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People and patience, post-demonetisation

Illustration: Sreejith R.Kumar  

Patience is hardly an attribute that is associated with the Indian psyche, particularly of the male variety. Instances of road rage at the slightest pretext leading even to death are far too common. A flock is way more common a formation than a queue. Even if a queue is to be formed, violators run amok in total disregard of the conscientious and often the geriatric in the waiting. The urban phenomenon of delirious honking is another manifestation of patience running thin. The recent past, however, has thrown up a remarkable exception, namely, the general attitude in demonetised India.

As we near the two-month mark, a consensus seems to be emerging among economists, from both sides of the ideological spectrum, that demonetisation will lead to significantly lower real GDP growth in the transition phase than expected but will have no effect in the long run. Estimates from academics and financial analysts suggest that demonetisation may lead to a decrease in annual real GDP growth of anything between 1 and 2 percentage points than expected.

One of the many crucial assumptions of course is that the national accounting norm remains the same. Irrespective of what the exact number is, evidence suggests that demonetisation has left behind a trail of economic consequences in terms of job loss and diminished economic activity, particularly in the informal sector, and will continue to do so in the near future.

Besides the pure economic cost, the psychological cost of having to wait in serpentine queues for a couple of thousand rupees is enormous. And queueing up may not yield rewards anyway as ATMs continue to run dry, especially in the semi-urban and rural areas. Initial reports suggested that the queues in the second month have been significantly shorter than those in the first. Now it seems the shorter queues have a different explanation — people have a fair sense of how long cash will last, if at all, and rational that they are, do not wait if they think their turn will not come. All this for their own money, and this makes demonetisation even more exasperating and psychologically costly.

For the pain that has thus been inflicted, the aam aadmi has shown extraordinary restraint and patience. There has been no major threat to public order despite considerable hardship, there has been no major protest, let alone violent ones. This is quite unlike other instances of sudden and unexpected economic downturn across the world — the Argentinian riots in 1989 were largely attributed to sustained hyperinflation. The 1991 structural adjustments-driven economic reforms in India led to considerable labour unrest in the mid-1990s. The Arab Spring, which promised to change the political landscape in West Asia earlier in the decade, was partly attributed to the widespread unemployment and economic hardship of the Arab youth.

Further, research suggests that negative income shock across the world leads to greater conflict — in fact even scarcity of rainfall, which is entirely natural and thus exogenous, has been found to have a strong effect on violence and conflict in India. It is remarkable that the overall sentiment post-demonetisation continues to be largely positive, despite its obvious immediate economic impact. So much so that there is hardly any wind in the Opposition’s sails. The moot question is, why.

Some have argued that the idea of sacrifice is seen as the hallmark of Indian civilisation and the current dispensation has effectively appealed to it. It has given an impression that any act that is critical of demonetisation is in effect a violation of the spirit of sacrifice, which is an elemental part of our history and culture.

But this is only partly true. While sacrifice in itself provides a moral tone, sacrifice for a greater common good offers the temporal foundation. And that temporal foundation was initially to eliminate black money and it is now to engender a cashless society. But that is not all. The government and its social media allies have gone a step further to situate demonetisation on the tried and tested plank of nationalism. So a dissent to demonetisation is being treated as a dissent to the idea of Indian nation state. So much so that the Indian military, which till now had been the most luminous emblem in the pantheon of nationalism, has been replaced, however temporarily, by the bank teller. The automatic tellers have been rendered substantially ineffective, and the hard-working, resilient and ever-alert human tellers have been accorded the status of the jawan. An unfortunate death in the ranks of bank personnel has been conveniently co-opted into the narrative of martyrdom.

This is impressive

It is true that the cashless, opinion-making, upper-middle India has not faced the brunt of demonetisation. But even the section of the people that has been directly hit as a result of the policy, has displayed an impressive composure, often found wanting on other occasions.

Understanding how human behaviour can be changed is a fascinating academic discipline. Much advances have been made here in the recent past, but none as spectacular as the effect of a generous dose of nationalism, however devoid that idea may be of the very people who constitute the nation.

Ritwik Banerjee is an Assistant Professor of Economics at IIM Bangalore. ritwikbanerjee@iimb.ernet.in


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Printable version | Dec 1, 2021 12:33:46 PM | https://www.thehindu.com/opinion/open-page/People-and-patience-post-demonetisation/article16979225.ece

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