Saturday, November 19, 2016

SIDHARTH BHATIA - There is a Rising New Contempt for the Poor and the Weak // G. SAMPATH - The morality of binaries // Death by Demonetisation: Satya Sagar

By now it must have become apparent to the meanest intelligence that India is in turmoil. A running economy has ground to almost a halt and there is no saying when things will get back to ‘normal’ again, normal in this case being the ability of the common citizen to work, earn and then spend that money for her daily needs. To be cut off from legitimately earned money, lying within arms reach but yet inaccessible and going through tiresome and humiliating moments to get it, has understandably frustrated millions of innocent citizens.

Fervid supporters of the present dispensation and especially of prime minister Narendra Modi, still persist in hailing this ‘masterstroke’. His political colleagues have now begun to admit that there is pain, but say it’s all for future gain. Economists are not so sure that it was a good idea at all, because the costs – economic and human – far outweigh the benefits. What will social scientists make of the aftermath of the off-with-his-head kind of firman issued by the prime minister one weekday night, which has radically changed the lives of millions of people and will cause serious long term damage? How has India reacted and what does it tell us, about our political masters, about our society, about ourselves?

Undoubtedly sociologists and historians of the future will study this phenomenon but even observing the unfolding of this human drama, which has seen not just economic misery but also death, one thing has become starkly clear-the vast class divide between the well off and also the well connected and the rest of the nation’s citizens has grown exponentially.

There was always a chasm in India between the rich and the poor, the haves and the have-nots. The poor were a blind spot for the other Indians, especially in urban areas. Even if they were within the eye line, they were mostly ignored. As for the rural poor, for much of urban middle-class India, they existed only in the abstract and therefore didn’t matter. But in an earlier India, even the richest and the wealthiest knew that poverty was a problem and something had to be done for them.

In the post reforms era, it was hoped that trickle down economics would eventually reach them, but as we know, that was a chimera. It was the middle-class that got richer and got the full benefit of higher salaries and consumer goods; the government was happy to tailor its policies towards them.
It was during the peak of India Shining and later, the India Story that a rising intolerance towards the poor became manifest. One of the criticisms against Manmohan Singh – and Sonia Gandhi – was their allocation of funds for schemes such as NREGA or the food subsidies, which were seen as a drain on resources. Though NREGA has not been done away with, that ‘imbalance’ is being readjusted now. Poverty is no longer part of the conversation.

This disregard for the invisibles at the bottom of the economic pyramid has created tremendous antipathy and hatred towards those who do not fall within the idea of what the modern Indian should be: consumerist, tech savvy and digitally networked. The poor now are a drag, a nuisance holding us back. In recent days, how often have we seen voices exhorting the poor to get plastic or mobile wallets instead of paying the old way? Or wondering why they don’t have bank accounts? Why don’t they just download WhatsApp on their smart phones? And in any case, why would demonetisation would matter to them since they don’t have 500 rupee notes in the first place? Aren’t the poor used to standing in queues? Can’t they understand it is for the greater good? 

On the social media, the tone is virulent; one asked, “why should every policy be about the poor.” Why indeed? These questions have not just come from the raucous online warriors but also from corporate chieftains and politicians who are credulous that such a great decision by the prime minister is being actually questioned. Their world of privilege and entitlement, a world in which one can manage with credit cards for weeks and months, has inured them to all other realities. This divide – economic, social or indeed digital – has not happened overnight. It was becoming apparent over the years.

No one from the government has said sorry for this major mess up – that would be asking for too much – and there has been no show of empathy either. No minister or MP has walked among the crowds or the people in their constituencies, offering them assurances-all the platitudes are being issued from their offices and then echoed by their publicity machine. Anyone who complains is being asked to think of the soldier in Siachen. The prime minister says it is the rich who are sleepless, not the poor-but all around one only sees people queuing up outside banks from 5 a.m. while the rich are hosting multi-crore weddings; the incongruity seems to have completely missed our leaders.

There have also been enough stories about people helping the weak and the indigent (though even that kindness has been mocked), because there is also no dearth of goodness in this country. Small traders and vendors have shown compassion and helped their fellow citizens. That is the least one expects in a civilized society.

