegally held off-shore. Modi's black money claims are all illusion, gilly-gilly.
Demonetization of 86 per cent of the value of all currency in circulation to secure, at most, one per cent of the black money flow is like using grape-shot to swat a fly. Where precision was required, indeed, where a "surgical strike" was truly required, the Modi government has indiscriminately hammered all Indians, the worst afflicted being the poorest. For the moment, they are being palliated with the thought that this "inconvenience" might be taken in their stride because the evil of black money will be ended. But what will their reaction be when they discover, as they must, that virtually nothing has changed and all that has happened is the usual drama and
jumla of the Modi-Shah regime, especially because inflation, just possibly hyperinflation, and a serious downturn in economic activity are the price yet to be paid but all too evidently in store for them?
Prof. Arun Kumar also makes a point missed by most amateur comment on the black (or parallel) economy. It is that black and white are intertwined: they are generated together, and then, in the accounting, a part of it is siphoned off to avoid paying taxes and thus flows into the black economy. Perhaps a fifth of our economy lies in this "shadow economy". Hence the hit on black money is also going to affect the white economy.
Modi, after having first said it would take but three days for matters to stabilize, has now infamously asked for 50 days' grace. That extended period of forgiveness has run more than half its course. What has
emerged is that some 47 billion new notes need to be printed
immediately to replace the banned notes and soiled valid notes to meet Modi's 50-day goal. We have, at best, a maximum capacity in our security presses to churn out about 32.5 billion notes over the next year. So in order to restore a measure of normalcy in liquidity in circulation, it is not 50 days that Modi would need, but nearer 500! You can fool some of the people all of the time, and all of the people some of the time, but not all of the people all of the time.
Meanwhile, Trump has marked Modi's mid-point by showing up the extent to which Modi's foreign policy has succeeded in "isolating" Pakistan. The next President of the US, helped to victory by the slogan so aptly provided by the newly-formed Modivist group, Hindus for Republicans, "
Ab ki sarkar/Trump sarkar", has received the following "Thank You" note from Donald Trump. Speaking over the 'phone to Nawaz Sharif, Trump exclaimed in words he has not denied:
- "You have a very good reputation" (er, would you repeat that please?)
- "You are a terrific guy" (who, Sharif?!)
- "You are doing amazing work which is visible in every way" (e.g. at Pathankot/Uri?)
- "Your country is amazing with tremendous opportunities" (for what - cross-border terrorism?)
- "Fantastic country, fantastic place of fantastic people" (did he mean "fanatic" or "fantastic"?)
- "All Pakistanis I have known are exceptional people" (so, do you know Hafiz Saeed and Masood Azhar?)
- "I am ready and willing to play any role that you want me to address and find solutions to outstanding problems" (what, Kashmir?)
- "It will be an honour and I will personally do it" (OMG!)
(Mani Shankar Aiyar is former Congress MP, Lok Sabha and Rajya Sabha.)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.