Demonetisation scheme: Does democracy benefit the citizen or political parties?

Very recently, in a demonetisation scheme, Rs 500 and Rs 1000 notes were banned in a swift and well thought out operation by the Narendra Modi government. The print and visual media focused on reporting the ‘hardship’ to the ‘common man’ – there has been little focus on the larger issues involved in this major economic step ushered in by the government. Many thinkers have analysed that the fundamental problems afflicting our economy and society relate to the existence of a parallel monetary economy/widespread corruption, along with lack of recognition of the importance of education and public health in our democracy. Many economists do not appreciate the disruptive and corrosive role played by the phenomenon of widespread ‘corruption’ – indeed many refer to bribery as a ‘domestic transfer payment’, dismissing its deleterious impact on quality of governance, indeed on GDP. It is now recognised that a country cannot move forward without clean and transparent governance, for which a corruption-free society is a basic requirement. Does any country figure in the top 50 of the Human Development Index, which has a significant amount of corruption? Isn’t the correlation between a genuinely welfare society, with appropriate attention to education and public health, and the absence of corruption well established by empirical evidence. The fact is that corruption distorts and disrupts the distribution system with great violence, is inimical to the fostering of excellence, and has its prime adverse impact on the poorest segments of the population. We need to note that nearly seven decades of independence, 70 percent of the population is in distress, leading a hand-to-mouth existence, large segments not knowing where the next meal is coming from – with abominable health standards and primary education levels, among the worst in the world. Much of this malaise is traceable to widespread corruption and existence of a parallel black economy. Many economists predict that cleaning up of the system will add substantially to the Per Capita GDP – Ambit’s Saurabh Mukherjea, the eminent analyst has predicted that within 3 years this move could lead to an increment of 3 percent in the annual growth rate. [caption id=“attachment_2619560” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] The major step taken the other day is the signal that the government recognises the need to clean up the system, and usher in a climate where the country can move forward and take its rightful place. This is a decisive blow for democracy to move forward. Anyone who does not recognise the larger significance of what has happened has no comprehension of how nations grow big, strong and powerful – this is the first step in 70 years to make ‘Bharat great again’. The occasion should not be trivialised to make brownie political points, or to pursue narrow partisan interests without understanding the larger national needs. This step could lead up to the cleaning up of our electoral process, which is dominated by black money and which thrives on a cycle of large black investments, capture of power through foul means, use of political strength to amass private wealth – all with disdain of the citizen. No wonder the regional parties in UP strongly oppose the move – at one stroke the large cache of ‘war-chest’ black money hoards, intended for use in the forthcoming crucial elections has been neutralised. It does not matter if this indeed has been the primary purpose of this major economic manoeuvre if it cleans up the forthcoming UP elections, indeed the election scenario for the future – this is a major step to clean up the system, and to bring in accountable governance. A lot has been made of the distress to the ‘common man’ by this ‘Tuglaqui Farman’. The fact is that there will be some inconvenience for a short period of time in access to short term expenditure funds. No honest citizen will lose his savings, nothing will get confiscated – there may be a temporary inconvenience to some segments of the population. Do not forget that the political forces which focus on the ‘distress’ to the common man are precisely those who have unconscionably and fostered corruption, generation of black money and misgovernance deliberately over the decades, leading to widespread attack on the interests of the common man. The citizen now well recognises the role of the conventional politician, who only makes wild promises come election time has no intention of fulfilling any of them, he is a congenital liar and obfuscator, whose only interest is in winning elections, amassing wealth each time to cover ten generations, and investing again in winning elections once again – this is the vicious cycle that is being perpetuated – the common man now sees this with clarity. Surely last week’s step is not the end of corruption or the black economy. Many follow up steps need to be taken to consolidate on this major seminal thrust on revamping the economy. The fear has to be put in the minds of the people to ensure that systematic transgression of the laws will lead strong punishment. The relevant judicial processes, systems and procedures need to be revamped. While the administrative apparatus at the Centre is being cleaned up, major attention to widespread corruption in the implementation phase in the states needs to be addressed. The war for good governance has started, it needs to be followed up with vigour. Recall that Aadhaar has been a great success. Jan Dhan programme, in association with over one lakh bank branches and 2,50,000 post offices outlets will provide a major fillip to move away from the cash economy, gradually and steadily, through to other channels. Digital India needs to be strongly pursued and made a reality in the next two or three years. All these are imperative, to minimise inconvenience to the citizen, reduce transaction costs, usher in transparency, and to sharply increase ease of business. One hopes that government will see these as work in progress, and bestow adequate attention. Let us not see the momentous recent events in a trivial light. Let us not over-estimate the short-term adjustment cost – the Indian citizen is used to hardship – he has longed for a better future over the decades. The recent major decision gives hope that the two other fundamental areas of reform – education and public health, now will come into the forefront of policy making. Hitherto there has been no evidence that the Central Government understands the criticality of these two areas in the life of the common man in a democracy – hitherto the attitude has been one of playing politics, business as usual, mouthing platitudes, and providing ‘band-aid’ cosmetic solutions – one hopes the realisation will come that major reforms in these two sectors are now imperative, and brook no delay. These are important sign posts on the road to lead to greatness.