Skip to main content

Three years on, mystery surrounds as to who advised Modi on demonetization

Recently it was reported that the Reserve Bank of India (RBI) has stopped printing Rs 2,000 notes. The report said that the “slowdown” in printing the notes – which were widely proclaimed (for unknown reasons, and from unknown sources) as high security because it was claimed they contained a hidden chip which would help the powers-that-be to trace their whereabouts – began about two years ago. Fewer and fewer notes were being printed, and now the printing has just stopped.
Several reasons are being advanced for the “withdrawal”, something that was in the air for quite some time – one of them being it is “easier” to hoard high denomination notes. It was also rumoured that fake Rs 2,000 notes – printed with much fanfare alongside the by now infamous demonetization days of November-December 2016 – are taking rounds in the market. Meanwhile, the ATMs across the country appear to have stopped offering these notes; they mostly offer Rs 500 currency notes.
There was, of course, a positive impact of demonetization at least on me: I stopped using cash wherever debit card is accepted, something I was afraid of doing. Yet, the fact is, as economists would tell you, the step badly affected the informal sector, employing about 75% of the workforce. If Prof Arun Kumar, with whom I interacted a year after demonetization, is to be believed, demonetization pushed down the Indian economic growth to a mere 0-1%, as the informal sector’s growth went into the negative.
Now, there are no dearth economists who say demonetization negatively impacted the economy – ranging from former Prime Minister Manmohan Singh, former RBI governor Raghuram Rajan, former chief economic adviser to the Government of India Arvind Subramanian, and, now, the new Nobel laureate, Abhijit Banerjee. While Rajan resigned ahead of demonetization, Subramanian was bold enough to jot down its negative impact in the annual Economic Survey, which he authored as government adviser.
Soon, it is going to be the third anniversary of demonetization – November 8, 2019. But mystery surrounds as to whose was it to come up with the idea which has allegedly pushed the Indian economy in a relatively bad shape than what it was in 2014, when Prime Minister Narendra Modi took over reins of power. Some months back, I went to the Gujarat government Sachivalaya, and met a top IAS bureaucrat, who, I thought, would surely know whose idea it was.
This bureaucrat, who was always frank during my Times of India days in Gandhinagar (late 1997-early 2013), told me bluntly, he had “no idea.” Yet, I persisted. I asked him if the idea was offered by
Hasmukh Adhia, a Gujarat cadre bureaucrat who served as revenue secretary in November 2016 and was Modi’s principal secretary in Gujarat, and the reply was: “Impossible. Do you think Modi will take his advice?” It was already known, even the two economists, both Arvinds, then working with the government – Subramanian and Panagariya – were not in the know of the demonetization plan. 
Finally, this bureaucrat came up with a name, Anil Bokil, about whom I had not heard. Belonging to Arthkranti, a Pune-based financial “think tank”, Bokil, this bureaucrat suspected, had suggested to Modi “key measure” to contain the flow of black money in economy and banning the big currency notes was one of them. According to one report, Bokil met Modi and gave a presentation on financial reforms and how to contain the flow of black money. One of the suggestions was demonetization. The bureaucrat, however, quipped, “I am not sure… This what reports say.”
Modi "advisers"? Bokil, Ramdev
Three years on, the only thing some of top Gujarat government insiders “confirm” to me is this: That all top moneyed people, known to be close to Amit Shah, were “sounded” about demonetization much ahead of the November 2016 move. They were quietly told to invest all their hard cash in real estate, which they did, “the last being a media baron”, to quote a bureaucrat. Yet, mystery surrounds as to who advised Modi to demonetize, and these insiders still keep guessing.
A few days back, some of these “insiders” are set to have met to enjoy dinner together somewhere around the state capital. Here, an informal chat ensued on the state of the Indian economy and how demonetization affected the country’s growth. While all agreed it had negatively impacted growth, one of them revealed: “During discussions on how to further improve the Gujarat economy, Modi as state chief minister would move over to India’s economy, and suggest demonetization of Rs 500 and Rs 1,000 notes was the only way out.”
This person further revealed: “One of those who knew a little more about economy asked Modi as to who gave him this idea to demonetize Rs 500 and Rs 1,000 denomination notes. And pat came the Modi reply: Baba Ramdev.” I cannot confirm or deny all that was said during this informal chat, during which time drinks may also have been served. For, there are bureaucrats who have bar at their residence, and they open the doors of these bars as and when an “esteemed” guest is to be entertained.
But this is what I was told: All those who had met on dinner agreed that Modi does not understand intricacies of the functioning of the economy, and all efforts to make him grasp them appear to have gone waste. Currently, there are no economic advisers on whom he should bank upon. Even Arvind Panagariya, the only Modi loyalist till date, resigned from his top Niti Aayog post in August 2017 citing bureaucratic interference. Thereafter, he is without any top economic adviser. “All his advises come from an RSS-run foundation run the name of Vivekananda in Delhi”, I was told.
I mentioned this conversation – which lasted till late at night – to a senior academic, whom I have known for quite some time. This academic rued that there is “no good economic adviser with Modi.” Bibek Debroy? I asked the academic. The reply was in a strong no-no. Rajeev Kumar? “He sounds more a politician than an economist nowadays… Even otherwise, among economists, he is rated poorly, not taken seriously”, I was told. The academic added, “The Congress, even in opposition, has better economists… Rahul Gandhi’s NYAY idea may not have clicked during Lok Sabha polls, but it was Abhijit Banerjee’s baby.”

