WAR ON BLACK MONEY LEFT ‘AAM AADMI’ IN TEARS

The recall of R500 and R1,000 currency notes was said to be for a good cause. However, the cause shifted subtly over days with rules changing everyday and bank queues undiminished

The recall of old notes was said to be for a good cause. However, the cause shifted subtly, with rules changing every day and bank queues undiminished.

NEW DELHI: Events that define an era have an image that defines them. Don’t you think of smoke rising from the Taj Mahal hotel when you think of the Mumbai attacks of 2008? In the same way, Kapil Dev kissing the World Cup trophy in 1983 captures India’s arrival as a global force in cricket.

The defining image of demonetisation, at this point, is the face of Nand Lal, 80, who burst into tears after losing his spot in a queue at a Gurgaon bank. As tears ran down Lal’s weather-beaten cheeks, those watching him looked more perplexed than sympathetic.

A defining image is not created in vacuum. However powerful the visual, it needs a back story. Nand Lal’s face may end up as the image of demonetisation because it captures the pain the common man has had to endure since Prime Minister Narendra Modi recalled the old ₹500 and ₹1,000 notes on November 8.

You can’t really blame the onlookers for not showing empathy for Nand Lal; it is not easy to show compassion when you yourself lined up at two or three in the morning, without knowing whether you will be able to take out any of your own money from your own account.

As the common man queued up, showrooms emptied, trade dwindled, businesses suffered. The GDP forecast is grim, with a one to two percentage points decline in growth expected this financial year. An international rating agency has questioned the credibility of the Reserve Bank of India.

As a cautious Naushad Forbes, president of industry chamber Confederation of Indian Industry, told HT: “The initial projections were highly optimistic.” That is perhaps as far as any businessman would go in his criticism of demonetisation. For the rest — and HT has spoken to several — it’s grin-and-bear-it. There has been a lot for everyone to bear. India has shown remarkable fortitude in braving the queues, unlike Venezuela, where protests forced the government to delay cancelling of the highest-denomination notes.

In India, they said it is for a good cause. But, all these weeks later, the cause appears to have changed. It is not as much a fight against black money as it is about going digital and cashless. But digital and cashless could be done without demonetisation. While the cause changed subtly, the rules of demonetisation changed drastically, with the 51st coming on December 19 to restrict deposits of old notes and asking for an explanation why they were not made earlier.

Any which way you look at it, this shows an inadequate grasp of the decision and an insufficient understanding of its impact. A top banker says the RBI knew it takes 21 days to print a note, starting with pulp to finished currency. Someone could have used this knowledge to plan the recalibration of ATMs and refilling of cash vaults. Why should you have to explain why you did not make your deposits earlier?

Why should you have to explain why you did not make your deposits earlier? Is it not enough to say the government gave time till December 30 and you decided to go later, hoping the crowds will thin down by then? Heck, why can’t you say you did not go earlier because you excel at procrastination?

As politician and activist Yogendra Yadav told his bank while making a small deposit: “I was assured by the prime minister, finance minister and RBI there was no need to rush to the banks and that I had time till December 30. I believed them.” To widespread relief, the RBI withdrew the notification that put restrictions on deposits. In the process, it notched up the 52nd rule change related to demonetisation. No wonder people are talking about a Reverse Bank of India.

The argument is that the rule changes and the cash shortage were necessary to pack in a surprise punch. But the surprise element being crucial to the success of the war on black money sounds more and more tired.

First, they don’t talk much about this war anymore. Secondly, it is more or less accepted that the portion of black money in cash was no more than 3% to 6%. So you have anyway given sufficient notice to those who hoard their unaccounted wealth in foreign numbered accounts, benami properties, gold, and equities held in someone else’s name.

What the surprise element has done is to mount the collateral damage to painful proportions. That is the pain that flowed down the cheeks of Nand Lal.