Post-mortem of the note-ban

Meera Sanyal’s legacy is a primer on avoid­ing the per­ils of un­think­ing pol­icy-mak­ing

The Hindu Business Line - - THINK - VENKY VEMBU

When Meera Sanyal was a child grow­ing up in Mum­bai (she re­calls in her book), her fa­ther, an of­fi­cer in the In­dian Navy, once took her on a stroll past the Gate­way of In­dia. Just then, she heard a group of urchins run­ning be­hind a tourist, shout­ing: “Dol­lar, dol­lar!”

Per­plexed, the young Meera won­dered what was go­ing on: at that point, she writes, her fa­ther of­fered her “my first les­son in eco­nomics and cur­ren­cies”.

That les­son con­cluded with her fa­ther proph­esy­ing, half-jok­ingly, that one day, Meera would be walk­ing on the streets of New York — and that chil­dren would run after her ask­ing for the In­dian ru­pee!

Meera, who would later go on to be­come one of In­dia’s most re­spected bankers, with an abid­ing, demon­stra­ble com­mit­ment to pub­lic ser­vice, writes: “While I would never wish for chil­dren to run after me in any city, any­where in the world, the im­age my fa­ther painted that day rep­re­sented a ru­pee so strong that it would be a cher­ished cur­rency.”

Trag­i­cally, the woman who over­saw a flour­ish­ing in­vest­ment bank­ing and cor­po­rate fi­nance prac­tice in In­dia (and abroad) and worked to chan­nel for­eign in­vest­ments just as the coun­try was open­ing up to it — and, to that ex­tent, con­trib­uted more than her fair share to re­al­is­ing the dream of an eco­nom­i­cally vi­brant In­dia — will never see a day such as her fa­ther en­vi­sioned.

Last week, Meera Sanyal passed away after a bat­tle with can­cer. This book — a cri­tique of the Naren­dra Modi gov­ern­ment’s de­mon­eti­sa­tion of high-de­nom­i­na­tion cur­rency notes in Novem­ber 2016 — is her legacy, along­side her other bank­ing and public­ser­vice ac­com­plish­ments.

It is a clin­i­cal post­mortem of a dis­as­trous ini­tia­tive un­der­taken against bet­ter coun­sel, and which has — from ev­ery avail­able met­ric — failed to meet the ob­jec­tives that un­der­lay it.

It is a cau­tion­ary tale of the folly of un­think­ing, un­car­ing pol­icy-mak­ing, which in­flicted mis­ery on count­less In­di­ans and “knocked out” the econ­omy. ********* The de­mon­eti­sa­tion story has, of course, been told many times over — to the point where one may le­git­i­mately won­der if there is any­thing new to be said. Where Meera’s book dis­tin­guishes it­self is in the way she chan­nels her per­sonal ex­pe­ri­ences — as a banker who has up­close knowl­edge of the work­ings of the fi­nan­cial sys­tem and of the key play­ers (in­clud­ing RBI of­fi­cials) — and frames it against the back­drop of pub­lic pol­icy.

It also helps that as some­one who men­tored a mi­cro-fi­nance pro­gramme of ABN AMRO Bank/ The Royal Bank of Scot­land, she was in­vested in the well-be­ing of over 6.5 lakh ru­ral women, and was in­ti­mately aware of the fi­nan­cially frail ecosys­tems in which those at the bot­tom of the pyra­mid get by. She, there­fore, brought to the de­bate an em­pa­thy for the poor that was markedly miss­ing — both dur­ing the 50-day cur­rency chaos that gripped the coun­try in 2016, and in the count­less of­fi­cial claims about the out­come of the en­tire ex­er­cise.

The gov­ern­ment may have pro­claimed from the rooftops that the de­mon­eti­sa­tion move rep­re­sented a “sur­gi­cal strike” against cor­rup­tion, but Meera, wield­ing the scalpel with the dex­ter­ity of a sur­geon, dis­sects that claim and lays bare the in­nards of the fi­nan­cial sys­tem. And us­ing com­pelling data sets, she dis­mem­bers the gov­ern­ment’s case to es­tab­lish how none of the of­fi­cial claims cited to jus­tify the move de­liv­ered the promised out­come.

