The misplaced Robin Hood

Editorial By- Sukhpreet Giani

It has been over a month that Indians from all strata of society were made to rethink on the way they handle their finances, and now most of them have expressed concern on the way the economy is being handled by the Narendra Modi government. A friend at Chandigarh has been constructing his house and had to stop it for some time for the want of cash to be paid to the labor. He expressed dismay that it’s difficult to get labor that came from eastern states of Bihar, Orissa, Jharkhand etc, as most of them are being forced to go back, as families back home don’t have much cash to depend upon. Also they were allowed to deposit old bills at any branch of their bank anywhere in India, but now are being told to get the withdrawal from the “home branch”, where as there is no such notification by the government. Perhaps the banks have adopted the means to keep the Queues outside the bank shorter. What an innovation… for your own money you are being made to beg and that to from the system! No wonder the banks could have been handed over an unwritten rule!
It was alarming to notice the friend in a state of shock. Reason- “there are more Sikhs now willing to take the work of a mason”, he said. He shared his story that he did hire this young gentleman who earlier used to sell vegetables, who now is opting to work for daily wages, for the simple reason that not enough liquidity to support the “small business” is available in the system. The vegetable wonder tried his best to survive for over a month and it was not possible for him to take back all the perishable produce at the end of the day, and he opted to work on daily wages. This is one case of a small “business man” opting for daily wages that to from a community that is not associated with such a type of job. This may not be an isolated case where odd means are being adopted for surviving just because someone sitting in the ivory tower feels that the nation is ready for digital economy.
The plight of the young man prompted me to visit the farmer’s market and was good enough to understand the shock experienced by this friend. Most of the farmer markets come to a close at about 9pm. The farmers were willing to sell of all their produce at an unbelievable price of Rs 10/Kg including fresh peas that a week ago were selling for Rs 60/kg or for that matter Tomatoes, that had seen a season’s high of Rs 30/kg. Their logic, it’s no use carrying the produce back to the farm, and their need to have bills of smaller denomination can best be fulfilled through these means!
The predicament of the Non Resident Indians in unique. Most of them maintain some cash especially when they travel to India with children for small expenses at the Indian airports when in transit. Almost all of them are left with some cash and don’t know what to do as Indian banks are not extending the right help. Should they spend close to $ 1500 to travel to India to get Rs 25000 exchanged ($ 500), or just simply dump. Mr. Modi failed to realize such a situation. Would Prime Minister Modi call this too “black money”.
Most seasoned economists have said that the objective of unearthing black money through demonetization will not be achievable and the same is being witnessed with stash of cash in new bills being unearthed. They also claim that Prime Minister Modi has made a massive blunder by taking this unprecedented step without adequate preparation. Their assertion to a great extent is being proved right when on December 7th; the RBI Governor Dr Urjit Panel failed to give any indication when normalcy will return. He only gave some general observations that the situation was improving. Former Finance Minister P. Chidambaram came up with the startling observation that the situation would not return to normalcy even after six months, and the objective of unearthing of black money will be defeated as fresh channels will be created for generating black funds from new notes. Indians have now started asking question to the elected representatives and have now restored to means that are unlawful-like locking the banks that don’t offer cash. The obvious questions arewhat was the need to give such an acute pain for long term? What was the real objective of Prime Minister Modi?
Prime Minister Modi is known to be a smart, calculative person. He has gambled and taken risks but this time there is little sanity associated with it. He is a master at making the nation give him all attention, at the same time his diversion tactics are good too. His focus is now the Assembly elections in the five states and he wants to get political sanction from the people. With budget also lined up just before the elections –the same is likely to be used as a campaign plank. He has already asked the poor whose accounts were used by certain defaulters to park their black money, not to let the money be withdrawn. Going by the figures, close to 250 million such accounts have been used. The gullible poor are likely to vote for him as they have been assured that is one time deposit due to the impact of drive against black money, at an election rally by none other than Prime Minister Modi. As the time passes, he would be considered a “Messiah against the black money and the wealthy”, by those who have no knowledge of economy but for the cash in hand. Prime Minister Modi is looking at the coming Assembly elections as a referendum on his programme. This is a make or break situation for him specially after having received a drubbing at Bihar. These potential achievements he believes will establish his legacy as a Robin Hood who got the ill gotten wealth of the rich to the poor. That’s the only plank he is left with as his drive for demonetization can not assure that investment will pick up due to massive liquidity crunch. The informal economic sector that strives on cash is starved of fund resulting in significant loss of employment. The industry cannot expect demand push in the current fiscal with the auto sector in India registering a decline by 22 % for the month of November.
Hence, Prime Minister Modi is only banking on the “messiah for the poor” image without realizing the real pain of the poor. The poor may not echo his sentiments, because of the precarious condition of the Congress and disunity among the anti-BJP parties, Prime Minister Modi may sail through.