NO ONE’S SURE WHAT THE NEW NORMAL IS

For the past 10 days, a colleague has been trying to spot cash-rich, black money hoarders in the long queues of people outside ATMs and bank branches. He is disappointed. Jairaj Singh is also wondering how could such a bold decision from Prime Minister Narendra Modi not be good.

As the chaos and disruption continues, following the November 8 decision to scrap ₹500 and ₹1,000 notes, is the tide turning? Undoubtedly, the initial days of the financial surgical strike drew applause and endorsement from a vast majority of people, especially those in the serpentine lines. Writing on this subject last Sunday, I had argued how the underclass seemed to have rallied behind Modi for what they saw as a decisive and brave move to clean up the system. The nation, it was emphatically declared, was a winner from it. That was the sense coming out of street corner conversations, people on TV channels and news reports from across the country.

Cut to now, I see a once-assured narrative steadily wilting. The earlier almost nonchalant and casual attitude that demonetisation was going to be all but a temporary “inconvenience” seems to be rapidly mutating. Anxiety has replaced hope and the previous unflappable patience is making way for discernible worry and anger .

It is evident that the government underestimated the scale and complexity of the decision it took. Pulling out ₹14.2 lakh crore, or 86% of the money in use by a nation of 1.2 billion people, will involve more than inconvenience for sure. Collecting and counting that money, which runs into 22,000 million notes, and then destroying them is a humungous exercise that will take months and hugely strain the country’s banking system. So will the task of getting new bills into circulation. An HT analysis shows it will take the RBI at least four months to print the required new notes and several weeks more to get them into the system. No one is sure when normalcy will return and what the new normal will look like.

While secrecy might have been critical for the original plan, the lack of homework is showing. The government first blinked by extending the initial 48-hour deadline to November 24 for exchanging old notes. Worse, it has since revised rules on a daily basis, denting people’s confidence in the programme and prompting the Supreme Court to deem the “situation as serition, ous” and that it “fear riots”.

It is also becoming increasingly clear that the longer-term economic gains might have been overstated. From large manufacturers to street side vendors, big retailers to small traders, restaurants to movie theatres, sales have plunged by 30% to 80%. In the vast rural hinterland, the impact is beginning to unfold as farmers run dry on cash and are unable to buy seeds for the Rabi sowing season. Weddings are on hold and barters to secure daily needs are running out of steam. This meltdown of sorts is still not accounting for the workdays lost by millions in long and often times unsuccessful waits for their own money.

To term these as short-term blips that will be more than offset by gains in the longer term sounds too optimistic. The Indian economy is a huge complicated biological organism that has its oxygen pumped in through millions of crisscrossing arteries. It is certainly not an abstract model run by a linear set of reductive calculations.

Have we wounded the unhappy beast with a few simple equations?