Perpetually abroad, Modi loses sight of the grassroots mauled by demonetization

[Banglar Bir]

Perpetually abroad, Modi loses sight of the grassroots mauled by demonetization
P K Balachandran, June 16, 2017

With an insatiable thirst for foreign travel (over 64 jaunts since he came to power three years ago), India’s Prime Minister Narendra Modi appears to have lost sight of India, particularly, the real India living its villages.

Though he claims to be a small town man of humble origin, Modi would rather rub shoulders with heads of state and prime ministers of distant lands than look up farmers in his own country, who, burdened by debt caused by his decision to demonetize 86% of the currency in circulation in November last year, are committing suicide at an alarming rate.

Between 2014 and 2015, there have been suicides from 12,360 to 12,602. States ruled by Modi’s Bharatiya Janata Party (BJP) have the dubious distinction of being in the top seven of suicide-prone states. Maharashtra, a BJP-ruled state, accounts for 37.8% of farmer suicides and tops the list. Chattisgarh and Madhya Pradesh, also ruled by the BJP, are in the top seven.

The single most important cause of suicide among farmers is debt/bankruptcy accounting for 38.7%.

Debts is due to draught, fall in the prices of cash crops, and the inability to sell produce because of a shortage of cash in the market, is a situation suddenly created by Modi through demonetization.

Also Read: Alleged suicide by farmer in Chouhan’s home district

The agricultural sector employs 50% of India’s workforce, and this workforce is paid in cash. Out of 1.2 billion Indians, 600 million have no bank accounts, and 300 million have no government identity cards to enable them to open a bank account. These millions were caught unawares and left in the lurch when demonetization happened over night.

Demonetization struck when farmers had harvested the kharif or winter crop and were going to sell the produce. But in the absence of cash in the market, buyers were scarce and the produce had to be given away at throw away prices. Cauliflower was going at Rs.3.5 per kg. Seventy percent of perishables had to thrown away in some states. In poverty stricken Chattisgarh, vegetables went for 0.25 per kilo. A report from Mumbai said that 70% of workers in some of the textile mills had to go back to their villages as the employers, who paid them in cash, had no cash.

Modi has not bothered to visit Madhya Pradesh, a state ruled by his own party where five farmers were recently killed by the police in an agitation for debt relief. He has not issued a statement sympathizing with them but is all set to travel to Israel and the US for photo opportunities with Benjamin Netanyahu and Donald Trump.

For all the overseas marketing of his “Make in India” project, Modi has little to show by way for Foreign Direct Investment to boost the organized sector. Research shows that the big FDI figures touted are only pledges and not actual investment. And much of the infusion of foreign capital is in the purchase of shares in existing Indian companies.

India’s private economy (leaving out the government and agriculture sector), grew by a mere 3.8% in quarter 4 of the 2016-17 financial year. For the same quarter the previous year, the growth had been 10.7%. Economists attributed this to the “incredible” effect of the demonetization of Rs.500 (US$ 7.5) and Rs.1000 (US$ 15) notes on November 8, 2016 which accounted for 86% of the currency in circulation.

Modi tried to market demonetization as an anti-terror financing measure. But this claim is yet to be tested for validity. However what is clear is that demonetization had hit India’s informal, agricultural and small scale industrial sectors below the belt.

Also Read: India scored “own goal”- China media comments on India’s economic slowdown

As on September 30, 2016, the annual rate of growth of bank credit was 12.1%. That fell sharply to 5.4% by March 31, 2017, according to the daily Mint. Growth in rural loans in the second half of 2016-2017 (October-March) was 2.5% as compared to 12.9% during the same period in 2015-2016.

Agricultural growth, which was 6% in the previous year dipped to 3.8 %. Manufacturing fell from 8.3% to 6.9%. Real Estate saw a dip in growth from 7.6% to 3.1%. Small and medium industrial sector suffered the most because this sector, like the agricultural sector, is based on cash transactions and the absence of Rs.500 and Rs.1000 notes made payments extremely difficult, a difficulty made worse by a shortage of notes of lower denominations.

