The Demonetisation Fiasco

THE demonetisation of 86 percent of the currency of the country, a virtually unprecedented  measure anywhere in the world, has brought immense hardship to the working people of the country, and will damage their living standards permanently (since the Modi government plans not to replace the entire value of the demonetised notes by printing new ones). Many however believed that it was a step being taken for the greater social good, for achieving certain important social goals.

The Dialectics of Authoritarianism

WE are seeing in India at present a remarkable inversion of reason. The more the common people suffer from the impact of Modi’s demonetisation, the more he is lauded for the “courage” shown by him in undertaking it. An economic measure should be, and normally is, judged on the basis of how it benefits the people, and any measure that brings distress to the people is derided for that reason. What we find in the present case however is just the opposite: the more demonetisation brings distress to the people, the more it is applauded for its wisdom and courage.

Banks as Victims

IN the outcry against the disastrous demonetisation experiment of the Modi government one aspect that has not been given adequate attention is the damage it has done to the reputation and the balance sheets of the banks. Customers queueing before bank doors and ATMs seem on occasion more forgiving of the government than of the harassed bank employees, who are forced to ration out currency and offer those customers they can accommodate, less than even the maximum withdrawal permitted by the government and the RBI.

Demonetisation as the Basis for a Fiscal Stimulus

A BIZARRE argument is doing the rounds these days. It states that the cash which gets disabled in the “black economy” because of the government’s demonetisation measure, would enable the government to undertake an equivalent amount of expenditure with impunity; it can therefore spend more on infrastructure and other essential areas, or simply provide cash transfers to the people.

Demonetisation as a Means of Fighting “Black Money”

SO many lies are being spread by the government which is currently busy wrecking the Indian economy in the manner of a bull in a china shop, so many spurious economic arguments are being trotted out by it, that one has to be extremely vigilant not to be swept away by this tide of unreason. In the current article, and the two subsequent ones to follow, I propose to examine some of the more persistent assertions that are being made by government spokesmen.

The Chimera of a Cashless Economy

A SECONDARY justification for the demonetisation of 500 and 1000 rupee notes, apart from its presumed deterring effect on “black money”, is that it ushers in a move towards a “cashless” economy. This argument too, however, like the perception that “black money” is just held in the form of a hoard of currency notes, is staggering in its simple-mindedness.