The turbulence this decision has caused will eventually settle down-in 15 days, 50 days or maybe longer. Farmers, workers and businessmen, especially small ones, will somehow make do, as Indians are known to, and get back on their feet. Whatever the outcome, the government and its vocal drum beaters will claim success; if you say something often enough and loud enough, it starts sounding like the truth, at least to yourself. But something has deeply changed in India and the long term consequences of that will not go away.

G. SAMPATH - The morality of binaries
Narendra Modi’s political opponents stand no chance against him unless they can script a powerful counter-narrative that resonates with the masses and isn’t about him
Demonetisation has been done many times before, without it disrupting the lives of ordinary Indians. Not this time though. Could it have been done in a less disruptive manner? Yes. Then why wasn’t it?
While there is no answer to this question from the government, some have blamed it on lack of adequate planning, and others on the necessity of secrecy. But the real answer may lie in the political rather than the economic or logistical realm. One could debate the merits and demerits of demonetisation as the best strategy to curb the black economy. One could also debate the merits and demerits of a ‘fast’ demonetisation versus ‘slow’ or gradual demonetisation. One could debate the manner of execution, in view of the known incompatibility between the newly printed notes and the ATM machines that could not dispense them without recalibration. One could debate the impact of this demonetisation — the instant elimination of Rs.500 and Rs.1,000 notes, which constituted 86 per cent of the currency in circulation — on ordinary people’s lives.

I, me, myself: All these aspects have indeed been widely debated. And it was eagerly anticipated that Prime Minister Narendra Modi, who was away on a visit to Japan, would address these issues on his return. Some were even hoping that he might roll back the move to ease the pain, at least until the logistics are in place.

Instead, the rhetorical turn in his speeches the day after his return took everyone by surprise. Addressing public functions in Goa, Belgavi and Pune on Sunday, he sought to turn the entire narrative about demonetisation into one about himself, his political career, and the unfairness of being persecuted by powerful enemies. “I know what kind of forces and what kind of people are against me now… They will not leave me alive. They will destroy me,” he said. In other words, the one who truly deserves sympathy in the present scenario is not the mass of daily wagers, street vendors, and farmers whose already precarious livelihoods have been disrupted, but Mr. Modi.

His rhetoric not only painted a sinister picture of anyone who dared to question his government’s moves, in one stroke, it rendered all criticism suspect. Anyone familiar with the tropes of Mr. Modi’s speeches would recognise his invocation of “those who looted the country for 70 years”. In this populist narrative that he has constructed and strengthened through hundreds of speeches over the years, the Congress equals the corrupt equals the black money hoarders equals the elites equals the liberals equals the Modi-critics equals the anti-nationals equals the bad people who want to destroy India. At the same time, the good people equals the true nationalists equals Modi equals Modi supporters equals the Congress-haters equals the proud Hindus.

Neither of these concatenations is fixed — they are liable to be extended to include new categories or shrunk to focus on a select few. But as encapsulated in Mr. Modi’s teary-eyed appeal, the significant aspects are three: the moralisation of politics, the infusion of emotion into policy debates, and the reduction of all debate into a single question, are you in support of Mr. Modi or not? If yes, support him. If no, then it’s hardly surprising that you are criticising what he has done.

Sacrifice for the nation: While this may be a crude summary of the dynamic at play, there is no denying that it is working for Mr. Modi. Anyone who has been out in the past few days queuing up outside ATMs could not have failed to come across people from every strata, but especially the lower middle classes, who, while acknowledging the hardship they are going through, nonetheless believe that Mr. Modi has taken a bold step for the good of the country.

When he says, “I promise you I will give you the India which you desired… I am doing what I was asked to do by the people of this country”, not only do a large number of Indians believe him, their words supply meaning to their hardship by wrapping it in a narrative that connects them to a larger cause, and makes them feel good about themselves. One would have to be really small-minded to complain about 50 days of hardship if this hardship could help make India a great nation by cleansing it of black money, no? 