Perhaps regretting his decision to demonetize Rs.500 and Rs.1000 notes, the Modi government this month issued new Rs.500 and Rs.1000 notes with special features to distinguish them from the pre-November 2016 notes.

This will go a long way to ease business transactions. But indebtedness and distress caused by demonetization have to be addressed as these lead to suicides. Loan waiver is being considered. But this will inevitably be a big burden on the Central Exchequer as only the Center has the money. The amounts sought by the states go into tens of thousands of crores. If loan waiver is done in Maharahtra and Madhya Pradesh, both BJP ruled states, other states will also demand and have to be catered to.
http://southasianmonitor.com/2017/0...loses-sight-grassroots-mauled-demonetization/

 

[DineshS]

Another crap article paid by corrupt politicians and business men who lost their illegal money to DeMo.

No worries, the next DeMo where 2000 rupee will be banned will take the lights out of your life

 

[P@nThEr]

lol garbage

 

[IndoCarib]

mindless article devoid of any facts. Only leftist sensationalist propaganda.

 

[Jacob Martin]

Yes, mindless leftist propaganda. For pointing out -

1) demonetization was a disaster that wiped out sections if the agricultural community by disrupting sale of kharif crop

2) none of the purported benefits of demonetization have accrued so far as claimed. They have not even released the final tally of how much money was deposited in the banks

3) Make in India, Digital India, Skill India, Smart City India, Swachch Bharat India, and all these Jumlas have fetched nothing so far and are total failures

4) FDI numbers are dodgy as institutional investment in equity and unrealized pledges are lumped together with non-existent Greenfield projects

5) GDP numbers are dodgy, and even the RBI is steadily losing credibility

6) whatever growth has taken place is jobless in nature, in fact employment growth is lower than under previous government

7) as for the socio-political climate...well I will not even go into that

@baajey @The_Showstopper @takeiteasy

Let us spread more mindless propaganda to sully our lovely ruling party!!!

 

[IndoCarib]

Yes, mindless leftist propaganda. For pointing out -

1) demonetization was a disaster that wiped out sections if the agricultural community by disrupting sale of kharif crop

2) none of the purported benefits of demonetization have accrued so far as claimed. They have not even released the final tally of how much money was deposited in the banks

3) Make in India, Digital India, Skill India, Smart City India, Swachch Bharat India, and all these Jumlas have fetched nothing so far and are total failures

4) FDI numbers are dodgy as institutional investment in equity and unrealized pledges are lumped together with non-existent Greenfield projects

5) GDP numbers are dodgy, and even the RBI is steadily losing credibility

6) whatever growth has taken place is jobless in nature, in fact employment growth is lower than under previous government

7) as for the socio-political climate...well I will not even go into that

@baajey @The_Showstopper @takeiteasy

Let us spread more mindless propaganda to sully our lovely ruling party!!!

All the things you listed here had reached pinnacle when your Vatican Sonia was ruling, right ?
Do you remember now infamous Times cover of MMS ? Or did you say it was rightist propaganda ? Admit it, you hate the present govt cause it doesnt play to the minority gallery. And dont hide under the garb of liberal secular. You guys are just as communal as BJP/RSS.

 

[Jacob Martin]

All the things you listed here had reached pinnacle when your Vatican Sonia was ruling, right ?
Do you remember now infamous Times cover of MMS ? Or did you say it was rightist propaganda ? Admit it, you hate the present govt cause it doesnt play to the minority gallery. And dont hide under the garb of liberal secular. You guys are just as communal as BJP/RSS.

Ignored!!!

 

[Fireurimagination]

The jury on demonetization is out, Poor loved it - Middle-class didn't mind it - Rich mostly remained unaffected. There has been some visible benefits, some visible loses. Overall India didn't mind, only Modi-haters are still jumping up and down and unable to digest how India supported Modi even after seeing BJP win 325 seats in UP (one of the most poorest states of India).

