Demonetization: The Monumental Disaster?

Writing my reactions as the nation descended into chaos.

By Nachiket Deuskar

“When suffering knocks at your door and you say there is no seat for him, he tells you not to worry because he has brought his own stool,” said Chinua Achebe, a Nigerian novelist. For a country with over a billion people, suffering has knocked one its door yet again.

On November 08, 2016, Prime Minister Narendra Modi made a sudden announcement that the government has decided to scrap the Rs. 500 and Rs. 1,000 currency notes to fight corruption, to flush out counterfeit notes from circulation and thereby making it difficult for terrorists. This process stripping currency units off its legal status is called “demonetization”.

He also announced that Reserve Bank of India (RBI) would introduce Rs. 500 and Rs. 2,000 currency notes.

I remember the moment clearly. If you ever studied in a journalism-school, you would know that news beeps on phones often ring in sync. I was lying on my bed after a tiring day on the field. I and my colleagues had traveled an hour south of Chennai to a place called Kelambakkam, a booming town with a lot of waste, sanitation and drainage problems. As I lay on my bed looking at the rough white ceiling on my wing of the room, I heard a ping from the other wing. Then, my phone repeated the ping as if the news was dropping one room at a time.

“Govt. scraps Rs. 500 and Rs. 1,000 notes,” the news beep read. I didn’t react. Every country phases out currency every few years. There was nothing odd about it. Then, a minute after staring at my phone’s screen, I realized there was something wrong. I walked out to the common room to switch on the television.

Within a few minutes of the PM going on air, almost all English news channels were flashing pro-Modi hash tags. As the news gradually sunk in, and I slowly realized what the magnitude of the situation was, I saw my colleagues walk past as if nothing had happened.

To put it into perspective, in a single tick on the clock, 86% of Indian currency by value, which was roughly 6,32,000 crores in circulation had become illegal. Well, you could still pay someone with those notes, only if they readily accepted it or if they didn’t know what was happening.

As I typed this piece, the power went off. The generator swung into action immediately. While my computer remained on, the one next to me went shut. The person who was using it had probably not saved her work. In a split second, her hard work had been wiped off, while I continued typing. Maybe, that’s what “demonetization” feels like. The privileged are undeterred, unmoved even as a stunning majority of this country are standing on the brink of absolute ruin.

In the first few days, some called it a “surgical strike” on hoarders of black money, while others rushed to the banks to get their currency notes exchanged.

What transpired was not what Modi or his countrymen would have hoped for. People of all ages stood in queues outside banks for hours and hours, sometimes skipping their work. While others sat in air-conditioned offices and dreamt of a cashless economy.

Well, we aren’t away from having a cashless economy. Just that a lot of people don’t have cash now. Literally.

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Photo: People queuing outside an ATM at Elliot’s Beach, Chennai even twenty days after demonetization.

 

As days passed, the dark side of this “surgical strike” sunk in. Moments after the announcement, I told one of my friends that “people are going to die”. Unfortunately, I was right. Dozens of people lost their lives.

While the queues were unbearable, the restrictions on exchanges, withdrawals and other transactions were the real daggers that hit the common man. Employers don’t have enough cash to pay their employees. Daily wage workers don’t have enough to feed their families, and there have been reports of government utilities refusing to accept the old notes in spite of the order suggesting otherwise.

While the Supreme Court told the government that there could be riots, the Home Minister was leading a delegation to Cuba for Fidel Castro’s funeral. Prime Minister Modi asked for 50 days for things to normalize.

Was it a case of bad understanding of the situation, on part of the government? Or was it bad planning and implementation? Why weren’t banks prepared? I understand that getting more people involved would hamper secrecy and would therefore kill the motive. But, why enough new currency notes weren’t minted in time? Why weren’t the ATM machines recalibrated? What will demonetization yield? Will it yield anything at all? Will this prove to me Modi’s masterstroke or will this be a historic blunder? Is he the ‘Knight in the shining armour’? Or is he Tughlaq?

RBI, an otherwise trustworthy institution of this country is now caught on the wrong side of this mess.

Will it spiral out of control or will things improve? The Modi government has a lot of answering to be done in the coming weeks, months and perhaps years. It remains to be seen what transpires.

 

Views expressed in this blog post are personal.

 

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