A camel's neck once got inextricably stuck in an earthen pot. Sheikh Chilli, its owner, had a simple solution. First he chopped off the camel's neck. Then, he shattered the pot with a pebble and held the neck aloft as a sign of his wisdom. When people asked him about the damage, Chilli pointed at the scattered pieces of the pot and replied: I am yet to count.
The RBI governor's latest reply to a Parliament panel on the number of demonetised notes evokes the same mirth as the joke about this ingenious owner.
After having slaughtered the economy with a quirky scheme that outlawed almost 85 percent of currency notes in circulation, the RBI now says it is in the process of counting the exact number of demonetised notes that were returned to it since 8 November.
Whether demonetisation was a success or a failure is a dead debate now. From the very beginning, the move was criticised for being flawed both in theory and practice by a majority of experts. Many of those who had defended it initially, calling it a masterstroke, later agreed that it slowed down the GDP, led to an agrarian crisis and destroyed the unorganised sector. Since the notes were outlawed, many indicators have pointed to sluggish to negative growth in several sectors of the economy. There is, thus, a general consensus that apart from leading to panic, putting Indians through the misery of queuing up to exchange their old notes, fight for new currency, the move has badly hurt the economy.
If demonetisation made Indians cry earlier, the RBI's latest statement should now make them laugh. In his reply to Parliament's Standing Committee on Finance, RBI governor Urjit Patel said he has no idea how many outlawed notes were returned because his team is still counting them. He blamed the lack of adequate counting machines for the delay.
Now, this is hilarious. Imagine the spectre of a few RBI employees sitting amidst stashes of currency notes, picking up one bundle after the other, wetting their fingers and counting the notes non-stop for almost seven months. Is this medieval-age exercise even required for putting a figure to the demonetised currency?
In January 2017, banks had submitted the date on currency notes they had received from Indians. All the RBI needs to do is add up the figures and tell the Indian public how much of the currency was returned and how many, as fans of demonetisation clucked in the initial days, dumped in the Ganges. Since adding a few figures is not really rocket science, the RBI could have revealed the exact number of notes received by banks several months ago. But, it has found a laughable reason to stall the information.
When Rs 500 and Rs 1,000 notes were demonetised, it was widely believed that a large percentage of them would not make their way back to the banking system. Supporters of the move argued that since a sizable portion of the currency is 'black' money, its holders would have no option but to throw away the cash. Sanguine about the chances of destroying unaccounted money, the government had even told the Supreme Court that it was hoping to extinguish several thousand crores worth of black money.
This money was then, as Sheikh Chillis of the economy had it, was to be passed on to the RBI as a windfall and then, as Mugeri Lals of polity dreamt, to voters as a gift from the Robinhood-esque government that had just robbed the corrupt and the rich.
Obviously, as Ghalib said, there must be something that has forced the RBI's silence, otherwise why would a governor who loved to talk so much about demonetisation back then would run out of words, so much so that the Parliament panel would get exasperated with him and decide not to interact with him again, exasperated by the futility of the exercise.
The most plausible reason for the RBI's silence could be that Indians actually managed to deposit most of the demonetised notes in banks (some believe money in excess of notes in circulation was returned as bank staff accepted fake currency too), turning all of it into accounted wealth. This theory had gained currency when the RBI suddenly decided to stop disclosing the amount of cash returned in the middle of the demonetisation drive. After making the details public for the first two weeks on its website, the RBI had suddenly become silent, scared perhaps by media reports that most of the outlawed currency--estimates put the figure between Rs 14,500 to Rs 15,500 crore--was deposited several days ahead of its deadline.
The problem with the RBI's silence is this: It makes a mockery of the Indians who participated in demonetisation, believing that it was some sort of yajna to cleanse the system of corruption and black money. Throughout November and December, they had queued up at banks, died in serpentine lines in front of ATMs in the hope that those hoarding black money would suffer more.
Now, the RBI can't even answer how much was all the trouble worth. It can't even reveal if a single currency note was extinguished as a liability because its owner did not have the courage to return it.
Like Sheikh Chilli, after holding aloft the slaughtered economy's neck as sign of its wisdom, it has just one explanation: We are still counting.
Published Date: Jul 13, 2017 01:14 pm | Updated Date: Jul 13, 2017 03:24 pm