 

[Cherokee]

Swarajya Mag is one of the most pro-modi sites out there . even they are calling it a disaster . But hey now they will be anti-nationalists as well .

Modi’s DeMo Gambit Failed: Costs Exceed Gains And Farm Anger Is The Final Piece Of Evidence

It is time for a mea culpa on demonetisation. This writer has been largely positive on the medium-to-long-term benefits of notebandi, as opposed to its short-term downsides, including a fall in gross domestic product (GDP) growth rates for one or two quarters. Now, and especially after the farmer agitations for loan waivers, I believe that the negative side of the ledger on demonetisation (DeMo) is larger than the positive. It has failed.

The critics have been right for the wrong reasons. They did not have a better crystal ball on DeMo’s side-effects than the optimists; but they did have a deeper animus against the Narendra Modi government that the optimists, including me, did not have. Thus, they were faster to pick up the negative signals than the rest of us.

The bottom line on DeMo, seven months after Modi announced that he was withdrawing the legal tender status of Rs 500 and Rs 1,000 notes from 8 November, is that the costs are outweighing the benefits. And the rising demand for fiscally ruinous farm loan waivers surely has a direct link to DeMo. Maybe loan waivers would have happened anyway in the run-up to 2019, but it is equally clear that DeMo has emptied many mandis of cash, and the demand for ready harvested crops has collapsed in many parts of the country, as Harish Damodaran notes in his column in The Indian Express.

Damodaran admits he was wrong in assuming that DeMo would impact farm production – which did not happen – but the damage came later. He writes: “Where demonetisation did have an impact, however, was in the prices received during harvest: Potatoes in Farrukhabad, Uttar Pradesh, fetched below Rs 350 per quintal this February, compared to Rs 600 or more last year. The same goes for rabi onions in Lasalgaon, Maharashtra, that traded at an average of Rs 450 per quintal in May, as against Rs 750-800 and Rs 1,200 in the same month of the preceding two years. Farmers, likewise, sold tomatoes at Kolar, Karnataka, in early May for Rs 300-400 per quintal, down from Rs 1,500-1,600 a year ago. When was the last time we saw all three – potatoes, onions and tomatoes – wholesaling at less than Rs 5/kg, and even retail prices within Rs 20/kg? And this, in peak summer! The above “fire sale” – the evocative term used by the Reserve Bank of India (RBI) in its latest bimonthly monetary policy review statement – has been repeated across a range of other crops too: Garlic and methi (fenugreek) seed prices at Mandsaur – the district in Madhya Pradesh’s Malwa region that’s become synonymous with the ongoing farmer unrest – averaged Rs 3,400 and Rs 3,100-3,200 per quintal in April, whereas these ruled at over Rs 4,100 and Rs 4,700-4,800 respectively during the same time last year. Farmers in Nashik, which has also witnessed large-scale street action, along with the rest of Western Maharashtra, had to dump Sonaka grapes at about Rs 12/kg in March, having sold the same green seedless variety for Rs 45 or so last year.”

I have quoted Damodaran at some length here because it details the damage done to the farmer, who epitomises the informal part of the economy like no one else. While all critics said that the informal economy was hurt the most by DeMo, now we know how that happened.

In late November 2016, the Centre for Monitoring Indian Economy (CMIE) had estimated the loss to the economy and various players at Rs 1.28 lakh crore. Since then we have had more data on GDP losses in the two quarters immediately affected by DeMo. If we assume that at least 0.5 per cent of the GDP drop was due to DeMo, the CMIE loss figure would at least double.

But now we have the unstoppable juggernaut of farm loan waivers: UP (Rs 36,000 crore-plus), Maharashtra (Rs 30,000 crore-plus), and Chhattisgarh (Rs 3,200 crore of interest waivers) have already taken the loss to state exchequers close to Rs 70,000 crore, and we haven’t even begun. Bank of America-Merrill Lynch estimates that the total size of loan waivers could hit Rs 2.57 lakh crore by 2019. They note in a research report: “We grow more confident of our call that farm loan waivers will spread across states after Maharashtra followed Uttar Pradesh in waiving farm loans on Saturday (10 June). This begs the question, how much of farm loans will eventually get waived? $40 billion, or 2 per cent of GDP, in our view, in the run-up to the 2019 general elections. This covers bank loans to farmers with up to five acres of land.”

