Demonetization in India

Demonetisation, in simple words, a process of stripping a currency unit of its status as a legal tender, as per recent economic statistics, has turned out to be a regressive step. As most of the observers seem to agree, it was a failure in relative to the costs it imposed on the country and its people. The whataboutery of the government as to what this regressive step might manage to achieve in the future remains a distinct possibility, something that could have been achieved by other practical means at a far lesser cost to the poor, albeit without costing the loss of lives.

The primary reason behind the politics of demonetisation hasn’t unfolded but the rising discontent amongst the public is slowly seeing an organised outlet. If we observe the same in retrospect, bode to support the vehement act of demonetisation, it doesn’t sync well for the economy, neither socially nor politically. It doesn’t denote that the people failed to identify their interest, had that been the case then the process of demonetisation wouldn’t have escaped unscathed. But in retrospect, the political support for demonetisation is reflective of a deep economic pessimism in India viz. convincing ourselves that we have not much to lose by the ill-thought-out mobilization(s) of this kind. The confidence imposed by the public in the government as a consequence of their desperate attempt to outdo the ills of the preceding governments. Had it been a more dynamic economy, people would have taken the cons into account.

The government as perceived from its political tactics’ is aggressively invested in narrating the saga of its own success, whether bonafide or vehement. In pursuance of which it is preventing itself from learning of its own mistakes and the mistakes committed by its predecessor(s). Something which is again reflective of the present economic slowdown. Tethering all the promises and hype to the ground i.e. busting of the myth per se. Every country’s economic slowdown is a resultant effect of many contributing factors, India being no different- institutional logjams, the rising transportation cost(s), export growth slowdown, adjustment to GST etc. But demonetisation has had a major impact, big enough to directly affect all these resulting factors, thereby inflicting disruption in the economy. Another effect which hasn’t been measured is the indirect psychological effect it has had on the economy and the mindset of people. The underestimation of the power of the invisible hands of the market.

Demonetisation was brought into the political fiasco under the garb of a moral crusade rather than a well thought out exercise with sophisticated and practical implications. An act which cannot be perceived even by the senses of a 5-year-old. The more government remains invested in the narrative saga of its success, the more this economy will remain vulnerable to voodoo interventions. Despite the narratives of the fallible successes and blaming of the preceding government for a cow mandate, India is failing to bring in private investment despite global interest in its market. The same is effected by a variety of reasons viz. bad debts, discontent in the governance, red-tapism, excess capacity etc. Although, deliberating on the same is nothing more than psychological analysis since citing facts here would be nothing but a contradiction to the narrative saga of the present government. But surely none can negate when the demons of demonetisation might return to haunt the black money crusade. 

The lack of focused intellectual and political outrage at what is at best a very modest economic performance should be worrying. It is of a piece with the government’s constant success in trapping us in an air of unreality. It also means that the political pressure to deepen the politics out of irrelevant disputes will continue. The invisible “technical reasons” behind the slowdown will have to be masked by the “invisible hands of the market” which only the present government understands. After all, Newton and Einstein were a result of Ram Rajya.

Here have some “achhe din” for all your troubles.

by boringbug