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The demons of demonetisation

Illustration: Deepak Harichandan  

“On this 9/11 (Indian style)”, somebody tweeted, “the USA (oldest democracy in the world, according to some experts) and India (by far the largest democracy in the world) moved from black to white, overnight.” In both cases the public came out on the streets. But of course for different reasons.

In the U.S. there was ‘anger on the streets’, with protestors displaying placards with the message ‘Not My President’. More than a thousand CEOs urged Donald Trump to ‘stop divisive politics’. It was really ‘shock and awe’, and a news magazine had reportedly prepared its issue in anticipation of a Hillary victory.

In India, people were on the street, fretting and fuming about the delay in exchanging their old notes with new ones and over malfunctioning of or non-availability of cash in ATMs. Even after three days I found several ATMs closed or non-functional, while others had not seen the cash delivery van since the demonetisation demon was unleashed. The cash crunch led to sporadic violence, and ration shops in some places were looted. While there were some cases of dire distress, there were others of philanthropic humanitarianism, where shopkeepers extended credit facility to their customers.

Nevertheless, there was a general public perception that the initiative, though welcome since it could have a positive domino effect on the economy over the long term, had been launched without adequate preparation and hence the arrangements for implementation left much to be desired. Some remedial measures were, of course, introduced subsequently; but given the small size of the premises of most of the bank branches and the logistics of queue management, I wonder how many of them could actually be implemented. One thing is, however, certain; everyone was made to fall in line. It also reinforced the virtue of frugality and established the supremacy of small currency. People were found ‘flaunting’ hundred rupee notes.

Politicians had their own take on the event. The decision was variously described as ‘Tuglaqi farman’, an anti-poor measure and an undeclared financial emergency. It was alleged that having made arrangement for itself, the ruling party had attempted to stymie the Opposition in the coming elections. On a more sober note, it was also suggested that the withdrawal of the currency should have been preceded by an announcement a few days earlier.

Three of them

At a personal level, I belong to that generation that has been witness to three demonetisations so far. I actually felt nostalgic, since the realigned composition of my wallet reminded me of an era gone by, when it used to consist of mostly ten rupee notes and coins, and an occasional hundred rupee note. But I did not have to rush to banks or ATMs. As a pensioner, my monthly pension gets credited into my bank account a few days before the end of the month.

I therefore make it a point to withdraw the money required for the next month, during the last couple of days of the previous month. I also ask my bank to give me the money in notes of different denominations, including at least one bundle of 100 rupee notes. When the bolt from the blue came, I had a considerable stock of 100 rupee notes to defray the daily milk and vegetable charges for a few months. But my plan was found wanting on one count. Since I had withdrawn currency notes of higher denominations too just a few days ago, I had to put them back in the bank.

For a variety of reasons, including demonetisation of currency in India and the unexpected result of the elections in the U.S., some individuals wanted to drown their sorrows (also known as gam galat karana in Hindi, popularised by such icons as Devdas) in their favourite brand of the bubbly. But they were in for a shock on two counts. First, since the shops would not entertain high denomination notes; and, second, if someone bought a small measure with lower currency and tried to down it in public in Delhi, he would have been fined Rs. 5,000 for the offence in the first instance.

The collectors of old coins and currency notes too were licking their lips in anticipation of a windfall in future. Cases of small thefts perceptibly declined; in one case the snatched purse was returned with a slap. In case of temples, the old notes are still current and the government is unlikely to ask any questions because, in a sense, it amounts to payment of tax directly to God, the original source of the coffers of the Reserve Bank of India.

At the end of the day, I was delighted to receive mint-fresh, crisp currency notes after a long time, having been routinely dished out senselessly vandalised and hopelessly frayed ones by the banks with sickening regularity.

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Printable version | Oct 26, 2021 5:03:47 AM |

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