Dilip Simeon's blog

Demonetisation is like a bad dream etched in our memories. Weddings were postponed and  medical treatment was curtailed  for lack of money. Long queues formed outside banks. Small businesses  closed due to lack of working capital  and their workers returned to their villages. Indians who never generated black money  were the worst affected . Yet, the narrative that demonetisation would destroy the wealth of the corrupt was widely accepted. This was because of the misperception that ‘black means cash’. If cash was squeezed out, the black economy would disappear at one stroke – justice being meted out to the corrupt. The Prime Minister said that for long-term gain one had to bear short-term pain. He likened it to ‘ ahuti ’ in a ‘ yagya ’. If the pain does not end in 50 days, Modi said, the public could give him any punishment and he would accept it. Two years later, the pain persists but the government only continues to justify its error. It has r...

More than 99% of the currency that India declared void in a surprise announcement in 2016 was returned to the country’s banks in subsequent weeks, according to a Reserve Bank of  India  (RBI) report. The figures suggest prime minister Narendra Modi’s demonetisation policy, which likely  wiped at least 1% from the country’s GDP  and cost  at least 1.5m jobs , failed to wipe significant hordes of unaccounted wealth from the Indian economy — a key rationale for the move. Modi shocked Indians in November 2016 when he announced on live television that all 500 and 1000-rupee notes, equivalent to about £6 and £12, would be banned in four hours’ time. People were given several weeks to exchange their demonetised currency for new notes at banks. But new notes could not be printed fast enough, and the policy sparked a months-long currency crunch that left  tens of millions of Indians cashless  or standing in line for hours each day to retrieve small sums ...

According to a 2011 Pew Research Survey, 95% of Americans born in 1955 or earlier said they could recall exactly where they were or what they were doing when Kennedy was killed. The sheer trauma of the event etches the day vividly in our memories. Indira Gandhi’s assassination on October 31, 1984 was yet another day. Most of us who were alive then can recall small details of that day. Even now I can recall every incident and conversation of that day. The demonetization of November 8 last year has become another day similarly etched in most minds. I was entertaining some friends at home in Secunderabad, when I heard that the Prime Minister was going to  speak to the nation. My friends and myself clustered around the TV and heard Narendra Modi make the announcement by saying: “Brothers and sisters, To break the grip of corruption and black money, we have decided that the 500 rupee and 1,000 rupee currency notes presently in use will no longer be legal tender from midni...

Western Uttar Pradesh, which votes on Saturday, may well prove to be the BJP's Achilles Heel in the crucial battle to capture the Hindi heartland state. In the 2014 Lok Sabha polls, it had swept this region, riding a communal wave unleashed by Jat-Muslim riots in Muzaffarnagar the previous year which left 80 dead, scores injured and thousands displaced. Three years later, mounting rural distress, compounded by demonetization woes, has dampened saffron efforts to rekindle communal embers in a desperate bid for a repeat performance in the assembly election. The slow ebb of the BJP in an area it believed was impregnable is evident even in a whistle-stop trip through the constituencies of the four leading figures of the post-Muzaffarnagar politics of polarization: MLAs Sangeet Som and Suresh Rana, and MPs Sanjeev Balyan and Hukum Singh. All four are facing an unforeseen backlash from unhappy voters with a litany of complaints. While the anger cuts across caste groups, what should ...

The demonetisation of Rs 500 and Rs 1000 currency notes has dominated Indian lives since its announcement on November 8, 2016. Its shock-and-awe approach has created a sense of frisson amongst Prime Minister Narendra Modi’s acolytes. However, for many who owe no allegiance to specific political dispensations, it has not been possible to accept the stated objectives at face value.  The case for robust skepticism towards demonetisation as a means of tackling the scourge of black money has been effectively made by many writers and economists. But more than the views of the critics, it is the government’s constantly shifting goalposts that makes us discount the putative justification for such a drastic policy decision. In the early weeks, the absence of a clear understanding on the true motive of such a radical monetary measure has led to much speculation that was akin to Kremlin watching during the Cold War era. Some have plausibly seen sudden demonetisation as an attempt to d...