Comments

TRENDING

Irrational? Basis for fear among Hindus about being 'swamped' by Muslims

I was amused while reading an article titled "Ham Paanch, Hamare Pachees", shared on Facebook, by well-known policy analyst Mohan Guruswamy, an alumnus of the John F. Kennedy School of Government, Harvard University, and the Graduate School of Business, Stanford University. Guruswamy, who has also worked as an advisor to the Finance Minister with the rank of Secretary to the Government of India, seeks to probe, as he himself states, "the supposed Muslim attitude to family planning"—a theme that was invoked by Narendra Modi as Gujarat Chief Minister ahead of the December 2002 assembly polls.

Why's Australian crackdown rattling Indian students? Whopping 25% fake visa applications

This is what happened several months ago. A teenager living in the housing society where I reside was sent to Australia to study at a university in Sydney with much fanfare. The parents, whom I often met as part of a group, would tell us how easily the boy got his admission with the help of "some well-meaning friends," adding that they had obtained an education loan to ensure he could study at a graduate school.

Tracking a lost link: Soviet-era legacy of Gujarati translator Atul Sawani

The other day, I received a message from a well-known activist, Raju Dipti, who runs an NGO called Jeevan Teerth in Koba village, near Gujarat’s capital, Gandhinagar. He was seeking the contact information of Atul Sawani, a translator of Russian books—mainly political and economic—into Gujarati for Progress Publishers during the Soviet era. He wanted to collect and hand over scanned soft copies, or if possible, hard copies, of Soviet books translated into Gujarati to Arvind Gupta, who currently lives in Pune and is undertaking the herculean task of collecting and making public soft copies of Soviet books that are no longer available in the market, both in English and Indian languages.

Gujarat slips in India Justice Report 2025: From model state to mid-table performer

Overall ranking in IJR reports The latest India Justice Report (IJR), prepared by legal experts with the backing of several civil society organisations and aimed at ranking the capacity of states to deliver justice, has found Gujarat—considered by India's rulers as a model state for others to follow—slipping to the 11th position from fourth in 2022.

Punishing senior citizens? Flipkart, Shopsy stop Cash on Delivery in Ahmedabad!

The other day, someone close to me attempted to order some goodies on Flipkart and its subsidiary Shopsy. After preparing a long list of items, this person, as usual, opted for the Cash on Delivery (popularly known as COD) option, as this senior citizen isn't very familiar with online prepaid payment methods like UPI, credit or debit cards, or online bank transfers through websites. In fact, she is hesitant to make online payments, fearing, "I may make a mistake," she explained, adding, "I read a lot about online frauds, so I always choose COD as it's safe. I have no knowledge of how to prepay online."

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Of lingering shadow of Haren Pandya's murder during Modi's Gujarat days

Sunita Williams’ return to Earth has, ironically, reopened an old wound: the mysterious murder of her first cousin, the popular BJP leader Haren Pandya, in 2003. Initially a supporter of Narendra Modi, Haren turned against him, not sparing any opportunity to do things that would embarrass Modi. Social media and some online news portals, including The Wire , are abuzz with how Modi’s recent invitation to Sunita to visit India comes against the backdrop of how he, as Gujarat’s chief minister, didn’t care to offer any official protocol support during her 2007 visit to Gujarat.  

Area set aside in Ahmedabad for PM's affordable housing scheme 'has gone to big builders'

Following my article on affordable housing in Counterview, which quoted a top real estate consultant, I was informed that affordable housing—a scheme introduced by Prime Minister Narendra Modi—has deviated from its original intent. A former senior bureaucrat, whom I used to meet during my Sachivalaya days, told me that an entire area in Ahmedabad, designated for the scheme, has been used to construct costly houses instead. 

Just 5% Gujarat Dalit households 'recognise' social reformers who inspired Ambedkar

An interesting survey conducted across 22 districts and 32 villages in Gujarat sheds light on the representation of key social reformers in Dalit households. It suggests that while Dr. B.R. Ambedkar's photo was displayed in a majority of homes, images of Lord Buddha and the 19th-century reformist couple, Savitribai Phule and Jyotiba Phule, were not as commonly represented.