Demonetisation means Corporatisation

by Aurobindo Ghose

Frontier | Vol. 49, No.27, Jan 8 – 14, 2017

On 8th November, 2016 at 8:15 PM, Prime Minister Narendra Modi in an apparently live televised address to a shocked and surprised nation, announced the withdrawal from circulation of currency notes of denomination Rs 500 and Rs 1,000, which would cease to be legal tender from that midnight. However, such notes could be exchanged on the basis of Aadhaar cards, or deposited by their holders in their bank or post office accounts from 10th November to 30th December. Referring to ‘black money’ as the wad of big currency notes hidden or slashed away under the bed or in godowns or in secret vaults, Modi said that the object of this exercise was to root out corruption, terrorism and black money. For the Prime Minister of the world’s largest democracy to be making such an announcement himself rather than the Finance Minister or the RBI Governor, was indeed unexpected and unheralded. 

Some things need to be clarified at the very outset. This move has since come to be widely known and referred to as ‘Demonetisation’ but it is not that. Demonetisation is the act of stripping a currency unit (not notes) of its status as legal tender, whenever there is a change of national currency, as happened when member states of the European Monetary Union moved over to the euro , while the old national currencies were demonetised. Similar was the move from the Gold Standard to paper currency.

Moreover, black money is not what Modi portrayed in the popular imagery as a hidden or slashed/stacked away wad of high currency notes, i.e. a stock of money. As Marxian economist Prabhat Patnaik immediately pointed out after the dramatic announcement, black money is rather a flow of money or income, emanating from illegal activities (such as arms trade or drugs trade) or income which is not disclosed in order to evade or avoid paying taxes. In terms of business behavior, those having black money are unlikely to hoard it in the form of money or notes, and may keep only a small part (6%) in this form for immediate cash transactions. The predominantly major portion of black money would be thrown into circulation, either by keeping it in undisclosed bank or (usually) post office accounts (where till recently PAN card details were not required) or converted into valuable assets like gold, silver or real estate. Thus the expected effect of high currency note-withdrawal on the flushing out of black money, would be minimal, particularly because in India such notes account for about 86% of the currency in circulation. Common people like housewives, salaried persons, wage earners, small businessmen, artisans, shop-keepers, vendors, people in other services like ordinary professionals such as doctors, lawyers, journalists, have till now mostly conducted their everyday economic transactions using Rs 500 and Rs 1,000 currency notes, particularly the former. Many of them in the informal/ unorganised sector or rural areas would be outside the pale of the ATMs, banks and post offices, even after issuance of their pass books for their accounts under the Pradhan Mantri Jan Dhan Yojana. Similarly, terrorism and corruption is hardly likely to be touched. They would mostly be operating through secret, undisclosed accounts, either in the country or abroad. The ‘Demonetisation’ praxis of 8th November has at least shown three things in terms of its declared objectives. Terrorism has not stopped, as the dastardly attack at Nagrota reveals. A new black market of converting old , withdrawn notes into new legitimate currency has emerged. Corruption has found new avenues and channels.

With 9th November declared by Modi as closed for banks and ATMs to give them time to get ready, and with few ATMs opening on 10th, all hell were let loose on the 10th of November all across the country from Kashmir to Kanyakumari and from Gujarat to the North-East. Long serpentine queues were to be seen everywhere. The banks and ATMs soon ran out of cash. Small businesses, vegetable markets, small shopkeepers, vendors had to close their operations in the first few days. For migrant daily wagers, there was little work and endless waiting. Hospitals turned away patients. Weddings were put on hold. Housewives were harassed. In the rural areas, the co-op banks, otherwise considered the life-line of farmers, sent out distress signals without any relief. In the North-eastern states, it was back to barter. There were as many as 105 flip-flops or changes in procedure of withdrawal, exchange and deposit of notes, between November 8 and 26 causing much uncertainty and suffering for the people. Donations dried up at temples and dargahs. The stock exchange crashed following Modi’s announcement. The value of the Rupee fell in terms of the Dollar.

‘Demonetisation’, soon was transformed into a demon which devoured women, infants and the elderly, about 100 of whom died, unable to bear the stress, including a dozen who committed suicide.

The national press reported the happenings faithfully but mostly chose not to criticise the Government. The Mumbai-based Economic & Political Weekly said : “Modi is clearly seeking to obtain political mileage from this move, even as this sudden decision has put large numbers of ordinary people, especially the poor to great inconvenience”. The international press reacted sharply. The New York Times ran the headline : “Chaos as Millions in India Crowd Banks to Exchange Currency”. The BBC complained : “How India’s currency ban is hurting the poor”. The Daily Mail 1 of the UK said : “Modi boasts of his 56-inch chest, but what kind of son lets his mother go through that? PM’s 96-year-old mother queues up to change notes”.

There have been praise and acclaim from Corporate leaders, but many well known thinkers, politicians and economists were critical. On the very first day, Mamata Banerjee stated : “This is a draconian decision”. A few days later, Mayawati had this to say : “The country is like a concentration camp”. Former Governor of West Bengal, Gopal Krishna Gandhi while speaking on “India versus India”, keenly observed : ” Our present preoccupation with the famine of currency makes me wonder whether we are to admire the great patience being shown by our people or lament the lack of protest among them.” In the Rajya Sabha, Professor Manmohan Singh, noted economist and former Prime Minister was scathingly sharp, when he said ” It is organised loot and legalised plunder. …It is a monumental mismanagement… It will lead to a slow-down of growth, by 2%). Professor Amartya Sen, Economist and Nobel Laureate, terms Demonetisation as a ” despotic act that has struck at the root of economy based on trust”. He, however, said that “he backs the intent of demonetisation but faults the execution of the reform”. Sen also said, “At one stroke the move declares all Indians—indeed all holders of Indian currency—as possibly crooks, unless they can establish they are not”. Journalist Iftikhar Gilani sounded ominous : “the US Federal Bank in 1929 took away 35% of the cash from circulation. Eventually leading to the Great Depression. Modi’s decision has removed 86% of the currency in circulation….. The crackdown is bound to have a spillover effect for India’s formal economy”.

Ratan Tata , who heads the house of the Tatas, asked the Government to consider “special relief measures similar to those employed at times of national calamities” for the poor to tide over the “great hardship” caused by the ”note ban implementation”. On the other hand, Mamata Banerjee and Arvind Kejriwal have suggested the withdrawal of the Demonetisation decision or to facilitate the conversion of old notes for new for the sake of the poor. However, such suggestions to ameliorate the hardship of the poor are unlikely to be given a sympathetic hearing by the present dispensation in power, which is pursuing neo-liberal policies. Michel Foucault, the doyen of sociologists of the 20th century sounds logical today. Foucault’s concept of governmentality is relevant by which he means how political regimes make subjectivity conditional on the subjects (citizens) being able to be ruled. The regime will never do anything to liberate the masses from their economic control and political clutches. Foucault believes that a neo-liberal State will “never let a serious crisis go to waste”, so is likely to use the present crisis to strengthen its hold over the masses by overt and covert means and attempt to subvert the present state of democracy, economic stability and social cohesion.

It is seen from the above survey that the decision to withdraw the currency notes was indeed a draconian decision, taken arbitrarily and without notice to the public, causing untold misery and suffering. The people’s right to life, liberty and livelihood under Article 21 of the Constitution of India, was trampled upon, just as the citizen’s right to property was infringed due to unwarranted restrictions on the operation of their own bank accounts. As Amartya Sen rightly observed, “Only an authoritarian government can calmly cause such misery to the people—with millions of innocent people being deprived of their money and being subjected to suffering, inconvenience and indignity in trying to get their own money back”. Manmohan Singh asked, “In which countries… people were barred from withdrawing their own cash?” After 10 days of demonetisation, Supreme Court saw a crisis. The High Court of Kolkata, pulled up the Centre for “not applying its mind” and doing “no homework” and “changing procedures” everyday. While the innocent have suffered, the tax-evaders and the corrupt have gotten away, resulting in discrimination and violation of Article 14 of the Constitution. Right through the events since the 8th of November, the Government weaved a false narrative of ‘nationalism’. Whoever supported the Government’s move of “Demonetisation’ was a nationalist, whoever criticised it was an anti-national.

The survey of events since the PM’s 8th November address, shows that the act did not invoke any law or authority. It was not discussed in the Parliament nor an ordinance was passed. It is now learnt that the Prime Minister informed his Cabinet only an hour before his address was broadcast purportedly “live”. He did not inform the President. It is only on 18th November, that Modi briefed President Pranab Mukherjee about ‘Demonetisation’ and its after effects and the steps taken by the Government. But it was too late in the day as many had died or committed suicide and millions were suffering.

According to Satyendra Murli, a reporter working with Doordarshan Samachar, as published by Sabrang lndia.in on 24th November, the Prime Minister’s “Address to the Nation” on ‘Demonetisation’, was not live, rather it had been pre-recorded and edited. It had been written many days before the RBI’s proposal, (not decision), on the subject at 6:00 PM of the 8th November and the briefing of the Cabinet by Modi at 7:00 PM. The PM’s address was broadcast at 8:15 PM at night with live band , to create the impression that the decision had been taken suddenly, and the public would believe that the matter had been kept fully secret, but it was certainly not so. Whether the Government of India rules under Transaction of Business Rules, 1961 and the RBI Act, 1934, have been followed, is a moot question.

From the circumstantial evidence available, it does not appear that the decision to withdraw high currency notes was taken suddenly. It is also not true that the Government was unprepared. The Government was prepared, but its object was not to attack black money, corruption and terrorism. This is a dress-rehearsal for the foisting of Corporate-Communal-Fascism, do away with the present Constitution and usher in a Hindu Rashtra. There are four or five threads of thought which need to be considered not separately, but together if one is to arrive at the truth. There appear to be multiple motivations for this exercise of ‘Demonetisation’.

