If there was a Sherlock Holmes detective mystery to be written on Arvind Subramanian's tenure at the Finance Ministry in New Delhi, it might well be titled, 'The Curious Case of the Demonetised Advisor.' We also need to do some good sleuthing to find out what the former chief economic advisor to the Government of India really means when he describes the outlawing of Rs 500 and Rs 1,000 denomination currency notes on that fateful night of 8 November 2016, as "draconian"—the word a dictionary describes as "excessively harsh and severe."
Commentators who are now berating the US-based economist for either not quitting in protest over the move after being party to the controversial decision by Prime Minister Narendra Modi have to read between the lines of his forthcoming book and also past some silences and events to get some vital clues on what really happened. Or might have.
To start with, anyone knowing the lay of the land at North Block may be mistaken in saying that demonetisation happened right under the advisor's nose. That would not be true either literally or figuratively.
All anecdotes and accounts suggest that the demonetisation that seems to have substantially backfired (except in the eyes of its protagonists) was such a big secret that it would go down in history as much for its dark stealth as for its failed pursuit of black wealth. They say even finance minister Arun Jaitley was brought in at the last hour. If Subramanian was not consulted, as it appears, should he be blamed in the first place?
So our focus should shift to what the chief economic advisor did after demonetisation happened. The CEA's post has a quasi-institutional quality and Subramanian by all accounts excelled in his role as the eloquent author of the annual pre-budget economic survey that is supposed to give an objective account of the preceding year's hits and misses in the economy. Some Shakespearean clues lie here.
Subramanian is now in a Mark Antony act from Julius Caesar as he slams the government even as he seems to praise the "honourable men" who surrounded him. However, in the spring of 2017, he was in the throes of a Hamletian dilemma, in a "to be or not to be" frame of mind.
Chapter 3 of the economic survey of the demonetisation year is titled "To Deify or Demonize". The choice of words then seems to offer criticism shaped as doubt, while the choice of words now appears to offer condemnation as description.
The survey that spoke of the "secrecy and suddenness" of the note ban has one telling para: "The public debate on demonetisation has raised three sets of questions. First, broader aspects of management, as reflected in the design and implementation of the initiative. Second, its economic impact in the short and medium run. And, third, its implications for the broader vision."
And it goes on to say: "This Survey is not the forum to discuss the first question." Thus, the CEA, much before departing his chair had kept the option open to discuss this in future, as he seems to be doing in his impending book. The survey appeared to defend the demonetisation by calling it a "reverse helicopter drop" to suck out money, but it carefully added that any attempt to guess its future would be "hazardous."
Well, away from Ground Zero Subramanian describes the same event as a "massive, Draconian monetary shock." Picture the past event now like a helicopter that contained a vacuum cleaner to suck out not wads of currency notes but poor workers and farmhands stuck in long queues outside ATM machines. Here is a man who is supposed to have shown a mirror to the government but it seems to have had a convex-concave trick -- the kind that they charge you for showing funny, mocking faces in village fairs.
The CEA clearly ploughed a lonely furrow during his tenure but for some appreciative gestures from Jaitley. And let it be remembered that apart from Subramanian himself, Jaitley was also targeted by Subramanian Swamy, a sitting BJP member of the Rajya Sabha, with none left to significantly defend either in the ruling party. You could even interpret the whole thing as a hint for the CEA to resign, which he did, eventually. But, the CEA for the most part preferred to be resigned to his fate than resign his office on principle.
You could say the CEA was himself substantially demonetised in design while being honoured for a period, much like the high-value notes that went out of the system amid fanfare and confusion. He is popping up again to use less fancy expressions to describe what in proximity seemed to us like an optical illusion of support for the demonetisation.
Unlike Raghuram Rajan, who was consulted on the note ban while he was heading the Reserve Bank of India (RBI) and said a firm 'no', for all practical purposes, Subramanian was presented with a fait-accompli that he could justify only with the power of his literary imagination. With equal imagination, he is now hitting at the government, and that is bound to be a good thing for the sales of his book. We can now wait for an I-told-you-so statement from Subramanian Swamy, with whom the former CEA seems to share little apart from half his name.
The mirror Subramanian spoke of has now turned into a hand lens and is trying to heat up the government in an election year. Much like the NDA government's new back series GDP data that show the predecessor UPA's economic performance to be poorer than its own, Subramanian's current description of the past event he witnessed from close quarters is controversial for its engineered hindsight.
What is it they say about karma and sowing as you reap?
( The writer is a senior journalist and commentator. He tweets as @madversity)
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Updated Date: Dec 01, 2018 09:56 AM