Modi’s 50 Day Promise
Broken
Relief From Neither Corruption Nor Note Ban Disaster
Prime Minister Modi’s New Year’s Eve speech was
significant for side-stepping all the issues raised by the Note Ban. Soon after
his 8 November Note Ban announcement plunged the country into chaos and
distress, the PM had appealed to the people of the country to “bear the pain
for just 50 days.” If the troubles continued after December 30, he had said, he
was “willing to face any punishment at any crossroads in the country.”
In his 31 December speech, however, the PM made no
mention of the 50-day deadline. He was silent on how far the self-proclaimed
objectives of the Note Ban had been achieved. Exactly what percentage of the
demonetized notes had proved to be ‘black money’ or ‘counterfeit money’ and
destroyed? How many black money holders identified and punished? How come
corruption seems to be flourishing just as much as ever, with new notes making
their way in lakhs into the hands of the corrupt? How come, contrary to the
PM’s claims, terror strikes continued unabated even after the Note Ban?
Above all, the PM remained silent on exactly how
long the cash shortage would last, and when exactly withdrawal limits from
banks would be lifted. He failed even to acknowledge the enormous economic
slowdown, wholesale destruction of jobs and devastation of agriculture caused
by demonetization – let alone announce any sort of relief and compensation
measures for this Note Ban disaster. Instead he announced several sops better
suited to a routine Budget speech rather than specifically address the demonetization-induced
crisis of livelihood and survival. Instead of waiving farm loans in view of the
acute agricultural crisis, the PM merely announced the pitifully inadequate
measure that farmers would not have to pay interests for 60 days on loans taken
for the Rabi crop from District Cooperative Central Banks and Primary
Societies.
The PM also tried to pass off old and existing
schemes as fresh ones. For instance, he announced a scheme of Maternity Entitlements
of Rs 6000 for pregnant women. He avoided mentioning that the National Food
Security Act 2013 had already mandated universalization of the maternity
entitlements of Rs 6000 – but the Modi Government since 2014 had failed to
allocate the budgetary provisions for it!
The provision for farmers to get RuPay cards or
other debit cards against Kisan Credit Cards has also existed since 2012; in
fact, journalists have pointed out that a government reply in the Lok Sabha
said that 56.60 lakh RuPay cards were issued against KCCs in 2013-14.
The PM announced the doubling of loans given
through the MUDRA Yojana, prioritizing Dalits, Tribals, Backward Classes and
women. A fact-check shows however that only a small percentage of MUDRA loans
are in fact ‘new loans’ given to first-time and hitherto excluded borrowers.
Most importantly, none of the measures announced by
the PM are of sufficient magnitude and significance to justify the enormous
hardship and economic crisis thrust on India’s people and economy by
demonetization. So these announcements could just as well have been routinely
made in a Budget speech, even if demonetization had never been done.
With demonetization having dismally failed to
achieve the objectives initially claimed for it, the PM is instead seeking to
shift the discourse to the supposed benefits of a “cashless” or “less cash”
economy. In doing so, his 31 December speech the misleading and absurd claims
that “cash” implied corruption and that India’s economy therefore needed to be
“cleaned” of “excess cash.” Facts show that cash has no correlation with
corruption, and “less cash” likewise has no correlation either with less
corruption or with more development and modernization. Sweden and Nigeria have
a similarly low proportion of cash in their economies – but Sweden is one of
the least corrupt countries of the world while Nigeria is one of most corrupt
countries. Japan has a considerably greater proportion (20.7%) of cash in its
economy than India (11.8%) – and yet it is the world’s third largest economy
and ranks 18th on the corruption index while India ranks 76th.
The PM’s speech made another equally false
suggestion – that most of the demonetized notes had been circulating in the
corrupt “parallel economy” and had now been brought to the “mainstream.” The PM
is thus implying that the informal sector is the “parallel” black economy. In
fact, the informal sector is the “mainstream” in India, employing 80% of
India’s workforce, including the small and medium industries, small retail, and
service sector and accounting for 45% of India’s GDP. By devastating the
informal sector, demonetization has struck a crippling blow at the very spine
of India’s economy and the lifeline of people’s survival and livelihood.
The PM in his speech implied that the “excess of
cash” had been fuelling inflation. This is patently ridiculous. The reduced
inflation witnessed after demonetization is due partly to the artificial fall
in demand due to the forced shrinking of spending power. Some fall in food
prices, likewise, is due to the demonetization-induced distress sale of crops.
Meanwhile the New Year has arrived with yet another hike in petrol and diesel
prices which is bound to push up prices of essential commodities.
The PM declared that never before had banks
“received such a large amount of money, in such a short time.” In other words,
bad debts worth Rs 11 lakh crore will not be recovered from rich corporate
defaulters. But banks have been recapitalized by forced deposits of the
hard-earned savings of the poor, which the latter are prevented from
withdrawing according to their needs but which banks can use to extend more
loans to the defaulters!
The PM made some banal noises about transparency in
political funding – but avoided announcing the much-needed concrete measures to
clean up political funding!
The PM is seeking to avoid being held accountable
for the failure to deliver on his tall claims for demonetization, or for the
massive human and economic costs of demonetization. But the country will
certainly hold him singularly responsible for the Note Ban disaster that has
crippled people’s livelihood and the country’s economy while sparing and even
benefiting the corrupt and super-rich.
