The cat is out of the bag; affirming the observations made by the critics, Narendra Modi government’s demonetisation exercise came out to be a futile one, as per the recent data released by the Reserve Bank of India, which says that nearly 99 percent of the demonetised currency notes of ₹1000 and ₹500 returned back to the banking system. Out of ₹15.44 lakh crore of demonetised notes, ₹15.28 lakh crore returned to the banking system, while just ₹16,000 crore never returned to the bank, which is something around 1.3 percent of the total demonetised amount.
According to the report by the RBI published on its website, the Modi government’s decision to ban the ₹1000 and ₹500 notes didn’t unearth black money from India, of which only 6 percent remained in cash; while the menace of fake currency notes still looms large. The total amount of demonetised ₹1000 notes that never returned to the banking system is 8.9 crore notes, i.e. ₹8900 crore worth of money was never returned to the banks and got invalidated, therefore. But there is no accurate information on the number of ₹500 demonetised notes that never returned to the system as the government issued new ₹500 notes at the same time and the notes in circulation will calculate both.
According to the former finance minister, P. Chidambaram, the RBI gained ₹16,000 crore from the demonetisation exercise at the cost of ₹21,000 crore wasted in printing new notes, including the new ₹200 notes released recently. The circulation of currency has increased post demonetisation and since the beginning of the new financial year, there is a large scale drop in the online transactions that the government also claimed as a goal of its widely hyped and criticised exercise, which wrecked a havoc on a large section of the poor, who lost livelihood, as the CMIE data shows 1.5 million job loss since January to April 2017 in India. The GDP of India has also dropped in the post-demonetisation period and there is a speculation that the growth rate will be affected in the long run.
This recent declaration by the RBI, which itself is not clear on several points, thwarts the lies peddled by the BJP and Narendra Modi himself, when the latter stood on the podium at Red Fort on 15 August 2017 to amplify the success of the demonetisation drive by quoting misleading figures. As per the speech of Narendra Modi, ₹1.25 lac crore of black money was detected by the government and ₹3 lac crore of unaccounted money returned to the banking system. However, the RBI figure shows that ₹15.28 lac crore returned to the banking system. Narendra Modi’s blatant lies to magnify the minuscule amount of black money hoarded in cash exposes to the world the nadir touched by the Indian politics, especially with the Hindutva regime’s unapologetic propaganda that overturns truth and facts with fabricated information. Until this day, the Narendra Modi government and the RBI didn’t show any consistency over the reasons why such a colossal economic turbulence was created. Earlier this year, the RBI denied information on an RTI application that wanted to know the real reasons behind the demonetisation exercise.
Narendra Modi and his government kept shifting the goalpost since it started the demonetisation exercise that brought nearly 90 percent of Indian adults on the streets to stand in the never-ending serpentine queues, caused numerous deaths, lot of anxiety and pushed a large section of the poor people, mostly from Dalit, Tribal, Muslim and Christian communities into a state of despair due to immense cash crunch and loss of employment. The demonetised notes were 86 percent of the currency in circulation when they were invalidated. This sudden withdrawal of the currency from the system may not have affected the affluent, upwardly mobile middle-class people of cities with 4G mobile signal making the round, but it wrecked the common people, the poor and the working class in both cities and villages.
In states like Maharashtra, Kerala, Tamil Nadu, Madhya Pradesh, etc. the Narendra Modi government’s adventurist measure, brought a man-made disaster in agriculture, already suffering badly due to the juggernaut of the neo-liberal economy crushing it, as the rural banks, mostly the cooperative banks were barred from exchanging demonetised currency notes and the farmers and the rural poor were made to travel to cities and towns to get their demonetised money exchanged, where many of them failed to get it done due to long, never-ending queues, and many had to lose a significant amount of money due to payments made to brokers who got the job done.
As the rural India landed in a cash crisis during the sowing period of the Rabi crops, the unscrupulous money-lenders and feudal landlords tightened their noose on the poor and marginal farmers, the landless peasants and the rural poor. By providing loans at exorbitantly high rates of interest in states like Andhra Pradesh, Madhya Pradesh, Telangana, Chhattisgarh, Uttar Pradesh, Maharashtra and Rajasthan, these unscrupulous money-lenders and crook feudal landlords forced the farmers to the verge of crisis from where many were left with no other scope but to commit suicide. It’s one of the major reason why a large number of farmers, facing the drastic fall in the selling price of crops, came out on the streets to protest against the BJP government, even braving the bullets of the police in states like Madhya Pradesh and Maharashtra.