But Mr. Modi’s narrative doesn’t stop at seeking the people’s support for demonetisation or for fighting black money. He wants them to save the country by saving him — from his enemies. And speaking of his “enemies”, Mr. Modi said, “They thought if they pull my hair, I will stop and do nothing. I will not be cowed down. I will not stop doing these things, even if you burn me alive.” These are the words of a person who holds the most powerful post in the country, of a person who is supremely in command of a party that enjoys a brute majority in Parliament.

Cult of the leader: Could there possibly be an objective basis for such utterances? One may recall his response when cow vigilantes were on the rampage. “Shoot me if you want, but not Dalits,” he had said. In a democracy, why must anyone shoot anyone else? Was it not possible for him to simply condemn the attacks on Dalits? But had he done so, he would have ended up acknowledging anti-Dalit atrocities as an authentic issue during his regime. By asking people to shoot him instead of attacking Dalits, he flipped the narrative of Dalit atrocity into one about Narendra Modi.

His response to the ongoing currency note crisis follows the same pattern. The demonetisation is the first bold, decisive step — one with immediate, nationwide impact — that Mr. Modi has taken since becoming Prime Minister. He did it in the most dramatic fashion. Days after the move, the nation is reeling under the impact. What used to be financial arcana has become a televised national spectacle. Above all, it has underlined in no uncertain terms his power as a leader, as someone extraordinary, and who towers above every other luminary in the national political landscape.

This brings us to the reason why he does not engage in a dialogue on equal terms with anyone — be it from politics or the media — on any of his moves. It’s because it runs the danger of diminishing his stature. It also carries the risk of elevating the status of those he parlays with as an equal — which is another way of diminishing him in relative terms. Hence the importance of frequent foreign trips. It is as if the only individuals he can be seen to interact with on equal terms are leaders of other countries, especially countries that command a bigger say than India on the international stage. Hence the bear hug of Barack Obama, Francois Hollande, Tony Abbott, and their ilk, extendable to other larger-than-life members of the global power elite such as Mark Zuckerberg or Hugh Jackman. The only modes of interaction open to ordinary interlocutors in India are supplication, obedience, and unquestioning acceptance.

Dominating the discourse: For Indian democracy to remain healthy, it needs political leaders who can challenge the Prime Minister as an equal. Right now there seem to be none. Hence his manoeuvre — which has now become standard operating procedure — of addressing his response from a podium, directly to the people of India, every time he is challenged on any of his policies.

Ever since he became the Prime Minister, Mr. Modi has been firmly in control of the national political narrative, with not a little help from the media. The way his demonetisation drive has unfolded reveals his willingness to leverage this control to evacuate all possible alternatives to his helmsmanship of the country’s destiny. He will continue to do so as long as the narrative that conflates national interest with Mr. Modi’s interest remains unchallenged.

His political opponents have been quick to talk about the businessmen who bankrolled his election campaign and are thus invested in his success. But there doesn’t seem to be adequate recognition of the fact that a large number of ordinary, lower-middle-class Indians are emotionally invested in Mr. Modi’s political fortunes. It is they who appear ready to undergo any hardship if it promises positive outcomes for their leader — not unlike a battalion of soldiers ready to sacrifice their lives for their general.

Going forward, we can expect more from this playbook of turning every issue into one about Mr. Modi. What should concern those who cherish democratic values is the absolute lack of imagination or ideas among what passes for the Opposition in the country. His opponents stand no chance against him in the 2019 elections unless they can rise to the challenge of scripting a powerful counter-narrative that would resonate with the masses & also, most critically - would not be about Mr. Modi.

Death by Demonetisation: Satya Sagar
demonetisation is essentially an an attempt at economic and social engineering – on behalf of corporate banking and financial elites 
The abrupt demonetisation of 500 and 1000 rupee notes by the Narendra Modi regime is a drastic move that is staggering in its scale, ambition and repurcussions. The only other figures in modern history one can think of, devious or stupid enough to attempt something similar, are the likes of Marcos, Suharto, Idi Amin and Pol Pot.

