This is just speculation, but drastic changes in the BJP’s propaganda seem to indicate that a rollback of demonetisation may happen.
We began with demonetisation being Modi’s special, secret project. The BJP and its formidable social media machinery has consistently defended demonetisation in the face of increasingly grave reports of losses and worse, nationwide. Even Modi supporters who are fully aware that the demonetisation is a disaster and little else seem committed to going down with heads held high no matter the cost to themselves or others.
However, unlike the supporters conditioned to sacrifice all for the greater good, there are increasing signs that the BJP would like survival for itself and Modi. There are subtle signs that Modi is increasingly being distanced from the mess and the missing RBI governor, Urjit Patel has manifested out of nowhere as well.
Reading the writing on the wall, I think demonetisation has failed and will soon be rolled back.
Here are the things I noticed.
- Starting from last week, almost all talk of black money and terror funding and what not died down and the new focus is on a cashless economy – not so surprising since people have to survive the cashless situation created by Modi and given that there are no arrangements for required within a short time, the only alternative is to minimize damage. What likely was expected to be a bonanza for Fintech companies has now turned into the government’s lifeline.
- While the BJP may dismiss losses and deaths suffered by the common man, there are increasing signs (and they were there all through – no idea why BJP didn’t expect them) that business losses will be staggering. The last week has brought news of massive layoffs, flight of foreign money and entire fortunes wiped out in the stock market. This sort of pain registers on a party that has basically floated to power on money from such very sources.
- SBI head Arundhati Bhattacharya (also being considered for a nomination to the World Bank) has been the weather cock on the demonetisation all through to the point where a lot of ignorant citizens probably thought SBI handles national currency and RBI just prints it or something. Statements endorsing the demonetisation, even as the Banker’s Association was talking of 11 employees dead in 10 days of work. Parroting the government line on plenty of cash being available even as banks and ATMs ran empty on a daily basis in the organization she heads. Today she demanded that banks should be compensated for the losses they suffered…. because of *cough* “RBI’s move”.
- Increasingly, extremely “planted” news points to the RBI and Finance Ministry for the demonetisation. A notable example being (note the language emphasized – this is classic BJP propaganda):
- Prime Minister Narendra Modi is working “more than ten hours a day” just on ensuring that the 8 November money measures announced by him ensure a smooth landing for the economy rather than turbulence. This despite the fact that the plan actually owed its origin to the Reserve Bank of India and the Ministry of Finance, who persuaded the PM to go forward with an idea which will affect (and has affected) over a billion citizens of this country. Prime Minister Modi showed moral courage in coming forward and accepting ownership of the currency swap scheme announced on 8 November, and has since then publicly backed every twist and turn in that policy by the monetary and fiscal authorities. Senior officials say “Prime Minister Modi was presented with the issue in such a way that turning down the scheme was out of the question”. Through the plan, concerned officials wished to “shield those in high positions in banks across the country from the consequences of the crony-oriented lending that they had been doing, specially since 2006”, the year when Narasimha Rao’s liberalisation policy was fully substituted by the UPA into a faux Nehruvian economic policy that combined Fabian socialism with Wall Street ways. “Officials argued that a windfall of up to Rs 550,000 crore would flow to the banks through the enforced extinguishing of currency notes issued by the RBI, and that this would recapitalise several banks that were in effect bankrupt, thereby allowing them to lend again”. The Prime Minister was assured that “steps would be taken to ensure that the common man suffered minimal discomfort” and that “the informal economy would accelerate its absorption into the formal without jobs being affected”…
Needless to say, this is the line that will now be taken by the party. Such stories don’t reach journalists via anonymous “senior officials” and “sources”by coincidence. So the strategy seems to be to downplay the fact that Modi announced the demonetisation and to present it as something he was reluctant to do but compelled by other forces covering up Congress actions. He himself is hardworking and has citizen interests in mind. Etc. This is a big gamble to play if he people pointed out as real culprits aren’t seen to suffer some consequence. Thus, I think Jaitley and Urjit Patel are now the scapegoats. In completely unrelated news, around the same time these developments happened, there was a photo of Amit Shah holding a goat, which I found totally hilarious.
