In the early days of the sudden government decision to withdraw from circulation the old 1000 and 500 rupee notes, one of the popular national TV channels aired an interview with an economist of international eminence on the reasons for and likely effects of the financial blitzkrieg.
The professor, a known advocate of market economy, was also a votary of the theory of ‘trickle-down effect’ that the Indian media had popularised when the then Indian Government took the first baby steps to open up the Indian economy to the vagaries of the global market.
In plain language, the government told the people at large, “the benefits of liberalisation would mainly be reaped by the rich; but don’t despair. Eventually, when their plates overflow, you too will benefit from what spills over”.
Cruel as it may sound to some, that in fact is the reality. All the so-called development is essentially for the benefit of the upper strata of the society, whatever name these may be called by. Any benefit from these activities that flow to those down the ladder is merely collateral.
Let us return to the TV interview of the economist. It was shocking that the eminent academic was bereft of any feelings for the people who, for exchanging their petty cash, formed long queues in front of banks only to be told, after several hours of exposure to the sun, that the bank had exhausted all its cash. Obviously, the professor, not being a wearer, had no idea where the shoe pinched.
On the screen, he kept gesticulating, wincing and shrugging his shoulders, looking more like a mischievous college kid than the scholar that he was. He belittled and discarded with a huff views of all the economists and financial experts who had expressed their reservations about the expected effects of the sudden move, and predicted an economic slowdown as a result of the vacuum created by the withdrawal of the currency notes. To be fair, he did not name anyone, but his targets and intent were quite apparent.
Now that the economy has really slowed down, and just about 1% of the discontinued currency notes has not returned to the Reserve Bank, our venerable professor is silent. The possibility is that, like the suave Finance Minister, he is busy thinking what spin to give to project a failure as a resounding success.
Finance Minister Jaitley, the lawyer, is a master of his tradecraft, viz. giving a spin and a twist to even the most open and shut cases to save his client or minimise the punishment. He is a politician who, much like a bureaucrat, has to defend and implement the government’s decision. Otherwise, he must quit.
Our scholar has, however, no such predicament. Or, hasn’t he? Ideological conviction, like blind faith, may override all rhyme and reason. Our economist seems convinced that the government’s declared objectives were indeed attainable through demonetisation. He must therefore somehow prove correctness of the move.
As the emerging data is indicating that the doubters were perhaps correct, the professor can do little but be silent, until some hint of even a minor achievement of demonetisation is visible, which straw he may then grab with both hands and spin his web around it.
When the PM announced the move in the night of 8 November 2016 the aim was to flush out black money and eliminating the menace of fake currency being pumped into the system by our enemies.
Then, as the days went by it became apparent that the move neither flushed out black money, nor did it make a dent in the fake currency business. The strain on the economy became real and visible. So, the declared objectives of the surgical strike first changed to digitisation of the economy and, lastly, broadening of the income tax base. Even these two last objectives seem to be illusory as the government’s own figures do not support any significant achievements in these areas either.
Still the ruling party and its leaders can’t be faulted for trying to defend the indefensible, for that’s what they are expected to do. Bureaucrats at home and abroad have always been doing so even at the risk of losing all credibility. A politician does not give two hoots to his being credible or not because people’s memory is too short, and their vision is blinded by ‘faith’.
The same cannot be said about those who claim to be aca without any political bias. . The people expect them to explain in clear terms whether the economy has gained anything at all from the demonetisation policy.
We need the experts’ considered and reasoned opinion on what the policy wanted to achieve and what it actually did or did not. That would help the government to correct its steps, if it so desires. The people could also make an informed decision when, at the next hustings, they sit on judgment over the report card of the government. That’s what a truly independent think tank, if it exists at all, should be doing.
It will be perfectly fine for such experts to say, as an economist friend of mine told me, that it is premature to give the final verdict on the matter.
But we can only have pity for those academics who have made it their solemn duty to find justifications even for the faultiest of steps taken by the government.
They of course may expect, and indeed get, some sops from the government for their ‘nationalism’, but are actually doing a great disservice to the nation.