Demonetisation is Narendra Modi's shock therapy that rewards honest taxpayer for first time - Firstpost
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Demonetisation is Narendra Modi's shock therapy that rewards honest taxpayer for first time


The recent demonetisation of currency notes reveals the sad state of our public discourse on government policy. The combination of braying anchors on TV channels and opinions on social media show how to mangle a discourse.

It shows the shallowness of the intelligentsia if TV anchors would like to be classified as one. It also shows social media has the ability to influence the trajectory of public debate. It does not portend well for a democracy when the crowd is used as the arbiter for policy.

The broad segment of the public discourse can be easily drawn as it is shorn of all nuances and can be easily clubbed into segments.

One set of people and this includes the TV channel anchors or people who depend on just TV channels and Whatsapp for their information. TV channels have taken a highly nationalistic line or decided to junk demonetisation move because of the hardship it is causing the common people. Both are extremist view on an economic decision that has far reaching ramifications.

The hardship caused to people is not the reason temporary demonetisation should not be done. Please note it is a temporary demonetisation (TD). If the measure is hardship government should not take any step that causes it even it is long term interest of the people. The same hardship argument could also be extended to paying taxes.

PTI

PTI

But the hardship is real especially among lower income categories that do not have bank account and need cash for emergencies. Their trouble is painful and affects the society emotionally. There is no justification logical or emotional for this pain. An emotional pain cannot be justified by logic, neither should an economic decision rest on emotional arguments. The reason an emotional justification is pulled in is because of the nationalist fervor or color being given to an economic decision.

The nationalistic line or patriotic one is wrong all it shows is the intellectual drought that TV channels suffer from these days. Their desire to kowtow the government line crosses limits of ridiculousness and borders on stupidity. Though the line is supported by those in the government and is detrimental as it will affect economic decisions in the future. People are not stupid to be swept by such fervor.

Second, set of argue that TD will not reduce or remove corruption. The artifice is high and is the favorite line of criticism for opposition politicians. Especially as the government is introducing a higher denomination Rs 2000 note and reintroducing Rs 500 and Rs 1000.

To understand, TD by itself does not remove black money or will get rid of it. One, it will help to bring more people in the banking system as they stop relying on cash, particularly traders and jewellers. Second, currency as stock is not going vanish anytime, it cannot go away, Rs 500 and Rs 1,000 are also going to come back. This step is a shock therapy to the system. To put the fear in the minds of people who do not pay taxes or use cash to hide unaccounted income. Clever politicians have tried to explain that black money is no longer kept in cash but in gold and real estate.

In a way, the honest tax payer is being rewarded as he does not have to worry about his cash deposits. For once the honest tax payer is in a privileged position which is rare and shocking for him.

This shock required surprise, surprise required secrecy, that means not many people knew. Therefore the system is still not ready. Hence the hardship. Though the secrecy argument cannot be used to justify the hardship as once announced banks need to get their act together. Especially as the nail that has lost the kingdom is the tray in ATM machine that is not able to take a Rs 2000 note.

The hardship is real, but griping about it is not an argument for or against TD. An opinion based on hardship is just that a gripe.

The nationalistic and the ideological jingoists are not too different. As both do not see facts they only see political angles to every policy. They are criticising this step because it will not rid India of black money.

Like all criticism it is easy. There is no single step or action that can get India rid of black money irrespective of what politicians and that unrealistic breed of economists say. The reason it is black is because the system is not able to capture it. No country has been able to successfully capture it, which is why tax havens exist. TD affects a small percentage of it, but should this step not be taken because it affects a small percentage.

Should we wait endlessly until we find that brahmashastra that will destroy black money. If incremental steps help they should be taken.

Criticism is always the lowest form of intelligence as it is an argument without a solution. Anybody can make it does not take any effort. Just because there an opinion exists does not make it right.

Today, social media gives every man the means to broadcast their opinion. But if you have a solution with that opinion it may be just a mite more useful. Otherwise, it is just another voice shouting loudly.

K Yatish Rajawat is a policy commentator based in New Delhi, he tweets @yatishrajawt

First Published On : Nov 16, 2016 08:01 IST

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