Poorna Swaraj: Why the roaring success of demonetization isn’t economics at all

How many times out of 10 would you listen to a politician asking you to physically go to a bank to either deposit your cash or exchange it for new currency notes, failing which any currency you hold would not only be worthless but also illegal?

Until exactly a year ago I would’ve, in arrogance, vehemently ruled out the possibility of anybody in India ever agreeing to such a seemingly absurd arrangement. What I’d severely under-estimated was the value of two things: 1) Narendra Modi’s reality distortion field and 2) the extraordinary spirit in our people to contribute to social good in our country.
This post is about the latter because the former, with no disrespect, is merely a spark- not the fuel or the flame which will carry India into the 21st century and beyond.

Demonetization’s success as a financial policy move has been the subject of intense debate between some of the leading economists around the world. But whether Narendra Modi and his government eliminated corruption, black money, terrorism and, most recently, prostitution in one swift blow is not what interests me. The fact that nearly every cash-wielding Indian cooperated in this massive experiment is infinitely more interesting to me. While one of the drivers for this level of compliance was obviously the fact that no one had a choice in the matter- you needed the new currency to sustain survival- I want to venture out and make a claim with limited evidence- there wasn’t widespread resentment of the move among the vast majority of the population. Why didn’t India take to the streets on November 9th and revolt in many fragmented voices like she always does and force the government to withdraw its announcement? Did the prime minister, in his 30 minute address, manage to teach 1.2 billion Indians the nuances of monetary economics?

I remember blogging impatiently 4 years ago when Prime Minister Manmohan Singh and Finance minister Chidambaram appealed to the nation to “control our appetite for gold” in a desperate bid to curb the rising current account deficit at the time. Disillusioned by the extraordinary amount of pushback that plea received from various quarters, I wrote in my blog:

“Does it ever anger you that the government is increasing fuel prices? THINK. It’s YOUR country. It runs using YOUR money. They buy crude oil using YOUR money. It’s a government not an MNC. Their revenue is YOU.
Not buying gold and paying more for fuel won’t solve this almost-crisis. But it’ll certainly help. This isn’t to say that government should wait for your help. They can do plenty that they haven’t done already. But what kind of sleepy democracy only wakes up ( partially) every 5 years only to vote and then sits back and hopes for the best?
Don’t vote for someone who claims he’ll bring petrol prices down. He won’t. Don’t boo someone who paints a realistic picture. Encourage them. Bite the bullet. Swallow the bitter pill.”

In hindsight the UPA government by that time had lost nearly all of its political capital and that was evident in the elections that followed and I’m inclined, now, to put down our complete and deliberate denial of our own roles in, what is now being called. “nation building” to that lack of trust in government. It wasn’t always that way. OECD’s trust in government stats which recently showed that over 70% of Indians trust the present government to do the right thing, also showed that in 2007, a whopping 82% of Indians trusted the then government to do the right thing. In a world where those numbers are constantly declining, we have chosen to believe in the leaders we elect. We’re proud of our democracy and we expect our representatives to do right on our behalf.

We’ve been taught to look at government in India as though it were a service. The administration, including the politicians, bureaucrats and every “sarkaari employee”,provides us services that we’re entitled to. We vote in the elections to pick the people who run this establishment and we pay our taxes to fund the services they provide. In return for devoting all their time to serving us, we let them have certain privileges- red beacons atop their tax-payer funded cars, tax-payer funded homes in the capital city, tax-payer funded flights and offices and the perks and vices of being “in power”. But democracy isn’t a service. Its a partnership. It is, as that cliched quote goes, a government, “for the people, of the people and by the people”. We’re a lazy democracy. When we’re called to action by big issues that are close to our hearts, we have shown that we are willing to engage and, when necessary, to resist. Through popular movements we have forced both UPA and NDA governments, in the last 5 years alone, to do things like taking stern action for women’s safety, enacting anti-corruption legislation, protecting net neutrality, abandoning an anti-environmental steel flyover project and, now, rejected great sufferings in the hope that it would end black money, corruption and terrorism in our country.

But our participation in democracy can not be reactive. We need to be more proactive and governments must enable that. We need to have well structured processes to make sure that it doesn’t take an Anna Hazare shouting with thousands of people in Ramlila maidan for our voices to be heard in the corridors of power. We’re a country of argumentative Indians, as Amartya Sen famously said. Everyone has an opinion and an idea to solve every public problem. Walk over to a breakfast spot like SLV or Adigas in Bangalore and there you’ll see it: The extraordinary sight of sweaty middle-aged gentlemen in trackpants and running shorts, just back from their morning walks, sipping hot filter coffee and belting out idea after idea for what the Prime Minister should do to end corruption, fix the roads, reduce traffic, solve air pollution and many other critical issues- all before the coffee goes cold.

These random ideas are seldom useful to anyone. The question is this: are you willing to put in your expertise and your time to make some suggestions to government on the basis of which they can take some action? Maybe you’re willing to take that action yourself. Groups like the ugly Indian are good examples of the community taking responsibility to pick up the trash in their neighborhoods to keep it clean. But maybe YOU know exactly why the trash piles up there in the first place and know how to fix that problem? How would you tell government about this? Do the mechanisms exist? Are there people who will listen to you? Are there people who will actually implement it? