Opinion: Demonetisation - There’s no politics in human suffering

As RD Secretary, I was shocked to discover this truth even in the case of a developed State like Tamil Nadu. The situation is appalling in the case of the backward States. There is a discussion on this in Veerappa Moily Committee’s Report on Administrative Reforms. 

All of us would like to see black money curtailed, if not eradicated. I initially supported the demonetisation move assuming that Rs 1,000 and Rs 500 denominations would constitute only about 20-25% of the currency in circulation. But when I learnt to my great shock that they constituted 87% of the currency in circulation, and that the economy is now supposed to run on the remaining 13% of the currency, it became apparent that this move had not been thought through properly. 

The size of the new Rs 2,000 note could have been made the same as the Rs 1,000 note so that it could be dispensed through ATMs straight away. Ditto for the new Rs 500 notes. Even this has not been thought through. This means that the limited supply of Rs 100 notes will have to be apportioned between bank branches and ATMs, mostly the former and most ATMs will not be functional for quite some time to come. 

Manufacturing new currency holder trays and recalibrating the 2 lakh ATM machines all over the country may take a month or even more. So people will have to queue up in front of bank branches to withdraw money, and the very purpose of establishing ATMs is defeated. The logistics of the situation will dictate that bank branches and ATMs in urban areas will be serviced first, and rural areas later, and the remote hilly, forested or desert areas last. 

The rich and upper classes, through their contacts, will corner the new notes first and the middle classes and the urban and rural poor will be serviced last. With 87% shortfall in currency and with ATMs in a mess, this is not a case of ‘making sacrifices for a few days’. 

This will cause tremendous inconvenience to the common public and dislocation of the economy for a few months to come. It is easy for us to talk but let us put ourselves in the shoes of the rural and urban poor and the people dwelling in remote hilly, forested or desert districts and experience their pain. There is no politics in pointing out human suffering. I believe that Narendra Modi and Amit Shah are smart grassroots politicians who will not let the Opposition take advantage of this well-intentioned but badly planned move. As in the case of the Land Acquisition Ordinance, Government of Inida (GOI) is likely to yield, in my opinion. Precisely how is the question.

The initial gains from the rhetoric of the ‘war on black money’ will be more than offset by the erosion of popularity due to the hardship caused to the common man. Anyway, it is GOI’s call. But I believe that the RBI Governor should be sacked because it was incumbent upon him to have briefed the Cabinet properly about the various ramifications of the move and RBI’s state of preparedness. 

I don’t think this mess would have happened if Raghuram Rajan was the Governor of the Reserve Bank of India. Urjit Patel seems to be a ‘yes man’ over eager to please his masters. He appears to be a poor planner and ineffective and he has no empathy for the sufferings of the people.