Wednesday, November 23, 2016

Money, Money, Money



At a time when the country was debating dinner choices, PM Modi’s announcement on demon-etization tightened the purse strings of one billion people. In a flash, a penny saved was a penny earned. Which politician, in his right senses upsets his core vote bank of traders, businessmen and the middle class? But the formidable risk taker called Modi (remember his unscheduled Pak stop?) indulged in a calculated gamble. In fifteen minutes flat, Modi did what Anil Kapoor did in 24 hours in the movie Nayak.

Wait, don’t run away, I’m not going to plague you with economic lecturebaazi. Relax, I’m mathematically challenged. Moreover, enough opinion makers have cashed in their chips by presenting different sides of the coin.

As for me, the first thing I did was to scurry towards my drawer and check for the 500s and the 1000 rupee notes. It’s rather embarrassing, but all I had was ten 500 rupee notes. For once, I was laughing all the way to the bank.
In the aftermath of Modi’s gambit, we witnessed Pied Piper grade queues outside banks. As the tide ebbed, those who were swimming naked were exposed.
The following day, Hashim, my carpenter tells me that he had saved 15 lakhs for the marriage of his three daughters. No marriage can be performed in less than five lakhs, he says. It’s strange, how we give into societal pressures. We must be the world’s most hypocritical people. Else how does one explain the desire to curb corruption on one hand and the display of lavish weddings on the other? We condemn corruption but are in awe of its dividends.
The lack of communication from the government led Hashim to believe that all his savings were bust, barring 2.5 lakhs. I tried to tell him that the money in his account was not going anywhere but he wasn't convinced. I persisted, “They clearly said so on the television news. Don’t you listen to the news?”
“Who believes TV didi? They say one thing today, another tomorrow.”

I didn’t feel like giving up. “I write for magazines and newspapers, I know.” To which he said, “But my local MLA said all my money is gone. He also gave me cash to deposit in my account in lieu of helping me with my daughter’s marriage later.”

Suddenly, I was reminded of the ABBA song, Money Money Money. It’s a rich man’s world.

Though most daily wagers, farmers and vendors were suffering, they gave Modi a blank cheque, calling the idea a masterstroke. However, many questioned the methods and implementation.
It was telling that the common man stood patiently in serpentine queues, but a united opposition protested. ‘A penny for your thoughts Mr Modi’, they said. ‘We will not let you survive on blood money.’ Chipping in, Akhilesh Yadav said black money helps in tiding off recession and put his money where his party’s mouth was. Of course, there is no need to bet your bottom dollar on whether most of them were worried about the common man or their own political future.

The truth is that neither absolute approval nor absolute rebuttal makes for a rational debate. What is amusing however is that the taxman with hitherto doubtful credentials has been given the stick!

I hope as hell that mathematician Modi is able to solve this complex economic equation after what the nation has gone through. As they say, money doesn’t grow on trees. So the ghost of demon-etization will hover for six months to one year, but once it’s gone, the real proof of the risk taker Modi will be tested when he reforms election funding. 

23 comments:

  1. The common consensus is - it was a brilliant move but executed badly. Instead of putting all the pressure on banks, the government could have involved NBFCs.

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    1. Implementation was flawed, perhaps it was a hasty step. Have a feeling it was done a month or two early.
      Only they know the compulsions.

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  2. From 'we could do with change' to 'we need change' - that's where I'm with demonetisation now. Like many others, I'm inclined to think that the idea was good, but execution went horrendously wrong. It was a minor inconvenience for the big fish; the rest of us are left gasping for air.

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    1. Yes, many loopholes. And faulty implementation.

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  3. I think that the move is a gross implementation failure. I sincerely hope the long term effects are good and not disastrous. Although with new notes being discovered with terrorists and old notes being exchanged in Black I dare say the purpose is already defeated !

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    1. Everyday we come to know of a new loophole and they take new steps to overcome it. It's a monumental step with logistical shortcomings. Hope it's worth the effort.

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    2. Also no CM, barring Nitish Kumar has supported the step. When states don't help, it's tough to cope with logistical problems.

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  4. Here is someone who is ready to act and that matters... One idea fails more will follow but motive matters i think....

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  5. These politicos are lamenting in the name of the common man-how transparent and desperate they are.
    When the need was secrecy and quick action,these hiccups were inevitable.Perhaps the planning could have been more flawless.
    About those who are weeping about imminent marriages-why not go to a temple and end your worries?If the other party insists upon a lavish wedding then they are not worth your tears.

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    1. You are right Indu, the opposition has fallen in the trap. They've exposed themselves.

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  6. Very well assessed Alka. Like you, my Maths is weak but what disturbs are the lavish display of money on 500 crores weddings when commoners are starving. Let's see how this measure help in its purpose to curb black money. I believe it should have been better planned while keeping it secret.

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    1. You have chosen a befitting image for your take on 'demon-etization'. I for one cannot imagine it being done any other way and be successful too —I mean the KGB grade secrecy and the supersonic speed of his actions. Unfortunately, there happens to be only one Mr Modi, the rest is the incorrigible India. No matter how much time the Prime Minister would have given for the notes to cease to be legal tenders, say even a year or two, something or else would have given in, like the shabbily printed Rs 500 notes. And, of course, it would have been a spectacular damp squib. The predicament of Hashim is tragic, ludicrous and unfortunate all at the same time. Lastly, as you said, curbing election funding will be one of the key tests of Modi's mission and mettle, but he has to scramble up many more rungs on the stepladder reforming the realtors, jewelers, hawala racketeers et al, before that.

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    2. The fact that local governments are not supporting Modi is evident and obvious. If the CMs had set up a control room and monitored the situation, people wouldn't be as inconvinienced as they are. But forget opposition, his own haven't come out in full support.

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  8. Excellent take on the topic, Alka. It is going to be months until crowds at ATMs and banks will reduce and economy to go back to normal. No good reform can be executed without inconveniencing someone, anyone. In this case the entire country.

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    1. Thanks Anita, next one quarter is gone. Then we will begin to asses the cost to benefit.

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  9. The real proof of pudding will be in the results. These are turbulent times. The question really is whether we will be able to measure the results and whether the measurement and communication of these results will be impartial.

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  10. Friv 3 play
    Those of the interesting information you always bring out the best that I know, thanks.

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  11. Nice article, though read very late. The common man's trouble were endless specially the lower middle class and lower class. However, I feel the digitisation drive will pick up amongst them too and they will be less fooled now

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  12. definately enjoy every little bit of it and I have you bookmarked to check out new stuff of your blog a must read blog! Results posted with each trade once completed.

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