Patna: People queue up at an ATM in Patna on Saturday. PTI photo(PTI11_12_2016_000101B)

Demontisation: Minor Inconvenience Are For Greater Good But Anyone Seen The Flow Chart?

First published on Huffington Post India.


It has been 7 days since Prime Minister Narendra Modi declared in a surprise TV announcement that currency notes of 500 and 1000 denominations will become invalid within four hours. The objective behind the decision was to render useless millions of black monies lying in people’s houses under the bed, behind the toilet flush tank, in the basement garage. Greedy corrupt people who have been hoarding money in their homes for decades, evading taxes, running a parallel economy, funding illegal activities (terrorism, naxalism) and other evils are given one tight slap by the government and their stash turned into trash overnight.

Imagine the scene, that obnoxious neighbor who always gloated over new cellphone or car have been shown their place, and now they are sitting with their useless filthy cash in hands and crying hysterically. Time for honest citizens to have the last laugh, as demonstrated by the Prime Minister on his visit to Japan. This is truly laughable, there is immense pleasure in seeing the neighbor going down whether it helps me or not. Common people cannot stop gushing over this bold heroic move. Modi reminded us of our filmy heroes, a la Rajnikant, those who don’t waste time in thinking, those who don’t get cowered by legal nuances or professional ethics, they just take actions and save lives. Modi is our hero and the hall is bursting with sound of 1.2 billion Indians clapping for the hero.

Unfortunately, this is not a movie, and if you come out of that scene you were imagining, you’ll realize that the rich and greedy are not exactly crying so profusely. Instead, millions of people at the bottom of the social and financial pyramid are suffering. Women are the worst hit followed by other marginalized people living on the fringes outside the systems created by the establishment, with no decision-making power and limited or zero mobility. The beggars; child labourers; sex workers; the old woman ostracized by villagers for being a witch; the illiterate housewife who is  not even allowed to go outside so much as to the balcony or terrace but who secretly saved for years to fulfill her small personal desire, that of having a plate of chowmin at the annual village fare or buying a saree for her mother; the lesbian couple on the run from a family trying to do honour killing; the stay in maid who doesn’t even know how to take the building elevator, who cannot speak the city’s language, whose bank accounts are in the village from where she came – overnight the government wants all such people to come out with whatever they got make a trip to the bank, post office, show their identity to have access to their own money.

Hundreds of millions of such people are robbed of their small financial independence as they are forced to handover their savings to the male members of the family or somebody else who has power over them. It is not just minor inconvenience, there are huge irreparable collateral damages with several lives being lost. The Hon’ble Supreme Court today doubted whether it is surgical strike or carpet bombing. A surgical strike is like a doctor doing operation, done with proper safety measures so that no damage is done to other part of body. Carpet bombing is like drone attacks on civilian villages to take out the terrorists.

But it is all for the greater good we are told. Let us examine this claim for a while.

Firstly, everybody is talking about this illusory ‘greater good’ but nobody seems to know the working? Has anybody seen the flowchart? The poor will be the most benefited we are told. How? Is there a flow chart that explains how the notes tumbling out of corrupt homes enter poor households?

Perhaps the government announced a new scheme. An open freely accessible pool of money, like a river or a well, will be created and whatever black money is coming out of demonetization will be kept in that pool, poor people will be allowed to take money out of the pool whenever they wish. No? Government did not make any such announcement? Then how is everybody so convinced that poor will be benefited?

We get money by working for it. From a poor daily wager to the CEO of top company, our salaries on which we pay taxes are our white money. A poor daily wager goes to work gets paid, she doesn’t go to work, doesn’t get paid. How will this move suddenly change her earning capacity? Will the labour contractor suddenly increase her daily wage overnight because of this move?

The largest beneficiary at the moment are the e-commerce giants / digital wallets like Paytm and Rupay etc. Consumerism and corporate conglomerates are greatly benefited. Look at the newspapers, full of ads on how you can do all your shopping online, that movie, pizza, Gucci dress. Followed by banks, and of course government will earn a lot by way of revenue. Government promises to build more roads, hospitals, schools. That kind of promises exist since eternity, little benefit trickles down to the poor. The question remains, is there a direct cause and effect equation which proves that poor will be directly benefited from this carpet bombing?

Secondly, how will the greater good arrive in future when this move is not even addressing the basic process of black money creation?

If I break down the process, it is something like this. I go to property dealer to buy a flat, she quotes 45 lacs. 10 lacs in cheque for property registration documents, remaining 35 lacs in cash. Now, I am an honest person but I need a house, so I take out my white tax paid money using ATM and give cash to the dealer. Thus 35 lacs turn into black money at dealer’s hand. In other examples, at the time of making every small and big purchase the seller tells me if you pay by credit card you’ll have to pay x% extra or if you want a pakka bill you’ll have to pay xyz tax. So, to save money I pay by cash or don’t take bill, seller don’t show those as sales and don’t pay taxes. The white money I gave to buy the thing turns black in the seller hands because it escapes government’s eyes.

Question, how will demonetization stop this process? It seems that with this move all that has happened is that previous stash is rendered useless, a temporary setback for the rich, but how do we know that they won’t restart hoarding in new denominations? Meanwhile, the collateral damage far outweighs the illusory ‘greater good’ so is it all worth it? Or was this a populist move before elections, for the clapping? A heropanti.

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