8th November 2016. I was in a restaurant in
Hyderabad sitting with a bunch of fresh Chartered Accountants. It was a few minutes past 8 p.m. We were
waiting for the juicy succulent kebabs to come in, when suddenly mobile phones
started buzzing.
Prime Minister Narendra Modi had announced Demonetisation,.
All currency notes of Rs. 500 and Rs. 1000 were now invalid. Processes for
exchanging the hard earned money were announced. The next hour in the restaurant was an
animated conversation. On one side there were people who extolled the virtues
of this move, on the other was another bunch who criticised the move
completely.
All of us converted into armchair critics in a few minutes. It did
not matter whether you understood the move, criticising and having an opinion were
extremely important.The entire nation got converted into a bunch of instant
economists and critics, each having acquired their expertise instantaneously.
The nation got divided along political lines. and the political tamasha had begun.
Over the next few days, the media fed us with visuals of
people suffering and dying while standing in queues. On the other side, there
were visuals of police having found money flowing in rivers, in garbage dumps
etc. Experience has told me that both sets of reporting can either be factually
true or manipulated.
Over the next few months, everybody who has an opinion and
more were discussing the benefits or otherwise of demonetization. It was
predicted to be Prime Minister Modi’s waterloo. But the forth coming election
results surprised everybody. The BJP made a clean sweep of most elections. The
opposition could not believe it. They now started contesting the validity of
the Electronic Voting Machines.
Anyways 10 months later RBI has finally released data. More
than 99% of the invalidated currency notes have come back into the system. Most
economists and armchair critics are out to fry the Government for what it calls
as an unsuccessful experiment or a colossal failure.
And the Government on its part is trying to give a different
spin to the episode, by insisting that the success of the Demonetisation move
has to be measured differently.
As for as I am concerned, demonetisation is a thing of the past.
Today by looking at the number of notes returned, we are only conducting a post
mortem. The organ has been removed. Was it cancerous? Or was the surgery
unnecessary? This post facto analysis
tells us whether the Prime Minister was right or wrong.
I wish the prime minister had the benefit of clairvoyance at
the time of taking the decision. Or there was a crystal ball which he could
have looked into and decided about taking this decision,.
Let us look at the decision making process. First, is there
or was there black money in the domestic market? The answer is yes. Anyone who denies
the same, is either blind or naive or motivated. Would part of it be held in
currency of a higher denomination? Would these people holding this black money
have difficulty in converting money into cash? The answer to both the questions
is yes. With this evidence, was demonetisation a correct decision? Maybe.
Now
let us look at what foiled the plans.One there were a host of accountants indulging in a colour
change operation. Secondly, there are stories of corrupt bankers, who helped
these people exchange their old notes into new notes for a commission. These
were the two factors which ensured that most of the notes came back into the
fold. Wonder whether the Prime Minister had bargained for the ‘support’ of these so called professionals
who made a fast buck themselves in this process.
On 1st July, 2017, addressing a bunch of
Chartered Accountants, he chastised them for these activities. I don't think the
Prime Minister has failed. If we look deep, we as a society have failed.
I remember a story where a liar was going to be lynched.
Along came a wise man and said, “Let the first person to throw the stone be someone who hasn’t lied
ever.” No one came forward. Similarly, for those who are expert at throwing
stones at failure, let me say, “Let the first stone be cast by someone who has
taken a risk and never failed.”