Even if we assume that only half the waivers are directly due to the DeMo impact, we are talking of a tripling of the figure first put out by CMIE – at the very least, with most costs yet to show up. This means the DeMo damage could be in the region of Rs 3.5-4 lakh crore at the minimum. Since the wildest estimate of gains from black money not coming back to the banking system do not exceed this latest ballpark estimate of loss, it is clear why DeMo has failed its cost-benefits test.

It can also now be clearly said that DeMo was the last straw that broke the farmer’s back, leading to a cascade of farmer protests and political demands for loan waivers. DeMo will damage the fisc like nothing else before this. Two consecutive droughts did not do as much damage as DeMo. All the fiscal prudence shown by the Modi government in the last three years will be washed away now in one huge burst of state government populism.

Here’s a counter-factual: if the UP elections, which happened before farm produce started coming to the markets, had taken place in June and not February-March, would the BJP still have won its big majority? In retrospect, the loan waiver may well have been the political sweetener offered well in advance to prevent farmer worries from boiling over into the ballot box.

So, mea culpa, once again.

The other bits of evidence that support the claim that DeMo did more damage than good are already in the public domain – or assumed to be.

One, the fact that even five-and-a-half months after the demonetisation window for old notes closed on 31 December we don’t know how much money has come back to the system tells its own story. The total value of Rs 500 and Rs 1,000 notes outstanding on 8 November was Rs 15.44 lakh crore. If the deposits have hit this number or even exceeded it, it would mean not only a major embarrassment for the government, but also the RBI. It would imply that fake notes got exchanged for new notes. I had raised this possibility in early December, but didn’t press it when some bankers assured me that they had mechanisms to detect fake notes. But I should have pressed the point: in the rush to clear queues, it is unlikely that cashiers were doing anything more than just count notes. Now that the notes are in, it will be impossible for anyone to link any specific bundle of fake notes with any particular depositor. DeMo may also have validated some fake notes, possibly with the connivance of bankers.

Two, there is not much evidence that tax collections have spiked due to DeMo or even that the tax base in expanding. The poor collections under the Pradhan Mantri Garib Kalyan Yojana indicate that no big disclosure of black money was witnessed, and even if we assume that a large chunk of the deposits made during November and December may have been unaccounted money, the government will have to unleash a tsunami of tax terrorism that will surely be counter-productive. The need of the hour is to bring normality to economic activity. The last thing we need, as we stand on the threshold of the implementation of the goods and services tax (GST), is an unchecked taxman let loose on unwary taxpayers when GST is likely to create its own fiscal chaos and disruption.

Third, it is clear that nationalised banks played a key role in implementing notebandi. But the fall in interest rates following large inflows into the banking system will constitute only a pyrrhic victory unless credit demand picks up – of which there is little sign. While rates can be cut, credit growth is muted. And with loads of bad loans to resolve, banks have had more costs piled onto them due to DeMo. This can hardly be good for them.

Fourth, perhaps the one big gain from DeMo is the still rising trend in digital payments. But this gain in intangible, and benefits will come only over the long term. Moreover, while DeMo made non-cash modes of payment necessary and vital, the popularisation of digital payment modes could have been done even without the disruption of notebandi. DeMo at best provided the government an opportunity to make necessity the normal mode of payment.

Fifth, even the implementation of DeMo could have been better thought out. With hindsight, one can say that the best way to demonetise would have been to limit it to the Rs 1,000 note, and then withdrawing the old Rs 500 notes in stages – by not returning those notes that came back to banks as part of normal cash deposit operations. The disruption was maximised precisely because this two-stage approach was not adopted.

The lessons the Modi government needs to learn from this costly experiment gone wrong are the following:

#1: Don’t rely on economic charlatans and a small group of babus in the Prime Minister’s Office (PMO) and the advisers brought over from Gujarat when taking big decisions like DeMo or even GST. Modi needs to widen the circle of experts in his government, even if he chooses not to finally listen to their advice. This is one redeeming feature of Indira Gandhi, who too had a strong PMO, that Modi could now seek to rectify.

#2: Empower more ministers, and make it a point to regularly listen to your own chief ministers who may have ears closer to the ground than the PMO. Shivraj Singh Chauhan and Vasundhara Raje could well have told Modi what may be a problem with DeMo, but this kind of political feedback loop does not seem to exist in the Modi government.

#3: A white paper on the larger effects of DeMo and the lessons learnt is important. While it may not show the government in good light, it will at least demonstrate that it is learning lessons from the misadventure. To brazen it out – pretending DeMo was not a failure – is the worst thing that can happen to a leader who is clearly one of the best India has produced in a long time.

#4: The damage on loan waivers has been done, but nothing stops Modi from holding a special parliament session and creating a multi-state group of chief ministers to recommend how to fix farming without waivers in future, and also to agree on a code that no politician or state government will henceforth demand a waiver except in exceptional circumstances, and that too on a selective basis.

In the past, Modi has proved he is a good learner from defeat. After Delhi and Bihar, he recovered quickly to win in Assam and UP. But DeMo is his ultimate test. If he learns from this, his next two years may still be his best.

Leadership is most needed when the country is down. Right now, banks, farmers, small and big businesses are all down – though not out. The economy will not recover easily without great economic and political leadership. Modi’s second term depends on him getting the economics right, and not just the politics.

It is great to be thought of as a bold leader who can take tough decisions to break the back of black money. But it is not so great to go about it in a hamhanded way and breaking the back of the Indian economy in the process.

Good politics begins with accepting that DeMo did not work. Hiding the truth can hurt Modi more than acknowledging it – directly or indirectly.

 

[Jacob Martin]

The major problem as of now is the fact that a bunch of people have assumed the responsibility of defending the government on the claim that they are Nationalist. They will never admit that they love the government because it is a Hindu government. So to them, the Hindu government must be protected at all costs, even if it takes the country down the drain.​

It just so happens that we have a secular Constitution. And it is no minor issue. Secularism is as fundamental and non-negotiable as any aspect of the Constitution. So while we have a government which has de jure legitimacy, it is de facto illegitimate.

It is the prerogative of anyone who respects our Constitution to oppose the government by lawful means.

 

[IndoCarib]

Swarajya Mag is one of the most pro-modi sites out there . even they are calling it a disaster . But hey now they will be anti-nationalists as well .

Modi’s DeMo Gambit Failed: Costs Exceed Gains And Farm Anger Is The Final Piece Of Evidence

It is time for a mea culpa on demonetisation. This writer has been largely positive on the medium-to-long-term benefits of notebandi, as opposed to its short-term downsides, including a fall in gross domestic product (GDP) growth rates for one or two quarters. Now, and especially after the farmer agitations for loan waivers, I believe that the negative side of the ledger on demonetisation (DeMo) is larger than the positive. It has failed.

The critics have been right for the wrong reasons. They did not have a better crystal ball on DeMo’s side-effects than the optimists; but they did have a deeper animus against the Narendra Modi government that the optimists, including me, did not have. Thus, they were faster to pick up the negative signals than the rest of us.

The bottom line on DeMo, seven months after Modi announced that he was withdrawing the legal tender status of Rs 500 and Rs 1,000 notes from 8 November, is that the costs are outweighing the benefits. And the rising demand for fiscally ruinous farm loan waivers surely has a direct link to DeMo. Maybe loan waivers would have happened anyway in the run-up to 2019, but it is equally clear that DeMo has emptied many mandis of cash, and the demand for ready harvested crops has collapsed in many parts of the country, as Harish Damodaran notes in his column in The Indian Express.

Damodaran admits he was wrong in assuming that DeMo would impact farm production – which did not happen – but the damage came later. He writes: “Where demonetisation did have an impact, however, was in the prices received during harvest: Potatoes in Farrukhabad, Uttar Pradesh, fetched below Rs 350 per quintal this February, compared to Rs 600 or more last year. The same goes for rabi onions in Lasalgaon, Maharashtra, that traded at an average of Rs 450 per quintal in May, as against Rs 750-800 and Rs 1,200 in the same month of the preceding two years. Farmers, likewise, sold tomatoes at Kolar, Karnataka, in early May for Rs 300-400 per quintal, down from Rs 1,500-1,600 a year ago. When was the last time we saw all three – potatoes, onions and tomatoes – wholesaling at less than Rs 5/kg, and even retail prices within Rs 20/kg? And this, in peak summer! The above “fire sale” – the evocative term used by the Reserve Bank of India (RBI) in its latest bimonthly monetary policy review statement – has been repeated across a range of other crops too: Garlic and methi (fenugreek) seed prices at Mandsaur – the district in Madhya Pradesh’s Malwa region that’s become synonymous with the ongoing farmer unrest – averaged Rs 3,400 and Rs 3,100-3,200 per quintal in April, whereas these ruled at over Rs 4,100 and Rs 4,700-4,800 respectively during the same time last year. Farmers in Nashik, which has also witnessed large-scale street action, along with the rest of Western Maharashtra, had to dump Sonaka grapes at about Rs 12/kg in March, having sold the same green seedless variety for Rs 45 or so last year.”

I have quoted Damodaran at some length here because it details the damage done to the farmer, who epitomises the informal part of the economy like no one else. While all critics said that the informal economy was hurt the most by DeMo, now we know how that happened.

In late November 2016, the Centre for Monitoring Indian Economy (CMIE) had estimated the loss to the economy and various players at Rs 1.28 lakh crore. Since then we have had more data on GDP losses in the two quarters immediately affected by DeMo. If we assume that at least 0.5 per cent of the GDP drop was due to DeMo, the CMIE loss figure would at least double.

But now we have the unstoppable juggernaut of farm loan waivers: UP (Rs 36,000 crore-plus), Maharashtra (Rs 30,000 crore-plus), and Chhattisgarh (Rs 3,200 crore of interest waivers) have already taken the loss to state exchequers close to Rs 70,000 crore, and we haven’t even begun. Bank of America-Merrill Lynch estimates that the total size of loan waivers could hit Rs 2.57 lakh crore by 2019. They note in a research report: “We grow more confident of our call that farm loan waivers will spread across states after Maharashtra followed Uttar Pradesh in waiving farm loans on Saturday (10 June). This begs the question, how much of farm loans will eventually get waived? $40 billion, or 2 per cent of GDP, in our view, in the run-up to the 2019 general elections. This covers bank loans to farmers with up to five acres of land.”

Even if we assume that only half the waivers are directly due to the DeMo impact, we are talking of a tripling of the figure first put out by CMIE – at the very least, with most costs yet to show up. This means the DeMo damage could be in the region of Rs 3.5-4 lakh crore at the minimum. Since the wildest estimate of gains from black money not coming back to the banking system do not exceed this latest ballpark estimate of loss, it is clear why DeMo has failed its cost-benefits test.

It can also now be clearly said that DeMo was the last straw that broke the farmer’s back, leading to a cascade of farmer protests and political demands for loan waivers. DeMo will damage the fisc like nothing else before this. Two consecutive droughts did not do as much damage as DeMo. All the fiscal prudence shown by the Modi government in the last three years will be washed away now in one huge burst of state government populism.

Here’s a counter-factual: if the UP elections, which happened before farm produce started coming to the markets, had taken place in June and not February-March, would the BJP still have won its big majority? In retrospect, the loan waiver may well have been the political sweetener offered well in advance to prevent farmer worries from boiling over into the ballot box.

So, mea culpa, once again.

The other bits of evidence that support the claim that DeMo did more damage than good are already in the public domain – or assumed to be.

One, the fact that even five-and-a-half months after the demonetisation window for old notes closed on 31 December we don’t know how much money has come back to the system tells its own story. The total value of Rs 500 and Rs 1,000 notes outstanding on 8 November was Rs 15.44 lakh crore. If the deposits have hit this number or even exceeded it, it would mean not only a major embarrassment for the government, but also the RBI. It would imply that fake notes got exchanged for new notes. I had raised this possibility in early December, but didn’t press it when some bankers assured me that they had mechanisms to detect fake notes. But I should have pressed the point: in the rush to clear queues, it is unlikely that cashiers were doing anything more than just count notes. Now that the notes are in, it will be impossible for anyone to link any specific bundle of fake notes with any particular depositor. DeMo may also have validated some fake notes, possibly with the connivance of bankers.

Two, there is not much evidence that tax collections have spiked due to DeMo or even that the tax base in expanding. The poor collections under the Pradhan Mantri Garib Kalyan Yojana indicate that no big disclosure of black money was witnessed, and even if we assume that a large chunk of the deposits made during November and December may have been unaccounted money, the government will have to unleash a tsunami of tax terrorism that will surely be counter-productive. The need of the hour is to bring normality to economic activity. The last thing we need, as we stand on the threshold of the implementation of the goods and services tax (GST), is an unchecked taxman let loose on unwary taxpayers when GST is likely to create its own fiscal chaos and disruption.

Third, it is clear that nationalised banks played a key role in implementing notebandi. But the fall in interest rates following large inflows into the banking system will constitute only a pyrrhic victory unless credit demand picks up – of which there is little sign. While rates can be cut, credit growth is muted. And with loads of bad loans to resolve, banks have had more costs piled onto them due to DeMo. This can hardly be good for them.

Fourth, perhaps the one big gain from DeMo is the still rising trend in digital payments. But this gain in intangible, and benefits will come only over the long term. Moreover, while DeMo made non-cash modes of payment necessary and vital, the popularisation of digital payment modes could have been done even without the disruption of notebandi. DeMo at best provided the government an opportunity to make necessity the normal mode of payment.

Fifth, even the implementation of DeMo could have been better thought out. With hindsight, one can say that the best way to demonetise would have been to limit it to the Rs 1,000 note, and then withdrawing the old Rs 500 notes in stages – by not returning those notes that came back to banks as part of normal cash deposit operations. The disruption was maximised precisely because this two-stage approach was not adopted.

The lessons the Modi government needs to learn from this costly experiment gone wrong are the following:

#1: Don’t rely on economic charlatans and a small group of babus in the Prime Minister’s Office (PMO) and the advisers brought over from Gujarat when taking big decisions like DeMo or even GST. Modi needs to widen the circle of experts in his government, even if he chooses not to finally listen to their advice. This is one redeeming feature of Indira Gandhi, who too had a strong PMO, that Modi could now seek to rectify.

#2: Empower more ministers, and make it a point to regularly listen to your own chief ministers who may have ears closer to the ground than the PMO. Shivraj Singh Chauhan and Vasundhara Raje could well have told Modi what may be a problem with DeMo, but this kind of political feedback loop does not seem to exist in the Modi government.

#3: A white paper on the larger effects of DeMo and the lessons learnt is important. While it may not show the government in good light, it will at least demonstrate that it is learning lessons from the misadventure. To brazen it out – pretending DeMo was not a failure – is the worst thing that can happen to a leader who is clearly one of the best India has produced in a long time.

#4: The damage on loan waivers has been done, but nothing stops Modi from holding a special parliament session and creating a multi-state group of chief ministers to recommend how to fix farming without waivers in future, and also to agree on a code that no politician or state government will henceforth demand a waiver except in exceptional circumstances, and that too on a selective basis.

In the past, Modi has proved he is a good learner from defeat. After Delhi and Bihar, he recovered quickly to win in Assam and UP. But DeMo is his ultimate test. If he learns from this, his next two years may still be his best.

Leadership is most needed when the country is down. Right now, banks, farmers, small and big businesses are all down – though not out. The economy will not recover easily without great economic and political leadership. Modi’s second term depends on him getting the economics right, and not just the politics.

