November 8th is the first anniversary of India's Historical move to ban 86% of its printed currency. The author does an analysis of the state of affairs in the past 365 days. It has been posted to this account as a way to protect the author from retribution.
As children we are taught that what matters more than money is freedom. Fast forward to November 8th 2017, India, in a sudden "big bang" move 86% the country's money vanished.
Figure 1: The announcement was done via a telecast that addressed the unsuspecting nation as "friends" in the national language Hindi. The word Mitron / Friends is now considered as a precursor to bad news
Chances are that you have read about the demonetization of India from Harvard Business Review, The Economist, Time Magazine etc. It's hard to imagine, but the reality of it is worse, harsher, and more unbelievable than you would likely think. "No cash," "digital revolution," "political agenda to win elections," "black money eradication program," "bold move," "monumental mismanagement," "Historical Blunder" have hit headlines, but it's hard to convey what that means to people living this way.
The author had struggled to explain the situation of "no cash" to friends and relatives not residing in the country — the most confused were those good souls who offered to send cash! For the common man, the cash, currencies became simple pieces of paper with numbers 500 and 1000 printed on them. They were just paper, and held no value any longer. Suddenly no one was able to accept currency because there ceased to be a currency.
What it looks like
In one instance the hospital rejected currency notes as they are no longer valid, in another instance the local store keeper said he will keep selling goods as long as he can without asking for money. India is a country with 1.3 Billion in population and for ease of calculation lets assume that 0.5 billion of them had some cash with them, ie we are not taking being rich or poor. We are talking about people, 500,000,000 people with pieces of paper printed by the central bank of India as legal (tender) denominations of 500 Indian Rupee, 1000 Indian Rupee etc — suddenly the value evaporated.
I had enough money to survive and so does my immediate family. But we all became helpless. We were not rich or poor any more - we just lost our freedom, we lost everything that we earned even though we still held the paper that says legal tender with us.
The reasons the media tout's this had to happen
The demonetization impacted only the super rich
(This photograph of an old man, an ex-serviceman, crying after missing his spot at a queue outside a State Bank of India branch in Gurgaon is the defining image of the demonetisation story. Credit: Praveen Kumar, Hindustan Times)
"Demonetization only impacted the rich" was one of the arguments put forth by the right wing government supporters. But when travelling miles after miles in search of ATMs with cash, there were no rich standing in the queues. There were men, women, middle class, upper middle class, daily wage laborers, migrant laborers, defense personal all were either queued up in front of the banks or ATMS.
Demonitization eradicated black money
Black money is money which is not accounted for and as per the goverment trillions of dollars worth of money, ie a minimum of 25% of the entire printed currency in the country was unaccounted for. As per RBI, the central bank of India, only 1% of the currency was not returned. Its possible that the goverment will blame Pakistan for injecting fake currency and it was a move to find the fake currency — they have not said this yet. But, if the goal was to eradicate black money that objective also failed.
Going Digital & Unique Identification Project
The next argument was the need to leap into 21st century with digital payments which is linked with Aadhar Number (which is a controversial biometric project implanted by India with complete disregard to privacy). People left with no choice used private options like PayTM which is essentially funded by Chineese funds. The PayTM founder encashed a major part of his stake during this period. In the following months, digital transactions slowly declined. Goverment launchd mobile payments initiatives like UPI which is a considerable success. UPI - Unified Payment Interface seems to have opened another can of worms. Its theoratically possible to exploit the interace via Android Operating system features and there is an increase in fraud in which numerous people are loosing money from their bank accounts linked with Aadhar Number (mandatorily and forcefully linked as expected !)
This is partly a conspiracy theory. The theory puts forward that the idea behind the currency ban without any prior notifications or planning was to win election in a key Indian state with the highest number of seats which will ensure majority for the ruling party in both the houses of the parliament. Whether the theory is true or not is unknown but the ruling party managed landslide victory in the state, secured majority in both the houses of the parliament and elected a new president with affliations to the ruling party.
The Jio factor
In Hindi "Jio" means live / live fully etc. Around the demonetization time frame Reliance - a large conglomerate with businesses varying from Petrochemicals to defense entered payment bank business with Jio Bank and they managed to attract large number of users to the platform. Jio has also launched high speed LTE based mobile services which is tightly coupled with UID / Aadhar Numbers. After the Chineese Funded PayTM the biggest benefactors are the Reliance owned Jio.
In the name of progress
Everything in India including killing people in the name of keeping / transporting cows is linked with progress and anti-corruption now. India undoubtedly has a long history and a number of achievments in the recent past as well those dating back to centuries. From 1990s when Economist and ex Central bank Governor and internationally acclaimed Dr Manmohan Singh was the brave financial minister, the country has seen tremendous growth. The author considers GDP as a mere measure rather than an actual indicator of propserity like Bhutan's Gross National Happiness (GNH) concept. Being said that India possesed a positive GDP which was much higher than most of the countries in the world except for China. The last one year period has seen phenominal dip in the GDP of the country. The author attributes part of the credit to the unscientific impmentation of demonetization.
India is a land of contradtions, numerous cultures, chaos & can be very confusing. But beyond all the confusion, poverty, lack of equality, corruption and caste system this country always gave importance to freedom of expression & unity besides diversity. The past century, especailly the Manmohan Singh era saw people breaking the cast - religion - region boundaries and exploring opportunities. Author doesn't believe in invoking colonialism or its issues with sister countries like Pakistan or rivals like China for any of the failures. The recent decades had seen progress and increase in opportunities and freedom like never before. People who were bound to professions or regions because of economic factors also found numerous opportunities and the last 2 decades the country has started to enjoy the freedom its beautiful constitution ensures. Debate and equal opportunities were plenty & policy decisions were carefully made to protect the nation from international economic crisis. The country also had the fortune to have Prof Raghuram Rajan — an accomplished economist at the helml of policy making. But the nation is on the verge of a downward spiral. As the popular joke goes, The Indian's are forced to link everything including their underwear to Aadhar. Reasoning and debate is dead.
Times are hard and as the title of the article says, the past 3 — 4 years have made the Indian people understand the value of freedom, the meaning in its true sense. Deprived of money, freedom of speech, freedom of worship, freedom of food this nation definately is in the struggle. But we will arise from the ashes once again in its true fashion.
- Fig1 : courtesy UrbanDictionary.com
- Demonetization is monumental mismanagement