Demonetization At Midnight - To Outcast The Middle Class

On the evening of 8^th November, 2016 PM Sri Narendra Modi announced the demonetization of Rs 500 and 1000 from the midnight. Some called surgical strike on black money, some called bold move, some called good for the economy, and some called pro-poor and anti-rich move. However, it might have been confusing, none of their views were substantiated with facts that how come it will hit black money hoarders, how it will help the people, and how it will resurrect economy. It was all speculation belying the ground reality in open and the misery of the people to begin. Nobody is sure what it means and what it is aimed at. All are throwing their hats speaking what they want to speak. 

These Rs. 1000 and 500 are no more a valid tender in India.

Amidst all the guess, sermons, claims, chest beating, criticism, and propaganda, some bewildering factual trends emerging out which might have been off guard over looked by the govt or they might have considered it as part of the policy. Nothing is clear as yet – its all speculation and to everybody’s guess that we might have to live for sometime in speculation and guess.

One of my wife’s friend and relatives were on Vaishnab Debi Temple visits and while they were coming back on 8^th evening the demonetization took effect and since then they all had to preserve their smaller currency and rationed for food till they survived the tour and arrived home safely.

 

A man in Mumbai goes to hospital to admit his wife in labour pain and the hospital refused admission because he had only Rs. 500 and 1000 old notes. He came back and left his wife at home and went to exchange the money. When he comes back, his wife had delivered and the baby was dead.

A lady sold her landed property worth Rs. 60, 00,000 and was supposed to buy another property the next day committed suicide because the currency what she had was no more valid.

All across the country, the ATMs of all the banks became dry with Rs. 100 notes within an hour and became non-functional from midnight of 8^th November. From 9^th morning, the queues of the people for exchange, deposit and withdrawal of their own money has been the story of desperation, uncertainty, wait, and mental agony. The queues of the people continue and will continue until they feel their money is safe and they have enough in hand for their expenses.

In the due course, some people waiting in the queue suffered heart attack and left to heavenly abode. Many dead bodies waited for cremation because crematorium refused accepting old 500 and 1000 notes. Several unwanted deaths committed due to non availability of money. Daily labourers and office goers spent time in queues to collect money for their expenses. No earnings for the day for them. The miseries have not ended yet.

Medias were biased, unbiased, and confused lot and calling people to explain the situation. As intimidated and perturbed in shaky situation, hardly any of the people threw light on the negative part of the move.  But the visuals were enough to understand the immediate impact it has created on the common man. And the stories on the social media said the truth. When this was the scenario in cities and township, a visualization of the rural India could be the truth of anybody’s speculation.  A bewildered disbelief has appeared in front of people that a harsh decision could be implemented for the business of government of India.  Is government for business Or welfare of the people?

However, the narratives of the government remained defiant and attacking on the opposition. The mockery and pleading continues to be government’s tactics to manage the poor planning situation of the chaos their decision has created.  The move was rated for the good for the future of the country while the present have been royally ignored and mismanaged. As usual, congress is denounced and chest beating is done for their own bravery. However, their bravery has layers of hidden truth that they may not be able to answer.

While the debate is on – several questions crosses one’s mind and the argument and counter arguments are both in the public domain for consumption. Its our own understanding (that is so complex), intelligence (more of emotional than logical), and belief (rather blind and ill) that will work as pain bam for the time being.

As government claims, no one had idea about this sudden move of the government. Not even the ministers and opposition leaders – anyone. Whereas on twitter, the BJP chief has tweeted the new

Rs 2000 notes on 5^th of Nov 2016. Evidently entire political circle knew about this move that is why so far none of the politicians, Industrialists and so called black money hoarders came to bank rather common man haplessly standing days together to exchange and withdraw their money. That too they can not withdraw whatever they want.  There is no enough cash.  Possibly all Rs.100 notes were taken out by those who are sitting quite in their official bungalows and the mansions. There is no urgency for them because their work is already done and they do not need to panic. Ironically, most of the people got Rs.50, 20 or 10 from the bank. Rs 100 ran out in no time.  I got 4 bundles of Rs.10 notes for the first time in my life from the bank. Question is where are the Rs.100 notes gone?