‘Big goals’

Il­lus­tra­tively, go­ing by the of­fi­cial pro­nounce­ments on var­i­ous oc­ca­sions in the days, weeks and months fol­low­ing the note ban, Meera iden­ti­fies “eight big goals of de­mon­eti­sa­tion”: flush out black money; root out cor­rup­tion; fight ter­ror­ism by ren­der­ing coun­ter­feit notes use­less; move to a dig­i­tal and cash­less In­dia; ex­pand the tax base; in­te­grate the in­for­mal econ­omy into the for­mal sec­tor and cre­ate a ‘larger and cleaner’ GDP; lower in­ter­est rates by forc­ing ‘idle’ sav­ings into the bank­ing sys­tem; and bring down real es­tate prices.

Some of these goals were not even wor­thy of pur­suit, Meera notes. In the case of a few oth­ers, where the ob­jec­tive may have been de­fend­able, the meth­ods de­ployed were ham-handed. Still oth­ers rep­re­sented the gov­ern­ment’s ef­forts to ‘shift the goal­posts’ and change the nar­ra­tive over time as it be­came ap­par­ent that the stated in­ten­tions weren’t be­ing re­alised.

‘Com­plete fail­ure’

Meera then pro­ceeds to mar­shal facts and fig­ures to draw up a “de­mon­eti­sa­tion re­port card” to give a sense of the costs that the move in­flicted — on the econ­omy and on cit­i­zens, par­tic­u­larly the poor. On the ba­sis of this quasi-foren­sic study, she con­cludes: “Not­with­stand­ing nu­mer­ous claims of suc­cess by var­i­ous min­is­ters and bu­reau­crats, fac­tual data show that the Modi gov­ern­ment failed to achieve any of the eight ma­jor stated ob­jec­tives of de­mon­e­ti­za­tion.”

The de­mon­eti­sa­tion, she adds, was not just “a com­plete fail­ure, but given the crip­pling eco­nomic costs and the de­bil­i­tat­ing hu­man im­pact of the move, also an un­mit­i­gated dis­as­ter.”

Con­struc­tive com­men­tary

Given Meera’s po­lit­i­cal af­fil­i­a­tion — she was a mem­ber of the Aam Aadmi Party’s Na­tional Ex­ec­u­tive Com­mit­tee — it may have been tempt­ing for de­fend­ers of the es­tab­lish­ment to dis­miss her book as a par­ti­san out­pour­ing.

How­ever, Meera’s man­i­fest sense of fair­ness ren­ders that a dif­fi­cult en­ter­prise. She gives the Modi gov­ern­ment credit where it is due: for in­stance, with the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act and the In­sol­vency and Bank­ruptcy Code.

“Though I am a mem­ber of AAP and dis­agree with… many of the poli­cies of the BJP-led NDA gov­ern­ment, I be­lieve it is im­por­tant for the gov­ern­ment to suc­ceed, if In­dia is to suc­ceed,” she writes. “Each of us have a vested in­ter­est in the suc­cess of our gov­ern­ment, par­tic­u­larly with re­spect to the econ­omy.”

That sen­ti­ment is rep­re­sen­ta­tive of Meera’s grace and fairmind­ed­ness, which is a rar­ity in to­day’s po­lit­i­cally charged cli­mate. Her pass­ing has stilled a voice that had much to of­fer by way of con­struc­tive com­men­tary on build­ing a vi­brant econ­omy. This book is an en­cap­su­la­tion of her in­tel­lec­tual legacy — on one as­pect of pol­icy-mak­ing — that she leaves for fu­ture lead­ers to draw les­sons from.

“Not­with­stand­ing nu­mer­ous claims of suc­cess by var­i­ous min­is­ters and bu­reau­crats, fac­tual data show that the Modi gov­ern­ment failed to achieve any of the eight ma­jor stated ob­jec­tives of de­mon­e­ti­za­tion.”

Meera Sanyal (1961-2019)

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.