“Man doth not live by bread only”, so goes the adage from the Old Testament, implying that the sum total of human existence cannot be gauged by material considerations alone; non-material aspirations are indispensable. This age-old maxim is eminently applicable to the demonetisation crises being played out in the country following the Narendra Modi government’s decision to rusticate Rs 500 and Rs 1,000 notes.
As much as it is an effort to flush out black money and enrich the government coffers, it is also a direct assault on the scourge of terrorism and a bold attempt to balance the scale of social justice.
The immediate post demonetisation period presents an unclear picture with conflicting opinions and vested political interests muddling the scene. It is important therefore to obtain an objective, impartial 360 degrees view of the matter.
For a long time, the Pakistani deep state has been waging a low intensity non-military warfare against India by injecting large amounts of a fake Indian currency into the system in order to destroy the credibility of the rupee both at home and abroad. As per an Economic Times report, in 95% of cases involving fake Rs 500 currency notes Pakistan stands implicated.
As much as demonetisation is an effort to flush out black money and enrich the government coffers, it is also a direct assault on terrorism and a bold attempt to balance the scale of social justice.
Additionally, this fake Indian currency has been used to fund terror activities in Jammu and Kashmir and all over India. While the ultimate effect of demonetisation on these nefarious activities will not be immediately known, a step in the right direction is definitely better than inaction. According to Colonel Vivek Chadha of the Institute of Defence Studies and Analyses, Delhi, “The phaseout of these notes is a double whammy for Pakistan. It limits the impact of counterfeit notes on the economy and curtails terror funding through FICN circulation in India.”
Demonetisation is also being wielded as an instrument of social justice, an economic scimitar that targets black money hoarders exploiting the system. It addresses the discontent among common folk, namely the prevalent perception that the system is complicit with the rich and powerful. With one blow Modi is sending a powerful message to all of India that no one is above the law and the guilty will be brought to book. Therefore, efforts by the Opposition and Modi detractors to instigate anti-government sentiments by invoking demonetisation hardships have proved to be a damp squib. Large sections of the public continue to support the government.
The good intentions of the governments sweeping measure are beyond doubt. The delayed response from the only authoritative personality on economic affairs in the opposition, namely former PM Manmohan Singh, an economic doyen, is ample proof that this is not a black and white matter. Finally, when the ex-PM did break his silence he concurred with the premise of demonetisation in principle but also chose to castigate the government of “monumental mismanagement”—peppering his criticism with incendiary terms like “organised loot and legalised plunder” that were at odds with his personality, but appeared to be an attempt to please his political constituency. Rather than indulging in unproductive criticism, the former PM with his economic expertise would do the country good if he were to offer some solutions to the perceived “mismanagement” and alleviate the sufferings of the common man. The government on its part should be open to constructive criticism and advise that would mitigate public suffering.
Finally, coming to economic impact of demonetisation: Tim Worstall, a columnist with Forbes magazine (Nov 17, Nov 19. Forbes) concludes that it could produce “a rather interesting set of effects. A lower budget deficit, lower interest rates and also lower inflation. Not bad for the one simple plan, is it?”
But he also adds: “…we just don’t know what the macroeconomic effect of demonetisation is going to be. It’s something we’ve just got to wait and see about.”
That is sane advice that all of us in India should heed and wait patiently.
In summary, the jury is still to be out on the economic consequence of demonetisation. That this is a blow against terrorism and Pakistan”s shenanigans and an attempt at social justice there can be little doubt: both important to the wellbeing of our nation as a whole.
True, “Man doth not live by bread only.’”
Vivek Gumaste is a US based academic and political commentator.