Moditisation or Demonetisation ?

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In 1897 Ronald Ross proved that what caused malaria were germ-carrying mosquitoes. Malaria was only a symptom, which quinine could only suppress but not cure. Had the scientist been around today he might well have advised the Modi government that using demonetisation as a cure for black money was like trying to cure malaria by taking quinine pills.

Morarji Desai did it in 1978. When asked why he took the drastic step, his reply was curt: to teach Mrs Gandhi a lesson. For he believed she had stacked up lots of large currency notes for use in the upcoming elections. Almost 40 years later, another Prime Minister, interestingly again from Gujarat, demonetised notes of Rs 500 and Rs 1,000 just ahead of crucial state elections.

If economists are to be believed, over 90 per cent of the cash in India is not black money. And as Amartya Sen puts it, “ I am not a great admirer of capitalism. On the other hand, capitalism has many successes… It’s despotic in the sense that if a government promises in promissory note that when given, we will give you this amount of compensation for it and to break such a promise is a despotic action.”

We are simply not into the age of plastic as yet and millions of Indians still feel more safe dealing in cash. This is especially true of rural and semi-urban areas where most Indians still live. Is it the right thing? Maybe not. Maybe there are greater benefits to be had by switching over to a New Age digital economy. But that surely ought to be a matter of personal choice. People should be allowed to transact as they want as long as they are not breaking any law.  A tweet  compared our Prime Minister with a confused housewife who had just started baking the first ‘roti’ and called the whole family for dinner.

Modi can demand — and the RBI governor will surely agree — to hand over almost all the Rs 3 lakh crore to the government as a special dividend. What will Modi do with this windfall? He can transfer a whopping Rs 10,000 into each of 250 million Jan Dhan accounts that have been opened since he came to power. This will absorb Rs 2.5 lakh crore, leaving Rs 50,000 crore for other purposes like infrastructure. Maybe the un-encashed proportion of high-value notes will be only 10%, not 20% as assumed so far. That will mean a lesser bonanza of Rs 1.5 lakh crore. That will still suffice to put Rs 5,000 into every Jan Dhan account, and leave Rs 25,000 crore for other uses. Modi can legitimately say the extinguished notes represent cash clawed back from black money holders, and boast that he is now distributing this to the aam aadmi. Voters will cheer resoundingly

The real menace is not black money; it is what causes the creation of black money, which is corruption. How do you combat corruption? Politics has this curious habit of corrupting language. And once words are corrupted, their meanings slowly corrupt themselves either through overuse or misuse. Never has this been more obvious than in the case of the word ‘corruption’ itself.

We Indians are said to be genetically predisposed to coronary disease and diabetes. Are we also biologically programmed to be dishonest in our dealings? If dishonesty is in our DNA, can genetic engineers reprogramme us to become honest and upright citizens? Quite a challenge for science, almost on a par with finding a cure for cancer.

Or, perhaps, our dishonesty is not gene-based but is the result of a social and cultural context in which we see our successive governments as nothing but an extension of colonial rule, thanks to the lordly distance that our netas and our babus put between themselves and us.

Noble intent does not always good decisions make. Or is it plain old schadenfreude that drives us all?


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