The Modi government first claimed that the decision, to demonetise the ₹1000 and ₹500 notes, was taken to deal a great blow to the black money hoarders and fake currency rackets. As the ₹1000 and ₹500 notes were highest denomination notes in circulation until 8 November 2016, therefore it was said that the black money hoarders have stocked their ill-gotten cash with these denominations. The fake currency rackets operating from neighbouring countries and within India were blamed of printing the high denomination notes to destabilise the economy. Narendra Modi called upon the people of the country, especially the poor, to sacrifice a little to ensure better days, cleansed of the filth of black money.
As we have earlier discussed on People’s Review, only 6 percent of the total black money in circulation was hoarded as cash by those who were in a position to transform the cash quickly into tangible assets. Nearly 94 percent of Indian black money was either stashed up in tax havens, returned to India as FDI, locked in lands, real estate, gold, shares and debentures and of course, in CSR activities of corporations and donations made by the corporate houses and shoddy people to the political parties of all hues, out of whom the ruling BJP and its paternal body, RSS receives the highest share. In such circumstances, the demonetisation exercise of Narendra Modi was a totally useless step that was really ineffective to strike at the core of black money, which also fuels the cavalcade of Modi and his coterie.
Also, during those chaotic days of demonetisation exercise, between 11 November to 31 December 2016, when the people were literally fighting with each other in their attempt to get their money exchanged, the government announced schemes for black money hoarders, which promised to officially whiten 50 percent of their unaccounted money if they disclose the same to the government voluntarily. The taxmen, who otherwise have very dubious credentials, were given the rights to decide upon the nature of each of the cases and it’s reported that more corruption was thereby promoted, as the government’s tax collectors charged hefty bribes in lieu of clean cheats.
It’s also alleged that through political connections and by influencing the bank and government officials with bribes, a lot of cash was acquired by unscrupulous people, big comprador traders and BJP leaders. When many people were struggling to get their demonetised currency notes exchanged for the rationed sum of cash that the Modi regime allowed every week, BJP leaders and big traders were arrested in different parts of the country with a huge cache of the new notes. These news stories were later censored and nothing came out in the public domain over what happened with those who were arrested and how did they manage to get hold of such huge amount of cash, when the country was reeling under a cash crunch.
Narendra Modi’s claim that the demonetisation exercise was a “surgical strike” against the black money hoarders, as the surprising decision was a sudden blow, was another hoax, as we have shown in this article, that the decision of demonetisation was known to the black money hoarders, stock brokers, real estate magnets and corporate houses even in April 2016, when there was a surge of cash transactions, doubted to be transactions done in a haste to do away with the odd notes to be demonetised nearly seven months later. There was no surprise element in the demonetisation decision, except for the common people, most of the black money hoarders, including comprador crony capitalists like Adani and Ambani, knew about the demonetisation decision and took care of their cash accordingly. So did all the top leaders of the BJP and other political parties.
Seeing the tall talks of wiping off the blot of black money from the Indian economy falling on its face, the Narendra Modi and his coterie of sycophant cheerleaders called the demonetisation exercise a drive towards making India leap to a cashless economy, without clarifying how could suddenly such a shocking transition could have been made possible without building up the infrastructure first and without digitally empowering the people of a country where there are more poverty clad people in six provinces than the 26 Sub-Saharan countries and where more than 60 percent of the people lives on less than a dollar a day.
The digital economy’s eulogies reached the highest skies and Modi was accoladed, by his coterie, as a champion who made India’s economy go cashless instantly. However, the truth was found diametrically opposite to the claims of the government’s uncritical cheerleaders. The reduction in cash transactions during the months of demonetisation happened due to the lack of cash in the hands of the people and soon after the cash supply started normalising from March 2017, cash transactions reached record height and the Modi government and its lackeys refrained from referring to it as an aim of the demonetisation exercise.
Narendra Modi and the BJP also said that the demonetisation exercise will wipe out black money from the coffers of the political parties, everyone except themselves. But no politician was found drying up of cash and none of the corporators, panchayat leaders to the MLAs and MPs showed any sign of facing extreme poverty or even a slight fall from their pre-demonetisation financial status. The BJP rather made it easy for the parliamentary political parties to fiddle with black money, by bringing forth new funding rules, under which a political party can sell bonds in the market and corporate houses, rich and influential people can buy them anonymously and not even show the amount exactly given to a party in their account books. The anonymous cash donation amount was reduced to ₹2,000 per head from ₹20,000, though, without capping the number of such donations a party can collect. This gave enough room to the unscrupulous politicians to collect black money and make it white, and this decision became another volte-face by the BJP and the Narendra Modi government over the goal of purging black money from the political funding system.