For all its audacity however, the decision could go down also as the grandest of blunders made by anyone in Indian political history. Poorly planned and implemented it is likely to prove disastrous not only for the country’s economy but – ironically enough,– for the BJP’s own electoral fortunes.
The abolition of the two currency notes – that make up 86% of all cash in circulation in the Indian economy –  has affected almost every family in the second most populous nation on the planet.  The harassment of the common citizen – particularly from the ranks of the urban and rural poor- through denial of access to income, savings and livelihood will not be forgotten anytime soon.

The Modi government’s  supporters have termed demonetisation a ‘surgical strike’ against black money, calling it a ‘bold’ , ‘necessary’ and ‘well intentioned’ step. A more rabid section of his fans see all complaints as coming from those who benefited from black money, mainly the BJP’s political opponents. The Prime Minister himself has called upon the nation to ‘make sacrifices’ and put up with hardship for 50 days in this battle against corruption.

However, growing consensus among economists both within and outside the country is that demonetisation is a foolish measure and will hurt the Indian economy badly – especially farmers, small businesses, labour and anyone part of the country’s informal sector – and operates on a daily basis through cash transaction. The informal sector constitutes over 30 % of the Indian economy in value and 92% in terms of workforce employed.

Since the drastic policy was announced on November 8, all these have come to a complete standstill, leaving millions without livelihood or means to buy basic goods. As one respected economist has pointed out demonetisation may have permanently damaged India’s informal sector.

A severe deflation is predicted over the next six months to a year or even longer, as spending power disappears or goes down for millions of Indians and businesses shut down. There is also the concern that, with government issued currency losing credibility through demonetisation, more and more people will keep their money in unproductive but safe assets like gold and property.

So, why would the government take such a high risk step ? What was Mr Modi really trying to do when he announced a measure that directly affects almost every single family in the second most populous nation on the planet?  Who are the real beneficiaries of this drastic policy? Will it really stop black money from circulating in the economy and end corruption from the country?

Despite all this propaganda it is quite clear now that demonetisation has nothing really to do with black money, that constitutes a sizeable 20 % of the Indian economy, of which only 6% is hoarded in cash, the rest being stashed away in gold, real estate and foreign accounts. If the government was serious about hurting the beneficiaries of black money they would have started by prosecuting those who keep such ill-gotten wealth in non-cash assets. Also, given the large-scale collusion of the Indian political class and bureaucracy in corruption the Modi regime should have first gone after its own ministers and government officials (particularly from the tax and revenue collection departments) to set a public example.

At its core, demonetisation is essentially an an attempt at economic and social engineering – on behalf of corporate banking and financial elites – the new paymasters Modi genuflects to after having ditched the small and medium mercantile lobbies the BJP represented for long. The Indian middle-classes, both real and aspirational, are rooting for the policy as they see a consolidation of their own power and future benefits in it.

With one stone, the policy’s architects have tried to slaughter many birds: recapitalise public banks burdened with bad loans; lend out new deposits to cronies in the corporate sector; enrich new entrants into the digital banking business, give the government extra funds to spend on its pet projects and steal a march over political rivals.

1.Rebooting troubled Indian banks: The bad loans or Non Performing Assets (NPAs) in the Indian banking sector, stood at nearly 6 lakh crore rupees by end of March 2016.  Over 90 per cent of this is on the books of public-sector banks, with the State Bank of India accounting for the highest amount. Even this sum, stunning as it may be, is considered a gross underestimation and if loans that face the risk of being declared NPAs are also taken into account, the overall stressed advances of Indian banks will double.  A bulk of the NPAs are in turn due to default on interest payments by the corporate sector, which has been milking the banking system through its political patrons.

The increase in deposits of banks expected due to the crackdown on black money is expected to help banks get into better health, lower interest rates and enable them to resume lending to Indian businesses again. In other words, demonetisation is a way of saving many Indian public sector banks while also providing corporates with fresh loans,  a very dubious strategy given those in power seem to have no real will to recover money from their defaulter cronies.

2.Increasing the government’s cash flow: read more:

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