First, the agenda of a Hindu Rashtra seems to be at the background right from the foundation of the political configuration of the BJP/RSS, and particularly during and after the 2014 Parliamentary elections which brought the Modi Government to power at the Centre. Ever since May, 2014 the forces of communalism have sought to be aggressive, with the tacit backing of the State, with ‘Ghar Wapsi”, ‘Love Jihad’, Muzaffarnagar riots, cow and beef-ban politics, the killing of Akhlaque and Intolerance as the nodal points of the aggressive bid to create a polarisation between the major religious groups and a frenzy of communal hysteria.

Second, the motivation is political, i.e., to ruin political opponents, meaning Mayawati and Mulayam before the UP elections in early 2017 as the money for the elections was almost wholly in high denomination notes.

Third, the persona of Narendra Modi appears to be facilitative of a crony capitalism with Mukesh Ambani and Gautam Adani being the main beneficiaries of his munificence : Ambani projecting the proximity and blessings of the country’s Prime Minister in his recent ad campaign dated 1st September, 2016 for the inauguration of his Jio 4G mobile services, and Adani being promised a Rs 6,000 crore very friendly SBI loan for his Australian mining project.

Fourth, there appears to be a pact with crony capitalists, not to touch their black money stashed abroad in tax havens and Swiss banks and to facilitate the conversion of their black money in India into white money. The Government’s reticence with regard to follow-up on the Panama papers and disclosure on Swiss accounts, is ample proof of the Government’s soft attitude towards recovering the black money abroad. So far as conversion of the black money owned by the crony capitalists in India is concerned, three widely divergent facts or issues, have to be seen in conjunction or together.

1)     The starting of the Pradhan Mantri Jan Dhan Yojana (PMJDY) on 28th August, 2014. Millions of such mostly zero-balance PMJDY accounts of the poor and weaker sections of society were mysteriously continued and made to survive by unaccounted one-rupee deposits about a year back. Now it is pay-time and the Jan Dhan accounts have suddenly surged, indicating that the Prime Minister’s cronies are converting their big notes through the Jan Dhan window. Between 10 November and 24 November this year, there has been over 30 times surge in Jan Dhan deposits by around Rs 21,000 crore in just 14 days, showing. It is indeed astonishing that after allowing such transfers to be made to Jan Dhan accounts, now the Government is shedding crocodile tears and issuing threats with regard to such transfers This is the classic case of the horses having bolted!

2)    It is of relevance that when Dr Raghuram Rajan was the RBI Governor, Mukesh Ambani’s application for grant of a payments banking licence was granted, on 20th August, 2015, along with 10 other applicants. However, when Mr Mukesh Ambani applied for a full-fledged banking Licence at par with the State Bank of India, it was allegedly rejected. About that time, it was decided not to extend the term of Dr Rajan and Dr Urijit Patel, former employee and President of Finance (Reliance) came up and he took over as RBI Governor, on 5th September, 2016. The emerging nexus of Government—Party—RBI—Crony capitalists, seemed a convenient ploy for selective leakages of news of impending ‘Demonetisation’ to facilitate conversion of big notes before ‘Demonetisation’. There have been several reports of the BJP having deposited crores of rupees into banks in West Bengal and UP and purchased land, just before Modi’s announcement of ‘Demonetisation’.

3)    Reliance Industries launched its Jio-4G mobile service provider on 1st September, 2016 with a full page ad having the Prime Minister’s photo on it. The services to the customer were free upto 31st December, 2016 provided a copy of the Aadhar card was given. Reliance got 52 million subscribers, i.e. 52 million Aadhar photo copies.

Finally, and this is very important. As Dr Abhijit Sen, former Economic Adviser and Professor of Economics has recently said, the ‘Demonetisation’ move and the recent push towards a ‘Cashless Economy’ have to be seen together and in conjunction as a concerted attack of the Government and the State on the huge unorganised sector in India (estimated at 85% of the total economy) consisting of the cash economy of the farmers, wholesale traders, small businesses, shopkeepers and vendors, and bring it under the hegemony and control of the large, private monopoly corporate sector in India. As suggested by Dr Abhijit Sen, ‘Demonetisation is indeed the Corporatisation of the Indian economy’. The Hindu Rashtra is incomplete without its Corporate counterpart.

‘Demonetisation’ is, therefore, not a case of monumental mismanagement (Manmohan Singh) or lack of preparedness (Prabhat Patnaik) or a decision no doubt having intent but full of faulty execution (Amartya Sen).

Rather, the decision of ‘demonetisation’ along with the narrative of a ‘false nationalism’ was deliberate and much deliberated. Even the timing of the “live” announcement by Modi and showing it to be a live broadcast was to create the impression that the decision was sudden, which it was not.

The decision is part of the planning and design of the Hindutva forces to create a mass psychology of corporate-communal-fascism by subjecting the people to a reign of coercion, deprivation of fundamental Constitutional rights, distress, fear and fatalism. The idea for Modi/RSS/Hindutva forces is to test the waters of mass/popular response and reaction to their fascist experiments, so as to determine the timing of fascist insurrection/ coup/ takeover of the Indian State for a surge forward to the Hindu Rashtra. ooo

[E-mail : g_aurobinda@yahoo.com]

– See more at: http://www.frontierweekly.com/articles/vol-49/49-27/49-27-Demonetisation%20means%20Corporatisation.html#sthash.5tDT1LxQ.dpuf

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