On November 8, Prime Minister Narendra Modi had his “Fair and Lovely” moment when he decided to whiten black money. Many even called it a “surgical strike”. On November 15, however, a Supreme Court bench comprising Chief Justice T.S. Thakur and Justice D.Y. Chandrachud said that, as everyone was affected, it was like “carpet bombing and not a surgical strike”.
They were hearing a petition seeking a stay on the demonetisation notification. Though there was no stay, the apex court asked the Centre to consider taking steps to ease the common man’s pain. On November 18, the Supreme Court heard the government’s plea asking that no other court should entertain petitions challenging the demonetisation notification. Several people, stressed by their inability to get their own money, had moved High Courts against demonetisation on different grounds.
Thakur and Justice A.R. Dave dismissed the government’s plea, and said: “Some measures are required. People going to different courts indicates the magnitude of the problem. People are affected and frantic.”
When Modi announced the decision, much of the nation was charmed and believed his claims. The opposition was guarded in its approach, and many thought it was good politics and good economics. Even those who felt the move was akin to Muhammad bin Tughluq’s capital shift, said so cautiously. Now, however, the analogy does not seem altogether misplaced.
Every day has brought a new set of problems and challenges for the government, which did no homework before announcing the scheme. “People have supported the scheme, which is why despite all the hardships, there is no law and order problem,” said Shamika Ravi, a senior fellow at Brookings India, a think tank. “But, the government has to reciprocate by supplying new currency notes on an emergency footing. The definitiveness of the announcement has not been followed up. With 85 per cent of the cash gone out of circulation, it is an emergency situation, and the government has to act on a war footing. They have to share information, total information on every little detail. But, what is happening is total vacuum, and there is no information.”
Said D. Thomas Franco, senior vice president, All India Bank Officers’ Confederation: “Very poor planning on the part of the Reserve Bank of India led to this crisis. They did not even have a roadmap... we understand there were no discussions with experts and stakeholders before they took the decision.” He said that when RBI Governor Urjit Patel signed the new currency notes, he could have seen the size difference and begun work on recalibration. Bank staff are overworked and stressed, he said, and estimated that this scenario could continue for another 12 to 15 months.
There have been a lot of wasted man-hours, which were spent on waiting in queues and organising funds. Farmers do not have cash to buy seeds or get loans, and have found it difficult to sell produce as people do not have the money to buy. In fact, large parts of the economy have been crawling. Consumers are not spending, and that will have a chain of disastrous consequences, which will hit demand and manufacture of capital goods, which is crucial to the economy. However, Union Finance Minister Arun Jaitley said demonetisation would increase investments in rural India. “Business is running slow, but it is only a matter of a few days,” he said. “Demonetisation will increase investments in the country. Cash worth crores has come into the banking system, which will increase the banks’ capacity to approve loans. [It is a] huge decision and the government had to be strong to make difficult choices.”
This difficult choice, however, has united the opposition, which has attacked the government both within and outside Parliament. This has undone the government’s efforts to divide the opposition in the previous session, when regional parties had come around to supporting the Goods and Services Tax legislation. If it wants to roll out the scheme by April 1, 2017, the government has to ensure that the GST bills are passed.
Amid the opposition, certain leaders have been using demonetisation to prop themselves up as Modi’s main rival. Among them are Trinamool Congress chairperson and Bengal Chief Minister Mamata Banerjee, and Delhi Chief Minister and Aam Aadmi Party convener Arvind Kejriwal. Congress vice president Rahul Gandhi, said to be on the verge of taking over as party president, has been consistent in his attacks on Modi and has been doing the rounds of banks and ATMs to express solidarity with the people.
Interestingly, as the people’s problems with demonetisation have increased, they have “demonetised” the new Rs 2,000 note, rejecting it as a worthless piece of paper. A trader in East Delhi rued that his helper, who is paid weekly wages, refused to accept the note, asking for his salary in Rs 100 notes. And, he was not alone.