Demonetisation to less cash: Economists can do without moral compass, not politicians
A good gesture from the government after the first two weeks of demonetisation would have been the frank admission: “Yes, we botched up. We could have planned better. Sorry for the inconvenience.”
One has to be cruel to ignore this.
In Delhi, a newspaper report says the cash-starved poor have been living on charity and doles, and students have been going to langars because they have no money to pay for food in hotels. All cash-dependent economic activity has come to a standstill in the weeks after demonetisation. Factories and smaller business establishments cannot pay cash to labourers, so they are headed back home with nothing in hand. People still waste productive hours standing in long queues at banks. The grim scenario looks grimmer if you consider that around 90 people have reportedly died while waiting to get their own money.
The misery of people is visible to the naked eye. One has to be morally blind to argue that everything is fine. The contention that the present suffering of the masses would give way to a bright future is specious too. As the apologists of the government, especially a section of the economists, keep arguing in favour of demonetisation despite the apparent social and economic dislocation it has caused around, one wonders whether that feeling called compassion is dead now.
Economists in ivory towers can do without the moral compass, not politicians. They can suggest ideas that are cynical to the core, even criminal, but politicians cannot be that callous. The core value of their vocation is supposed to be built around empathy. What we notice post-demonetisation is callous disregard for it. A good gesture from the government after the first two weeks of demonetisation would have been the frank admission: “Yes, we botched up. We could have planned better. Sorry for the inconvenience.” But no, what we have is adamant defence of the move, backed vociferously by the fervent drum-beaters of the ruling dispensation.
Was less cash transaction part of the original deal? When Prime Minister Narendra Modi announced trashing of Rs 500 and Rs 1,000 notes, the buzz was black money. People were ready to undergo some pain so that tainted money could get purged from the system. There was more appreciation than anger for the prime minister in the long queues outside banks. Now that the talk has suddenly shifted to electronic transactions, the ordinary people have reason to feel that they have been conned.
The questions come thick and fast: What was the need to go for demonetisation if the aim was to promote less cash transactions? What’s the logic behind clubbing one with the other? A good idea it might be but shouldn’t less cash be a gradual process? What right does the government have to force people to shun cash habit this way? Was the real intent behind demonetisation something else? The poor are obviously suffering but who’s having a good time at their cost?
These are not questions that would have been raised had the government stuck to what it claimed while announcing demonetisation. Now people have the right to ask: Was it necessary to go for it? Which economic common sense drove you to go for it? How come you failed to anticipate it was going to be this messy?
It is being alleged by the political opposition that the government has shifted the goal post. It indeed has, perhaps as a face-saver, because it grossly misunderstood the dynamics of black money and sought to take the populist route, as in every other matter, including diplomacy, to fight it. A couple of weeks into demonetisation, it was clear to all concerned that things were not going right. The government had the option of admitting to people that it went wrong but it decided to be clever.
It could be either arrogance or fool-hardiness. The strong advocacy of less cash is certainly not doing the government any good. Worse is the claim that everything alright and the poor are happy.
It is cruel. Someone out there ought to start thinking with some compassion.
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