- Prime Minister Narendra Modi is working “more than ten hours a day” just on ensuring that the 8 November money measures announced by him ensure a smooth landing for the economy rather than turbulence. This despite the fact that the plan actually owed its origin to the Reserve Bank of India and the Ministry of Finance, who persuaded the PM to go forward with an idea which will affect (and has affected) over a billion citizens of this country. Prime Minister Modi showed moral courage in coming forward and accepting ownership of the currency swap scheme announced on 8 November, and has since then publicly backed every twist and turn in that policy by the monetary and fiscal authorities. Senior officials say “Prime Minister Modi was presented with the issue in such a way that turning down the scheme was out of the question”. Through the plan, concerned officials wished to “shield those in high positions in banks across the country from the consequences of the crony-oriented lending that they had been doing, specially since 2006”, the year when Narasimha Rao’s liberalisation policy was fully substituted by the UPA into a faux Nehruvian economic policy that combined Fabian socialism with Wall Street ways. “Officials argued that a windfall of up to Rs 550,000 crore would flow to the banks through the enforced extinguishing of currency notes issued by the RBI, and that this would recapitalise several banks that were in effect bankrupt, thereby allowing them to lend again”. The Prime Minister was assured that “steps would be taken to ensure that the common man suffered minimal discomfort” and that “the informal economy would accelerate its absorption into the formal without jobs being affected”…
This is a development. RBI is increasingly blamed for the demonetisation and any overflow perhaps to hit Jaitley while Modi is the great humanitarian who reluctantly was compelled to announce it and is now shouldering the responsibility, etc.
This wouldn’t happen if the BJP were planning to go through with the demonetisation – it would want to be seen in solidarity with RBI to instill confidence in the success of the demonetisation. Also would be too much risk of the RBI saying inconvenient things that could still nail Modi if demonetisation stress continued.
So my guess is Urjit Patel is the fall guy, Jaitley will be thrown under the bus in some minor way if that is not enough (many say he is too big to be a fall guy), Modi will go scot free after rolling back the demonetisation to save country from these two.
It’s easier to believe stories of Grimm’s Fairy Tales, than such explanation. Indeed, the government need to do a lot of answering to the country and neither the Prime Minister nor the Finance Minister can escape that. Who so ever may be the initiator of the demonetisation plan, the political bosses can’t escape their responsibility. As a Prime Minister, Narendra Modi must not only have the will to do, he must also know the path he needs to traverse. Unless he has a clear vision, he shouldn’t have led the entire country into such a disaster.
Dear Vidyut,
Nice article.Keep it up….
What do you think of the move to stop exchange of notes at the banks? You can still deposit and withdraw simultaneously but you’ve gotta have an account. I also think that for this reason banks are not putting cash in the ATMs and instead using it to service only their customers through withdrawal. ICICI is asking to use checks instead of withdrawal slips. Don’t know why.
The stopping of exchange of notes is basically a completely anti-poor step. Those without bank accounts to exchange money in are left stranded completely. And this isn’t necessarily people without bank accounts. People with accounts in district co-operative banks are in trouble too, as they are not authorized to exchange the notes. I think you are partly right about the ATMs. Though basically the main reason is that there aren’t enough notes to begin with. When branches of top banks in the most elite areas of Delhi and Mumbai run out of cash within an hour or two of opening, there just doesn’t seem to be enough cash for ATMs. You do have a point about servicing own customers only – as opposed to ATMs. This could also be a factor in stopping exchange. About withdrawal slips… I can only speculate that possessing a bank issued cheque book is additional insurance against unauthorized withdrawal and fraud.
It also seems that the move to stop exchange of notes is an exercise in image management. That’s something the modi govt is best at, or at least most focused at. With the lines not growing any shorter, they decided to end exchange so now the lines will be much shorter coz only bank customers can access the service. The poor are screwed but the mainstream media won’t stoop to doing any real journalism and so the image will be of things getting better. Everyone will think that it’s just their area that’s severely hit.
India desperately needs alternate independent media such as yourself and some other blogs like kafila. But a greater audience can be reached through YouTube. Like TYT in USA. Have you thought about that?
Demonetization has caused unexpected hardship to the poor, no doubt, but not anti poor.