It is great to be thought of as a bold leader who can take tough decisions to break the back of black money. But it is not so great to go about it in a hamhanded way and breaking the back of the Indian economy in the process.

Good politics begins with accepting that DeMo did not work. Hiding the truth can hurt Modi more than acknowledging it – directly or indirectly.

Agreed, the note ban was gamble, a daring one at that. Even us, most Modi followers ( you call us Bhakts) admit it. The Govt didnt play that gamble well. It was destined to have some casualties from the beginning. Farmers being the first ones. The move may or may not have any long term implications.

And yes, we do criticize the govt and we are not anti- nationals. But if you criticize Congress or AAP, you may be branded a Bhakt by your own secular-liberal ilk !!!

 

[Cherokee]

A
And yes, we do criticize the govt and we are not anti- nationals. But if you criticize Congress or AAP, you may be branded a Bhakt by your own secular-liberal ilk !!!

I am yet to find anyone on this forum who loves congress . They are neck deep in cesspool created by their own dynastic and minority appeasement politics .

 

[Jacob Martin]

I am yet to find anyone on this forum who loves congress . They are neck deep in cesspool created by their own dynastic and minority appeasement politics .

Precisely. Not ONE of these so-called Nationalist, non-sickular desh bhakts who launch into a reflexive defense of the indefensible even ASK a person as to whether they have any political affiliations or preferences. Instead, all they can do is label people as AAPtard, Khangressi, sickular, pseudo-liberal, anti-national, Naxalite, Maoist, Missionary, Mullah, fake NGO, illegitimate child of Macaulay, etc.

Once they have labeled everyone thus, there will only be a handful left and they can corner the narrative by declaring themselves as patriotic Nationalists. How convenient.

 

[Soumitra]

It just so happens that we have a secular Constitution. And it is no minor issue. Secularism is as fundamental and non-negotiable as any aspect of the Constitution. So while we have a government which has de jure legitimacy, it is de facto illegitimate.

What is your definition of the word secular? Why do you believe BJP is not secular?

We live in funny times where the party which wants Uniform Civil Code (same laws for everyone , irrespective of religion) is called as communal and those who oppose UCC are seculars.

The definition of secularism is that govt will not interfere with anyone on basis of religion. Having different laws as per different religions is diametrically opposite of secularism.

I want you to give me a clear cut answer and explanation. How is UCC NOT secular? If UCC is communal then are Europe and US - which have UCC communal too?

The problem is that the so called thekedars of secularim have twisted the meaning of the word to suit their own agenda and vote banks. Maybe this is why we call them "sickular"

If you belieeve that BJP is not secular for XYZ reason and congress and others are not secular for opposing UCC or pandering to the mullah brigade in Shah Bano case even after the Supreme Court verdict then my contention is that NONE of the parties in India follow secularism so no one has the right to act holier than thou and call BJP as communal

 

[Nilgiri]

LOL...such facepalm these "articles".

Lets take on just one of their claims with facts:

http://economictimes.indiatimes.com...ng-up-26-2-till-date/articleshow/59181210.cms

Didn't tax base also increase by like 9 million people?:

http://www.livemint.com/Politics/WR...tisation-effect-91-million-new-taxpayers.html

As for swarajya magazine, it leans pro-modi (as a platform)....does not mean all its articles are quality and neither are all their authors pro-modi or even neutral. Similar to how there is a sizeable amount of Trump hate on Fox news.

Let's have a look at this particular author's record:

https://swarajyamag.com/author/17505/r-jagannathan

Yes clearly a staunch Modi supporter that has suddenly shifted right? I am not even going to bother with the OP article and author.

All I will say is it's seriously laughable that people are already "tallying" up pros and cons (from their skewed analysis) when the real pros are much more long term than the cons. Basically they have realised this is the window to try make the most anti-modi anti-BJP hay....because hey what else can one do after what happened in UP.....which was supposed to be the massive defeat for BJP and Modi on the topic of demonetisation.