Then shifting the goal post once again, with an aim to keep the digital economy’s woes at bay from public discourse, Narendra Modi and the entire brass of the BJP and the RSS kept saying that the demonetisation exercise will be a big blow to the problem of Naxalite rebellion in the country, to the terrorist outfits working within the country, to the militant groups in Kashmir and it will also, the Modi regime vouched, stop stone pelting on the streets of Kashmir. When the streets of Kashmir were left barren during the cold days of winter, the Hindutva camp jubilated over the end of stone pelting and protests on the streets of Kashmir against the Indian occupation. Only to have an ostrich moment since the summer melted the snow and revived Kashmir after a silencing spring. Maoist attack in Chhattisgarh killed 24 CRPF men in April 2017, who went there to help the big corporate houses fight a violent war against the tribal people. None of the things changed, except for the ₹1000 and ₹500 notes since demonetisation.
During the crucial assembly election of Uttar Pradesh, where the BJP secured a huge majority by polarising voters on communal lines, the Modi government claimed that the demonetisation exercise did better than worse to the poor. Without, of course, providing any data to support the rhetoric. Narendra Modi’s strategy of using demonetisation as a populist measure to garner votes from the politically backward masses, to whom the critics and opposition failed to explain the pros and cons of the demonetisation exercise, paid good dividend, which made the prime minister claim during a rally that he is smarter than the “Harvard economists”, who called his demonetisation exercise a hoax.
Though most of the economists and critics of the Modi government, including the World Bank-deputed former finance and prime ministerial berth holder Manmohan Singh, blamed the decision of demonetisation of being a populist one and opposed it as a very disastrous for the Indian economy, they never spilled the bean before the people of the country and exposed the real reason behind the demonetisation exercise of the Modi government.
People’s Review published this article, which, quoting the facts and figures mentioned in the countercurrents.org website, showed that the demonetisation exercise was undertaken by Narendra Modi’s regime to meet the demand of the Catalyst organisation, an offshoot of the US government’s USAID organisation. The Catalyst, which is led by an Indian with a vested interest in the Indian economy and political system, has a special tie-up with the Indian Finance Ministry headed by Arun Jaitley. The Catalyst organisation brought the BJP on board of its decision to experiment the transition to a cashless economy by a sudden shock therapy in a special market like India, where the electronic transactions will increase the business opportunities and revenue generation for big finance capital owned global payment system corporations like Visa, Mastercard, etc. and enable online payment sites to earn huge profits, capitalising on the agony of the people.
As more and more people are forced, coerced into accepting digital currency and as the government creates an ecosystem for the digital economy to survive, the big finance capital owned corporations will be able to multiply their profits quite many times as the consumer base will expand. This huge profit, earned at the expense of the people’s agony by the big finance corporations and banks will move out of the country’s economy and reach Wall Street, from where the Modi government is taking its orders. The exposure of this angle, especially the complicity of the Narendra Modi-led BJP government serving the interest of the US monopoly and finance capital in India at the cost of harming the poor, would have harmed the ‘nationalist’ credentials of the RSS-led Hindutva camp, which is built employing a lot of labour invested by propagandists, academicians, toady journalists with the incessant funding provided by the foreign corporate houses and their Indian crony-comprador lapdog corporations.
This is the time to not raise questions behind the logic of demonetisation and its repercussions on black money, as it will be the same thing like questioning George W. Bush and Tony Blair on the number of WMDs recovered post their much-hyped Iraq aggression. Rather it’s the time to take these facts on the failure of the demonetisation exercise to the poor and the marginalised people of India and politically arouse them so that they may see the real character of the Modi government and its RSS alma mater.
Only by exposing the wrongdoings of the government, in favour of big foreign corporations, can the people be brought in the political battlefield against Hindutva fascism and its progeny. The common people who were made to believe by their semi-knowledged and half-witted social-political influencers that demonetisation exercise is a gem, a masterstroke by Narendra Modi, must be taught otherwise, must be made a participant in the broader struggle against Hindutva fascism. Because, at the end of the day, it’s only the people, the majority of the people, i.e. the poor, oppressed, exploited and marginalised people of the country, who can defeat fascism, especially the Hindutva fascism, using the sword of mass struggle for a people’s democracy, progressive secularism and socialism.
An avid reader and a merciless political analyst. When not writing then either reading something, debating something or sipping espresso with a dash of cream. Street photographer. Tweets as @la_muckraker