They had little financial access and autonomy to begin with and now with their secret stash of cash gone after demonetisation, women in India struggle to start all over again Biro, o… Biro,” calls out Chander, a jute sack slung over her shoulder, her feet plodding through the ground that’s carpeted green with the slush of bathua and dil leaves. “She goes missing every few minutes aur mujhe dhoondna padta hai (I have to search for her),” says the 60-year-old, now walking back through the early morning crush of people and battery-operated e-rickshaws at the Ghazipur vegetable mandi in east Delhi. “I have been selling vegetables for 25 years but things have never been this bad. Yeh notebandi ke baad toh maal waise hi pada rahta hai (after demonetisation, my vegetables haven’t been selling). Earlier, I would earn at least Rs 1,000 a day; now, if I buy vegetables for Rs 1,000, I only take home Rs 400,” she says, sitting on her haunches on one of the pavements lining the market. ...

The forum represents over 18,000 employees of the RBI across the ranks.  The letter said appointment of an officer to coordinate currency management is a “blatant encroachment” on the exclusive jurisdiction of the RBI on currency and accused the Government of “impinging on RBI autonomy”.   “It’s (RBI’s) autonomy and image have been dented beyond repair.” “May we request that as the Governor of RBI, its highest functionary and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated” Feeling “humiliated” by events since demonetisation,  RBI  employees today wrote to Governor Urjit Patel protesting against operational “mismanagement” in the exercise and Government impinging its autonomy by appointing an official for currency coordination. In a letter, they said autonomy and image of RBI has been “d...

Avid supporters of Prime Minister Narendra Modi and his government are known to respond to criticism in bizarre ways. Recently, the prime minister himself, in an  unfortunate statement  that in many ways insults the dignity of his post, compared the opposition parties to ‘enemy’ Pakistan. Perhaps the most bizarre have been responses to criticisms around senior citizens dying in queues and in banks. While Modi has not considered his citizens’ deaths worth his words despite finding time to  congratulate  cricketers and offer  lotteries , his supporters’ responses have ranged from completely denying media reports of queue deaths to dismissing them as inevitable for the nation’s ‘larger good’.  Some of them, for instance Manoj Tiwari, the BJP’s newly anointed Delhi leader, was even captured on video laughing at the gullibility of people standing in queues outside banks to get their money. Many supporters of the move have used their social media platforms...

India’s first chief statistician, Pronab Sen, is now country director of the International Growth Centre, which seeks to build effective growth facilities through engagement between policymakers and researchers. In this interview to  Scroll.in , he speaks on the 50 days of demonetisation, its failings, its severe impact on the poor, the loss of credibility of the Reserve Bank of India, the push to make India a cashless or less-cash economy, and suggests measures the government could take to rev up the slowing economy. Excerpts: Much of the old Rs 500 and Rs 1,000 currency notes seem to have come back to banks, perhaps beyond the government’s expectation. Does this imply a large percentage of black money was converted into new currency notes? Or was it that the government miscalculated the amount of black money in the economy? The government’s estimate of black money and ours was roughly the same – about Rs 3.5 lakh crores. What they miscalculated was the Indian ability for ...

As the deflationary spiral deepens rapidly across vast swathes of India's cash-dependent informal economy, ultimately impacting the formal sector too, what was seductively sold to the public as a "surgical strike" on black money may turn out to become the worst-ever carpet-bombing the country's economy has ever experienced at the hands of its own government. In any case, a militarised imagination is the last thing India needs to face its real problems today. ASEEM SHRIVASTAVA - Weapon of mass digitisation Part 1 We are in the hands of a digital-romancing political fantasist of extraordinary unrealism, gambling with the real lives of unsuspecting millions across the country. He makes the adventurous Tughlaq seem sane by comparison. The currency is the centrepiece of a modern economy, the trust and credibility reposed in it being one of the most precious of national assets. It is not to be trifled with by ignorant tyrants. And this is why fiscal and monetary pow...