By Swati Deb
Of all his major decisions so far as Indian Prime Minister, the move to outlaw currency notes worth 1000 and 500 rupees with immediate effect from Nov 8-9 (2016) mid-night would be regarded as Narendra Modi’s most significant game-changer.
“These notes will not be acceptable for transactions from midnight onwards. The five hundred and thousand rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper,” Modi said in his rare and hurriedly convened television address to the nation on October8 evening. His admirers have called it “surgical strikes” against Black money – a promise his party had made during the high-voltage campaign of 2014 parliamentary elections that Modi swept.
Prime Minister said the decision has been taken to “break the grip of corruption and black money” on the country’s economy and linking the fake currency to terror funding. Modi said the enemies from across the border are using such fake currencies abundantly as tools to harm India and Indians.
“It has been a matter of concern for all of us that corruption and black money tend to be accepted as part of life. This type of thinking has afflicted our politics, our administration and our society like an infestation of termites. None of our public institutions is free from these termites,” Modi lamented even he urged citizens not to panic over such an unprecedented decision.
In terms of precise actions, many say this was a move “waiting to happen.”
Harshavardhan Neotia, president of business chamber FICCI said in a statement: “This is an extremely bold move by the Prime Minister and will have a debilitating impact on the parallel economy in the country as well as deal a body blow to terror financing.”
Bharatiya Janata Party leader Kailash Vijaywargiya said, “With one shot a large volume of black money will be rendered non-operational and this will impact terror sponsors as terrorism is certainly linked to such illegal financing”.
Certainly the government of India has added extra teeth to its on-going efforts to win the war against black money and also on terror – especially the ones supported and perpetrated with alleged support from Pakistan.
Modi’s war against black money and terrorism would certainly have multiple impacts. The fallout on the ‘criminalization of politics” is one such area. It remains of academic interest how some regional parties and even the BJP
Moreover, gang wars, large-scale smuggling and bootlegging syndicates actually emanate from the ‘fake currency and black money’ nexus only.
They say ‘courage’ is perhaps not the absence of fear but the mastery over it.
As a hardliner Hindutva leader, Modi is known for “decisiveness” and courage and also has a knack of making most of his decisions ‘lethal’ when he mixes the same with good timing and unconventional style. In his political backyards in Gujarat, Modi had already earned the reputation of a ‘development catalyst’ when he pushed major corporate decisions – often not caring much for the decorum and rules of the bureaucracy.
According to French scholar and columnist Christophe Jaffrelot, as Gujarat Chief Minister, Modi was perhaps “less a politician than a manager.” In the context of Modi’s latest moves to fight black money menace, thus it can be safely said that his government has acted against the prevailing intellectual consensus and middle class indifference and thus acted more like a super-CEO.
But courageous moves have always fascinated him and politically he has reaped huge dividends of such a strategy.
However, the truth of the matter – especially in the context of the fight against a menacing grip of black money, terror and politicization – Modi would do well to remember that his move is not a single “bullet” of reforms that will fetch results or will be a panacea.
There are already apprehensions in some quarters that the resultant reduction in money circulation could bring in high prices.
In the eastern Indian state of West Bengal, Chief Minister Mamata Banerjee urged Modi to withdraw the “draconian decision” and said it was a “heartless and ill conceived” move. The Marxist leader Sitaram Yechury tweeted saying, “To uncover the illicit money trail, we demand that the government release the name of Top 100 defaulters of bank loans.”
However, a source in the ruling BJP claim the move will deal a blow to those who were indulging in “huge business of fake currency.” He also said the impact may be felt even across the border in Pakistan as Indian agencies had reports about illegal funding of terrorism in India with fake currency.
As we debate various pros and cons of the methodologies to fight black money and terror funding; it ought to be understood that while money laundering – an off shoot of black money – typically involves the flow of ‘dirty/criminal proceeds money into a clean account, the terror funding often means transfer of clean money to unclean sources.
Either ways, “fake currencies” were vital and thus, presumably, the elements with questionable credentials would always use the same to harm India “one way or the other”.
Often, it has been found that the hawala operators have laundered drug proceeds ultimately to help terror organizations in various parts of the globe.
It goes without saying that while fake currency and flow of black money in the country result in huge loss to the economy, people remain different. Worse, even intellectually and morally inclined towards positivity, the middle class do not shun such elements or criminals. Businessmen over the decades have actually flourished using the ‘black money’ route essentially with an intent to conceal the income per se and save on taxes.
These actually mean booster for white collar crime, that is also increasing every passing day due to technological advancement. Now whether the gigantic and drastic steps announced by the government would result in reduction in fake currencies and thus check terror funding remains to be seen.
In his new initiatives, while there are some elements of optimism, others – as usual – are skeptical. “It appears, poorly planned. The announcements are only mere rhetoric. The announcement neither addresses the major sources of black money abroad nor those invested in property, gold and such instruments,” said Yechury.
In the meanwhile, PM Modi has tweeted saying, all citizens should participate in what he has called “the festival of credibility.”
The foremost task before the government will be to insulate the economy from the influence of ‘parallel economy’ of black money. There is no guarantee that the measures announced so far are fool proof and within a stipulated time ‘fake currencies’ and the black money would do a vanishing act.