Why ‘Notebandi’ inquiry is needed

I remember the evening of November 8, 2016 with graphic precision. There were no TV commitments, it had been a regular day at the office. I was in the middle of a serene mid-distance walk-jog when my mobile phone rang. It was from the media team of the Congress party, who have to continuously juggle allocations of spokespersons to various shows at short notice.

I initially thought it was just another one of those unpredictable last minute-shifts. The voice on the other side had a slight hint of panic. “What’s the news break”, I asked? “Mr Modi is making a big announcement on national TV across all channels. We need to be prepared to respond.”. “To what“, I inquired.

“Something about black-money”.

Black money? My first reaction was that India’s Prime Minister, who had sold the preposterous fantasy of crediting ₹15 lakhs to every Indian citizen’s bank account through a miraculous recovery of illegal monies stashed abroad (within 100 days too) had perhaps miraculously achieved that irrational salesman’s pitch. Fact is, he was under constant fire for this juvenile hyperbole ever since his close lieutenant Amit Shah had casually dismissed it an electoral “jumla” (an electoral spin).

Modi’s demonetisation announcement, made with his typical melodramatic flourish, was unambiguously a theatrical stunt for any serious analyst from the word go. Here is why.

Going by the track record of income-tax raids and sundry recoveries, it was a fair estimation that at best the Government could hope to recover 5-6% of demonetised currency as black-money. Secondly, black money was rarely hoarded in cash. Those who craftily indulge in large-scale tax evasion usually park their tainted cash in overseas tax havens; after all, they remain vulnerable to the midnight knock on the door. So, demonetisation would be like throwing water on a duck’s back.

Also, if Modi meant business, why had he chosen to be comatose on going the whole nine yards on attacking the source of black money generation? Financial skulduggery happens most in gold and bullion trading, export-import transactions, real estate deals, P-Notes (Participatory notes ) in stock-markets and business corruption.

The latter morphs into a monstrous force when it begins to contribute to political funding. Demonetisation was a crystal-clear case of missing the woods for the trees. Thus, it was apparent from the very beginning to the discerning that Modi’s real intentions was never to obliterate kaala-dhan, but to use demonetisation as an exercise in personal image-building ahead of state assembly elections by appearing to be an anti-corruption crusader.

It is hardly a secret that like all authoritarian leaders Modi sees himself as an immortal character soaked in invincibility. Thus, they love “big“ things: spectacular razzmatazz that captures public imagination by touching on emotive subjects (corruption is one such; remember the ‘India Against Corruption’ farce on Lok Pal?)

Having a largely pliant media, virtually lip-syncing corporate India and several “independent” analysts serenading demonetisation was straight out of Modi’s playbook. Of course, this voodoo economics had the full endorsement of the RSS ideologues, some who are now in the board of Reserve Bank of India.

It was a scripted show meant to augment Modi’s cracking façade after current Congress President Rahul Gandhi’s sarcastic jibe Suit-boot-ki-Sarkar had begun to cause excruciating pain.

For a while it worked; India’s trusting population queued up for several hours to withdraw their own hard-earned savings. Modi won the Uttar Pradesh and Uttarakhand elections (nobody bothered to care that BJP lost/trailed significantly in Punjab, Goa and Manipur), and the Bharatiya Janta Party’s propaganda machine, usually high on steroids, went into a blitzkrieg.

Modi was hailed as the saviour, a gifted alchemist who would “ transform” India. Celebrations began, and Modi blamed the opposition for being petty, pesky obstructionists for questioning what appeared to be a giant illusion sold by an adroit snake oil salesman. On TV shows, if you questioned DeMo, you were promptly labelled as a corrupt crook hand-in-glove with the filthy sharks; you were an anti-national. But truth is a true patriot. It speaks out fearlessly. It did a few days back. The RBI finally has acknowledged that 99.7% of the demonetised currency came back (in the age of electronic banking it took the RBI two years to make the reconciliation?); Rs 15.31 Lakh Crore out of Rs 15.40 crore.

In short, demonetisation was a monumental disaster, as predicted by two outstanding economists, Nobel Laureate Amartya Sen and former Prime Minister Dr Manmohan Singh (the lesser said about the intellectually bankrupt Niti Ayog’s fanciful forecasts the better).

The cost of printing fresh notes was higher (approximately Rs 11000 Crore) or almost as much as the non-returned currency. By the time the monies locked in co-operative banks, confiscated cash and currencies in Nepal and Bhutan are counted, it might even reach 100%; which questions the core assumption I made earlier in the article, namely why did not the reasonably anticipated minimum 6% of black-money remain outside the banking system?

Were they tipped off; were they aware in advance of the PM’s address to the nation on November 8, 2016? It is this which prompted dissident BJP leaders like Arun Shourie to call demonetisation the biggest money-laundering exercise in history. It is this compelling argument that made Rahul Gandhi label demonetisation as a mammoth scam; it was not an astronomical blunder but a calculated plunder of India’s financial system to benefit crony capitalists and facilitate legitimisation of ill-gotten wealth.

The BJP will in typical fashion dismiss this as a slander campaign, but since it is unlikely to order a full-investigation, this will probably be initiated only in 2019. But inquiry is a must. Because it involves us all.

I am not even getting into the destruction of the informal economy, loss of millions of jobs, a 1.5% collapse of India’s GDP, rise in bank frauds (Rs 41000 crore, and 5835 cases in 2017-18) increase in currency as a percentage of GDP to nearly 10.9% (closing in on pre-November 2016 levels), escalating terror attacks and enhanced Kashmir stone-pelting and militancy. Both fake notes and counterfeit currency are in kinetic circulation as well.

Incidentally, India has made no tangible progress on the Panama Papers investigations, and as Modi’s tenure ends, there is no Lok Pal either (though he used it to become PM).

Narendra Modi owes an apology to the people of this great nation who believed him, who trusted him. Demonetisation was a brutal betrayal. There must be comeuppance.

PS: 140 Indians died. Thousands and lakhs suffered. What was their fault?