Despite the pain and suffering that the public has endured over the last 50 days, demonetisation may have boosted prime minister Narendra Modi's brand image, while that of the Reserve Bank of India, the monetary authority in charge of the Indian currency, may have taken a huge drubbing, say brand experts.
Modi announced the decision to demonetise Rs 500 and Rs 1,000 currency notes on 8 November with the stated objective of curbing corruption, black money generation, fake currency circulation and terror funding. The move sucked out about 86 percent of the Rs 15.44 lakh crore cash in circulation even as the central bank was not ready with enough replacement currency of smaller denominations. This resulted in a cash crunch.
The public queued up before the banks and ATMs to deposit old notes they possessed and also to withdraw cash. What made matters worse is the restrictions placed on cash withdrawals by the government (at Rs 24,000 per week from banks and Rs 2,500 from ATMs). The long lines at banks and ATMs resulted in unprecedented misery for people, with nearly 100 people reportedly dying standing in the queues.
“For sure, marriages have been affected and there have been reports of people having died standing in queues, but that is only minuscule,” says Harish Bijoor, chief executive officer of brand and business strategy firm Harish Bijoor Consults Inc.
According to him, though the common man has been affected, the complaints have not ridden over what most consider as the PM’s ‘good’ move, which they felt was for a larger cause and so brand Modi has not been significantly dented.
The common man is in the mood to forgive the prime minister as he realises that demonetisation is a big task that irritants like more than 60 policy flip-flops after the announcement of the scheme can be ‘tolerated’, says Bijoor.
The man who is complaining the most is the one who is affected and that is not the ‘common man’, believes Bijoor. He places Modi’s popularity on a ratio of 80:20 with 80 percent having welcomed the bold move of the PM.
"Everyone from the local vegetable vendor to traders have been quick to adopt digital forms of payment,” says Alpana Parida, managing director, DY Works, a Mumbai-based brand strategy and brand design firm. She feels that it is the traders, small businesses and politicians who are vexed by demonetisation. This section cannot be termed as the majority, she points out.
“The Modi brand has been strengthened overall with the common man and international community seeing the PM as exhibiting boldness of thought and action. If he follows demonetisation up with significant tax reforms and people-friendly budget, his brand will gain more strength," she says.
Modi, the man
The outcome of the whole exercise cannot be determined now, some experts say, pointing out that that demonetisation is still a work in progress. The cash crunch situation continues with not enough Rs 500 notes in circulation. No one wants the Rs 2,000 notes that is being foisted upon them by banks and ATMs as it is difficult to procure change for the large denomination note.
That demonetisation has shifted perspectives and created sharp divide with regard to the popularity of the PM is a known factor. However, it has also crystallised the image of the prime minister as a decisive leader who recognises a problem that many before him have but were hesitant to take that risky call, says Santosh Desai, social commentator.
Bijoor seconds that and says Modi comes out shining as of now for the masses have welcomed his bold step in spite of the hardships they are facing. Each of the rule change post demonetisation has troubled citizens but they have factored that it is a complex issue which brings these irritants in its wake, he says.
However, Modi has burnished his image. “In a democracy, people believe there cannot be a strong leadership and Modi has debunked that belief,” says Bijoor. So though people are struggling to access their money in banks and ATMs, Parida says that people feel that decision-making in politics was paralytic until now -- Modi has infused it with quick action. “It shows that the PM is unafraid to take action and that is the image that resonates with the people,” she says.
Will the image remain strong?
Brand Modi will be tested on the strength of Union Budget 2017 depending on what sops the finance minister will announce as a balm to the difficult days brought about by demonetisation. “If there are no substantial benefits in the budget for the common man like income tax cuts, or rewarding Jan Dhan account holders, for instance and other sops, then the mood of the public may change,” says Bijoor.
If the government’s aim was to punish the black money hoarders, then the common man would look to being rewarded for his struggles to access his cash.
Desai says that though PM Modi’s stars have been on the rise since demonetisation, where it will come to rest is not known as the queues outside ATMs and banks continue though they are shorter now. “Until the effects of demonetisation is dealt with fully, it is difficult to have a clarity in terms of the PM’s image,” he says.
RBI's image affected
Meanwhile, the RBI's image seems to have been dented significantly during the period. Post the announcement, the action mostly happened in Delhi and the central bank was relegated to the background. Moreover, the frequent rule changes, mostly dictated by the political bosses in Delhi, unfairly affected the central bank's image.
Unlike many other government institutions, the RBI has never been part of everyday conversation and so retained an image of being pristine, trustworthy and efficient. Also, there have been many instances when the governors of the central bank resisted political interference, which gave it the image of a 'bold' regulator.
Under Raghuram Rajan's governorship from 2013 August to 2016 August, the brand image of the RBI got "humanised", Parida says.
However, post demonetisation adjectives such as ‘bold’ and ‘decisive’ were being attached to Modi and the RBI’s image took a beating.
Its present Governor Urjit Patel, who has kept a low-key image right from his days as deputy governor, is seen in direct contrast with his predecessor Rajan. That he remained silent in the early days of demonetisation even gave rise to questions on its independence (read an article in Scroll here).
Santosh Desai even feels that the demonetisation was something the RBI was dragged into unwillingly.
Demonetisation almost coincided with Patel's appointment as the governor. Also the positive image that Rajan left for the RBI and himself was fresh in the public conscious, says Bijoor. “It is unfair to Patel. But yes, there has been an erosion to his image,” he concedes.
Governor Patel did not come with an image like that of Rajan. He was seen in the shadow of someone charismatic as Rajan. If the image of Patel was that of someone who liked to be in the shadows while being very efficient at his job, that image has shaken considerably, says Desai.
He says that the changed belief in the ‘efficiency’ of Patel may not be the reality but his actions post-demonetisation has led to the making of that image.
Parida feels that there is still time for governor Patel and the RBI to assert itself. “The brand can go either way. It is at the cusp and has tremendous opportunities to become powerful again,” says Parida.
Updated Date: Dec 30, 2016 13:09:22 IST