More than anything else this has given an impetus to be more aware of the system and an urge in poor to be educated, no matter to what extent. This has also driven them to be aware of and use technology, particularly by younger generation which in turn would have a cascading effect on elders, especially aged and illiterate. The impulse generated in the less educated to be open to the use of technology and to realize that how simple it is to cope up with such a situation, had I been educated! Only this aspect of progressive thinking as regards use of technology and the constraint imposed to be educated would make our population gallop many fold in a short time period which otherwise would have taken decades and billions and billions of money! This writer has seen personally even elders and illiterates chasing and urging youngsters to to teach/help know of the new technologies! This one aspect alone will set off more than the bad effects of demonetization.
The fact that people think that the hardships (discomfort is another word being used) to the poor is unexpected, shows how well the Modi govt. has managed public opinion through mainstream media. It wasn’t unexpected at all. Here are some facts that the govt. knows (or should have known):
1. A very small percentage of the entire economy is printed money. Most of it is digital. In any country in the world, if every citizen decides to withdraw all of his money, there is no where enough cash to pay everyone.
2. Despite this fact, most of India’s rural and urban poor and lower middle class still deals in cash. Millions of people don’t have smart phones to do PayTm (as advertised by Modi) or access to internet to do internet banking.
These two facts were known and enough to tell anyone that this move will cause millions of lives to be destroyed. Yes, that should be the word used instead of hardship.
It’s wishful thinking that this move will move India forwards by forcing the poor to embrace technology and educate themselves. Even if it was a consequence, this is no way to do it. By this logic, let’s start castrating rapists and hanging all murderers to give a nice incentive to others to not do these crimes. But this won’t be a consequence because in order to achieve that you need a lot of other things; country wide penetration of technology, education, electricity, banks etc.
The rich and middle class in the cities have managed to handle this disaster and the media has only portrayed it as a mild discomfort. But that’s not the truth of it. Sure, other political parties are making noise partly for political reasons, but also because millions of people have truly been badly hit by this stupid plan.
I am reminded of a drive I took from Bihia to Arah in Bihar while attending a friend’s wedding. I was surprised to see the mud huts with thatched roofs and butt naked children sitting in the dirt with dogs and hens and pigs. It was like a scene from some old movie. But the reality is that a large part of India is still severely poor. Some of the poorest people on earth live in India. I find it hard to see them rushing to their educated young neighbors, asking them to teach them how to use PayTm.
Let me put it like this. If your son/daughter is using internet for the first time, should she operate Facebook or your bank account?
That is perfect. Inthe same way a child wanting to learn swimming hesitate to enter(jump into) thepool for fear but if he is pushed in and proper assistance is given the boylearn swimming besides doing away with the fear! Modi, if one has to be named ,wanted to bring about transparency by getting rid of the ocean of black money as a first step,without any previous experience, (which probably no one has including the socalled economists ) took the plunge on 8th Nov when the majority includingthe poor applauded while some of us seemto be pulling him down! There was no one way to eradicate black money and themore one brood around the more one could be confused! Tsunami and floods were localizedand those in distant areas not affected could only be, at the most, on lookersand lip sympathizers but the demonetization has affected every one far and wide! Here again, no doubt, the poor are thesufferers while the noise makers are those involved with black money! All of ushave a responsibility, though infinitesimal, to see through that the effort putby the elected government succeed as the intent and purpose of the task cannotbe disputed, notwithstanding the inconvenience and the fact that lot more stepsmight be in the offing! While electricity can kill we also use shock treatmentto cure ailments!Most parents aspire to send their children to IITs , IIMs and so on and the principles of good management laysdown action at a right(good) time for its appropriate effects more than itstotal success! Expecting 100% success in every decision making of management actionwould be too much to expect ! I have no political inclinations But I should state here that Modi’s demonetization appear to have cured the speech impairment(dump!) of Dr.Manmohan Singh as he turned out very vocal the other day, people all over have been demanding him to speak for 10 years during his tenure, which he avoided! He was an appointed PM where as Modi is democratically elected PM! I am of the opinion that governance in the country should begin at the last man and it is only control that is required at the upper strata!
somnambulism, looks like!!