When even the Gujarat CM blames the Centre, you know how bad things are. This is not the people’s impatience, this is the government’s incompetence.
Give me just 50 days, Prime Minister Narendra Modi had said in November 2016. If problems with demonetisation persist even after 50 days, punish me as you like.
Over 500 days later, ATMs in many states ran dry again. As people ran from one ATM to another to find cash, Modi said in London that he appreciated the impatience of his compatriots back home.
Going through a dull patch, the last thing the Modi government needed was a rude reminder of demonetisation. Don’t judge me by demonetisation and GST alone, the PM had requested at the beginning of this year.
More than 500 days after demonetisation, it turns out that the Modi government has still not been able to sort out the flow of currency from the printing presses to the common man’s pocket. Having finished any semblance of autonomy with the Reserve Bank of India, the government can’t even distance itself from the cash crunch.
The cash crunch of April 2018 is not a bad idea badly implemented by the government. It’s something much worse. It’s the government having no idea whatsoever. There’s widespread confusion over why we’re suddenly facing a cash crunch all over again.
Is it the 2000 rupee notes? Is it the 200 rupee notes? Did the ink run out? Did everybody in Karnataka withdraw money for the elections? If that’s the case then why did we not see a cash crunch during the Gujarat elections?
It’s deja vu, whatever the economic reasons may be. The headlines are a painful reminder of what India went through in the demonetisation period. Once again, weddings are being postponed due to cash crunch. Once again, farm prices have plunged in Gujarat. Just like December 2016, the cash crunch comes on the eve of a sowing season. Holiday plans have been spoilt, festivals are once again looking glum.
FMCG fears consumption slowdown once again.
That familiar sight of ATMs not working is a reminder of what we were promised: a short-term sacrifice for long-term gain. What was the long-term gain? We’re reminded of how the government changed the objective of demonetisation from destroying black money to promoting digital transactions to increasing the tax base.
More than 500 days later, as Indians are again unable to withdraw their own money, we are reminded how all those objectives have failed. The tax-to-GDP ratio has remained the same. Forcing Indians to go cashless has remained a pipe-dream. As for destroying black money, over 99 per cent of demonetised currency came back to the RBI.
Over 500 days after demonetisation, the central bank is still counting the notes. Demonetisation neither discovered nor destroyed large amounts of fake currency. It failed to finish stone-throwing or terrorism in Kashmir, or Naxalism in the forests of central India.
What it did do was to erode trust in the Indian currency and the Indian banking system. It is this erosion of trust that made people in Andhra Pradesh and Telangana fear for the safety of their money in the bank. They started withdrawing it in large numbers. As it happens, more than 500 days later, the RBI still hasn’t been able to pump in enough cash in the economy. There was a demand-supply gap, leading to dry ATMs.
None of this was sudden or unexpected. There have been indications for a long time that this could happen, but the government couldn’t prepare for it. The government failed at demonetisation not once but twice.
The buck stops with the Modi government, whose excuses have been rejected by Andhra and Telangana alike. When even the Gujarat chief minister blames the Centre, you know how bad things are. This is not the people’s impatience, this is the government’s incompetence.
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