Breaking the back of black money

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Shashi Shekhar

Let me begin with a disclaimer. I am writing this piece not with the credentials of an economist, but as the representative of the man on the street gripped by anxiety.

Prime Minister Narendra Modi’s decision to ban Rs1,000 and Rs500 currency notes has turned people’s lives topsy-turvy. The market systems that were used to following a conventional path have been forced to tread a road less travelled.

This turmoil was expected, but a matter of relief is that the people’s unrest hasn’t yet been expressed through extreme means anywhere in the country. Should we assume that the people born and bred in India are tolerant? Are they prepared to face every circumstance, whether it is a foreign invasion or any other emergency? To assume this will be to insult them. This is the India of the 21st century that has achieved the distinction of evolving from a poor, colonized nation to a rapidly emerging economy in just six-and-a-half decades. Whatever happens, we Indians never let the flame of hope be snuffed out.

Despite having weathered 45% of his prime ministerial tenure, Narendra Modi hasn’t let the voters’ confidence in him flag. The statements he made in the first half of 2014 are still replaying in the people’s minds like movie dialogues. The first was about his 56-inch chest and the second was that he would bring back all the black money deposited in foreign banks by tax evaders and deposit Rs15 lakh in every Indian’s bank account.

His rivals have been making fun of Modi, but by conducting a surgical strike on black money, he has declared that he is not one to keep silent. This government has the calibre to attack its enemy on its own terrain. The buzz around the strike is still in the air. So, when people began to hear on 8 November that the prime minister will address the nation at 8pm, it gave rise to speculation that India-Pakistan tensions had crossed the limits. 

As it turned out, the issue wasn’t war with the neighbour, but war against black money. Taking both his opponents and supporters by surprise is Modi’s signature style of politics. 

Still, nobody would have imagined he would go to this extent. No wonder the opposition is still in shock. Reeling under the embarrassment caused by the uproar over the surgical strikes, opposition parties are fumbling for issues they can adequately respond on. Anticipating this, Modi addressed the issues of cross-border terrorism and drug smuggling and took swipes at politicians, bureaucrats and affluent businessmen in his speech so that his rivals don’t get a handle to raise the political temperature. 

Before the surgical strikes, by extending a hand of friendship to Pakistan, he had succeeded in conveying an impression to the world that India’s intentions, unlike its neighbour’s, were benign. 

The first to come was the income disclosure scheme. During that time, Modi and finance minister Arun Jaitley warned those with black money to declare their undeclared assets; otherwise the law would take its own course. They sent the message that the scheme, which was open for four months until 30 September, was the last chance for the dishonest to come clean. By taking the common man into confidence, he was preparing to strike when the iron was hot. Therefore, when he took that step, there wasn’t as much public uproar as some people had initially thought. 

Former prime minister Manmohan Singh could not communicate what he had achieved to the people. Unlike him, the current prime minister knows that his achievements have to resonate with the people. We need to understand this difference between an ‘elected’ prime minister and a ‘nominated’ one. 

It is a fact that Modi has broken the back of black money by banning high-value currency notes. But it is also true that small businessmen and the man on the street have been tremendously inconvenienced. 

The cash economy is a centuries-old tradition in this nation. Its temporary collapse has taken a toll on people who cannot even dream of black money. They worship cash because it fulfils the basic necessities of their lives. Clearly, for this to be restored, banks will have to work round the clock. 

Despite the advent of numerous private banks, nationalized banks still dominate the banking industry in real India. If the lower-income groups and the middle class keep getting money 24x7 from the ATMs, banks keep exchanging the outlawed currency notes for new and wholesale traders’ business isn’t hit, their popularity can only grow among these sections of the population. These are the people who represent the real India as well as the ‘voters’. 

Clearly, Modi’s actual work has just begun. History is beckoning him. It has a bad habit of recording both successes and failures of politicians with equal ruthlessness. 

I am sure Mr. Modi is aware of this. 

Shashi Shekhar is editor-in-chief, Hindustan.