Demonetisation comes with wider political and financial implications. Prime Minister Narendra Modi has not only been facing the wrath of the opposition but internally his own party members as well. He has disturbed the vote base of his own party. Now a separate base is being created who would support Modi. Over 60 crore people, farmers, labourers, low paid salary class and the unemployed would be his main support base.
The Prime Minister created foes within his own party like former Prime Minister Indira Gandhi when she nationalised banks in the country. New base and cadre will come from youth who are not able to get jobs because of corruption. These groups will overtake the old cadre. Although he asked for 50 days, but he was well aware that to govern India for long, he needs a new base irrespective of caste, creed and religion.
Politically and economically, it is a critical turning point for India. We must be very careful to economic planing. Now we are at a stage where growth and development may be affected and even socialist features embedded in our constitution can get a bolt. These can lead to chaos in society. Question is, how does the present move differ from the Indira Gandhi’s action of switching over to mass control from private regime of businesses?
The answer is perhaps, the Prime Minister does not believe in continuity and with a ‘mid night stroke’ a ‘ promise’ was broke. The RBI promise, Government says, "I promise to pay the bearer the sum of five hundred rupees." The promise was broken. The Prime Minister wanted independent checks and balances for the Indian economy and the best possible way to do that was through demonetisation. Integration of different institutional mechanism may lead to a higher stage of advancement of economy, but it remains to be seen that cost a lot.
Fallouts are money coming from overseas, indigenous masses losing control over economy, enlargement of working or middle class, loss of values, several old age traditions, and restriction and tightening of policies which would even be opposed by the Party’s mentor the Rashtriya Swayamsevak Sangh (RSS). So be ready for big changes. Stop your car at a Dhabha and pay the bills, through a swapping machine. It would be the most appropriate place to discuss and debate about benefits of cashless economy versus parallel economy. People would appreciate the participants views on ‘ The Wonder that is India.’ Finally, I have faith in a commitment and a government machinery and Government. , voted to power by the majority. The Government would make many more promises after breaking the rupee ‘ Promise.’
Our executives manifest trust deficit by hunting own citizens. Increasing trust deficit between executive, administrative, business class and citizen would not lead to advancement of society. The executive needs to have faith and confidence on citizens in a democracy.
Anyway, rural India should sacrifice their happiness for a short period, but a larger benefit in future. The government is urging people to go digital and use less currency.
In rural India, the poor, the farmers, dalits and backwards are not part of regular banking system and it will take much longer time, then anticipated, to push them into a controlled exchange system, known as digital currency. Cashless currency makes business secrecy of new enterprises wide open. It does not add self confidence that used to be there while transacting in cash.
Finally, it is desirable that spirit of constitution with regard to equality should remain at the top. Everything else will fall in place in the times to come.
( Author is a financial consultant and head of Sanjay Sabran & Company. Views expressed are personal)