More news from the bankers suggests that they had ideas of Rs. 2000 coming in circulation but the time was not announced. Around 15 days ago the calibration and programming for vending Rs.2000 notes were done in leading banks ATM. However, still it was a short time to complete the job in all ATMs of all the banks. That is why few ATMs could dispense this currency in couple of days time.

I came across a labouerer who got Rs.2000 in exchange from the bank yet he could not buy his food for two days because no one was ready to give him change until he buys Rs 1600 worth food. At last, a good Samaritan offered him a free meal for the day.

India is a cash rich economy and we do not transact until necessary through the bank. Bank is only used to keep extra cash which is not in use. The farmers, the small traders, and the small venders all depend on the cash transactions.  It’s a big hit for them and they might be the bigger losers with the move. In fact, they are the largest tax payers group too. Farmers have been committing suicide for non-payment of their loans and this misery will suck them dry.

Imaging a cashless economy without ample arrangements is a utopian dream. But our FM is more pragmatic and he wants India to beat even US economy.

The argument that runs positively is curbing counterfeit notes. Counterfeit notes have always been in circulation and no sooner the new notes will be in the market it will have counterfeits too may be little later. However, largely the counterfeit notes have been denied by traders, business owners and banks because of the new checks and mechanism of identifying the fake ones.  Hence, how far this argument holds good is anybody’s guess.

Again, how good will it be to reintroduce Rs.500 back and a higher denomination of Rs.2000 in the market. Later on Rs.1000 may come back too.  Will there not be any accumulation of black money?  Will it not increase more corruption?

If you listen to the experts on black money front, some economists say the move will have a limited impact as people will simply begin to accumulate black money in the new currency as soon as that becomes available.


But the government hopes this will bring cash worth billions of dollars in unaccounted wealth back into the economy. The two notes accounted for more than four fifths of the currency in circulation. However, the demonetization economics is complex and the collateral damage is likely to far outstrip the benefits.


Prof Basu, who was chief economic adviser to the previous Congress government, said – “This "demonetization" just witnessed in India is at best, a one-time flushing out of the system and the return of black money is likely if not inevitable.” Many economists also say the costs of such a one-time "flush" will be huge.


PM said –“Honest and poor people are happily sleeping and rich and black money hoarded looking for the sleeping pill.”  This rhetoric is brilliant to create a divide between poor and the people which have got little more money and might or might not fall into rich category, but certainly may not fall in super rich category. This is real psychotic pill and negative move to make poor be his voter because he has attacked the rich with demonetization. But the super rich and the political class remains his friend. This is the tactics Indira Gandhi had adopted and so she ruled for so long. He is also aiming to position himself for long innings.

What looks more obvious with the move of surprising demonetization of Rs 500 and 100 is that BJP has finally decided to move away from its core vote bank which kept them floated for nearly 6 decades. The traders, business owners, professionals and working class are the ones who have witnessed stripped in open. The poor and marginalized people have been suffers, while the rich and one who are in power corridors are taken care. The 2014 parliament election in reality was also the upsurge of this middle class (upper and lower) young, old, committed and educated voters that ascertained Modi to be PM of India. The vote of the lower class was bought by the false hope and promises that anyways he will continue doing.

The current demonetization is clearly a move towards squeezing more tax from the middle class.  It’s the class who pays tax and getting forced to pay more tax in future too. The faulty taxation system of India is screwing middle class to its maximum.

Further decoding the fact reveals BJP has positioned itself as cash rich political party with cash rich funding business houses what Congress earlier used to be and they consider poor and marginalized to be their vote banks that turn in large numbers to cast vote irrespective of any situation and no apprehension whatsoever. This shows one class who will fund the election and another who will vote for them. Congress sustained on this principle for 7 decades. So, PM and BJP is following congress to be in power and they used middle class as steps to climb the power stairs.  And now, they do not need them any more – used and dumped – a surgical strike to outcast middle class.