Skip to main content

One year of demonetization: Purpose was to create mayhem in political circles ahead of UP polls, manipulate unofficial cash

By Anil George*
Demonetization was a calculated scam.
The first purpose was to disable party's that were contesting the UP election by blocking their cash and creating mayhem in political circles.
The second purpose was to exchange unofficial cash through manipulation of the banking system. For this the governor was changed and direct new currency supply lines were established. Cash was exchanged at a discount ranging from 5% to as high as 50% and then eventually tapering to 5% towards the end of the program.
Temples and Trusts that receive cash also opened discount windows to exchange the money.
Midway during the program, Congress found some explosive material on Modi and threatened to expose him through an earthquake but this was prevented after a meeting between Rahul Gandhi and Modi and issuing of executive order that all political party's could deposit cash into their own bank accounts.
After this all political parties got busy with opening similar discount windows through which old currency was deposited and later withdrawn.
As no political party comes under RTI or under Income Tax and as all their deposits and expenses are away from public glare, everybody made money at the expense of those who had accumulated large amounts of money.
The big businessmen were already kept in the loop and they were not affected at all.
What went wrong in the calculation was the RBI's ability to handle the cash crisis and refilling of the cash.
Thus digital Indian was promoted but that too worked for a short time and is now more or less is dead. Very few people are using digital payment methods. Cash use level is back to what it was before November 8, 2016.
And the 45% Indians who did not have bank accounts and could not exchange their money and the poor got shafted but they were sold patriotism and soldier standing on the border kind of stories, queues outside Reliance Jio stores and Cold Play concert ticket lines were used to shame most Indians who dared to speak against the Modi move to kill black money.
No black money got killed. The sudden withdrawal of cash from the economy however killed the informal economy, which anyway is the bulk of our economy. Small and Medium enterprises got badly mauled, job losses were all around and as a consequence the GDP fell. Although government claimed a fall to 5.7% but considering that the formula had been tweaked earlier, actually it has fallen to 3.7%.
Now at the recent press conference, Arun Jaitley showed a graph of IMF based forecast which shows the economy going into decline till 3rd Quarter of 2019, which is two years of continuous decline from today before it comes back to level off at pre-November 8, 2016 levels in 2023.
The government's hope that people will not be able to deposit all the money and their childish attempts to prevent deposits including threats issued by Modi himself and 60 rule changes in 50 days showed that the government is of the uneducated and in its zeal to keep the move secret it had shot itself in the foot and indeed shot the country down.
But all political party's made money while the sun shone.
This is the long and short of demonetization. An experiment by IMF to test what happens to a country when all cash is withdrawn and our joker allowed the country to become the IMF laboratory.
If you notice, there is only one institution that is praising Modi and that is IMF.
By the way, it was not a scam to recapitalize the banks. That would have only happened if Indians had failed to deposit all the cash. But most of the cash was with the big guns who were anyway unaffected and the small guys managed to push in all their cash through proxy accounts. Thus 98.97% cash came back.
Yes the consequent fall in economy and the destruction of banking credit ensured that the interest rates went down, this benefited large borrowers at the expense of small depositors and retired people. For the first time in India's independent history bank credit growth went into negative territory.
It is a long road to recovery as business confidence lies shattered and the economy has been sent to the cleaners.
In any other country the government would have been deposed and the leader lynched, but we are only good at lynching those who attack cows and we make such leaders into holy cows.
---
*Source: Anil George's Facebook timeline 

Comments

TRENDING

India under Modi among top 10 autocratizing nations, on verge of 'losing' democracy status

By Rajiv Shah
A new report, prepared by a top Swedish institute studying liberal democracy, has observed that there has been a sharp “dive in press freedom along with increasing repression of civil society in India associated with the current Hindu-nationalist regime of Prime Minister Narendra Modi.” The report places India among the top 10 countries that “have autocratized the most”. Other countries that have been identified for rolling towards autocracy are -- Hungary, Turkey, Poland, Serbia, Brazil, Mali, Thailand, Nicaragua and Zambia.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam*
RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

RSS supremo Deoras 'supported' Emergency, but Indira, Sanjay Gandhi 'didn't respond'

By Shamsul Islam*
National Emergency was imposed on the country by then Prime Minister Indira Gandhi on June 25-26, 1975, and it lasted for 19 months. This period is considered as ''dark times' for Indian democratic polity. Indira Gandhi claimed that due to Jaiprakash Narayan's call to the armed forces to disobey the 'illegal' orders of Congress rulers had created a situation of anarchy and there was danger to the existence of Indian Republic so there was no alternative but to impose Emergency under article 352 of the Constitution.

Letter to friends, mentors: Coming together of class, communal, corona viruses 'scary'

By Prof (Dr) Mansee Bal Bhargava*
COVID greetings from Ahmedabad to dear mentors and friends from around the world…
I hope you are keeping well and taking care of yourself besides caring for the people around you. I’m writing to learn how is the science and the society coping with the prevention and cure of the pandemic. I’m also writing to share the state of the corona virus that is further complicated with the long-standing class and communal viruses.

Clean chit to British rulers, Muslim League? Karnataka to have Veer Savarkar flyovers

By Shamsul Islam*
The BJP government of Karnataka led by BS Yediyurappa is going to honour Hindutva icon VD Savarkar by naming two of the newly built major flyovers in Bangalore and Mangalore after him. There was a huge uproar against this decision of the RSS-BJP government as many pro-Kannada organisations with opposition parties and liberal-secular organizations questioned the logic to ignore so many freedom fighters, social reformers and others from within the state.

Hurried nod to Western Ghat projects: 16 lakh Goans' water security 'jeopardised'

Counterview Desk
Taking strong exception to "virtual clearances" to eco-sensitive projects in the Western Ghats, the National Alliance of People’s Movements (NAPM) in a statement has said urged for a review of the four-lane highway, 400 KV transmission line and double tracking of the railway line through the Bhagwan Mahavir Wildlife Sanctuary and Mollem National Park in Goa.

Border conflict? RBI nod India's 'brotherly' help to China internationalise its currency

By Bhabani Shankar Nayak*
In the middle of a global pandemic, China started an unprovoked border conflict with India. It unraveled trust deficit and ties between the two neighbours. As thousands of Chinese troops tried occupying Indian territory, the Narendra Modi-led BJP government directs the Reserve Bank of India (RBI) to allow the Bank of China to start regular banking services in India. The Bank of China will now operate in India like any other commercial banks.

Disturbing signal? Reliance 'shifting focus' away from Indian petrochemical sector

By NS Venkataraman*
Reliance Industries Ltd (RIL), a large Indian company, has expanded and grown in a spectacular manner during the last few decades, like of which no industrial group in India has performed before. RIL is now involved in multi various activities relating to petroleum refineries, petrochemicals, oil and gas exploration, coal bed methane, life sciences, retail business, communication network, (Jio platform) media/entertainment etc.

Case for nationalising India's healthcare system amidst 'strong' private control

Counterview Desk
A draft discussion note, prepared by Dr Maya Valecha, a Gujarat-based gynecologist and activist, sent to the People's Union for Civil Liberties (PUCL) as also a large number of activists, academics and professionals as an email alert, is all set to create a flutter among policy experts for its strong insistence on nationalizing India’s healthcare system.