Prime Minister Narendra Modi made a bad analogy comparing the cash drought prevailing in India now after the midnight
ban of Rs 500 and Rs 1,000 notes to the chaos prevailed in Japan in the
aftermath of the 2011 earthquake. "People stood in line for four hours,
six hours but accepted the decision in national interest the way people
of Japan tackled the aftermath of the 2011 disaster," Modi said speaking to an Indian gathering at Kobe, Japan.
The
chaos that follows a natural disaster and the willpower of a society to
withstand the difficult days is one thing while the chaos and
disruption of normal life in a society post a “well-thought-out
decision” planned months in advance by the government is another. The
fact is that the Modi government has miserably failed to design the
implementation in the days after the demonitisation announcement, though
no one is questioning the intention of the very exercise. Every honest
citizen wants his country to be free of the evil of fake currencies and
black money. But while doing so, the government should have foreseen
what is going to happen in the hours and days after the announcement.
Narendra Modi PTI
Obviously,
the mob psychology works in full swing on such occasions. And that
psychology would drive the common man into a panic mode, telling him to
run fast to the nearest bank branches and ATMs to withdraw maximum
possible amount permissible (as of now Rs 2,000 per day), even if he
doesn’t need that amount. He would need to pay to the vegetable vendor,
milkman, cablewallah, newspaperwallah, and cabby, a majority of whom
still live in the cash economy, for whom PoS terminals, plastic money,
PayTm are all still fancy words. While in metros like Mumbai and Delhi,
people still have the possibility to use plastic money to meet most of
the daily needs, in the semi-urban areas and villages, life will turn
hell when ATMs dry out of money in few hours, daily labourers are denied
wages because their employer doesn't have cash and kirana wallah frowns
when asks for credit yet another day.
Modi
should remember that the people standing in long queues certainly don’t
have the mindset of a soldier fighting a national cause but only have
curse words for the government for turning their lives into a nightmare
Modi
must have acknowledged this state of affairs, the failure of the
government on execution front and promised to resolve the issue as early
as possible. Instead, he warned about further measures post 30 December,
when the deadline to exchange old Rs 500, Rs 1,000 currency notes
expire. This will only add to the panic since people would start
speculating that what the next blow is going to be. Already, Union
Finance Minister Arun Jaitley has hinted that it might take at least
three weeks before normalcy sets in. Three weeks is a long time for the
cash shortage to continue. By then, the problem can go totally out of
hand for the government.
Where did the government go wrong?
In the months prior to announcing the currency ban, the government should have taken the following steps:
One,
the government should have printed sufficient number of lower
denomination notes of Rs 500 and Rs 1,000 in the government mints,
instead of pushing the fancy not-so-useful Rs 2,000 notes into the
market. The Rs 2,000 note is a hard nut for the public and not more than
a showcase item, for now. You can boast of having one, but if you walk
into the town with this, there won’t be too many takers since there is
very little cash in the system to offer change. The guy who gave the
wonderful idea to the government of introducing the Rs 2,000 notes first
against the ban of Rs 1,000 and Rs 500 currency notes should be sacked.
The
fact is that even though the government claims it has been planning the
move for last six months, the new Rs 2,000 notes have been printed only
in the last two months — the precise reason why these notes carry new
RBI governor, Urjit Patel’s signature
Secondly,
it should have equipped the ATM network to deliver the new currency
notes. As of now, ATMs aren’t equipped to deliver anything other than
the Rs 100 notes. To equip the machine to accommodate the new series of
notes will take a long time — a process which will further delay the
functioning of ATMs. Already there are bigger queues than one typically
sees in front of beverage shops. How on earth government plans to rewire
the ATM network within
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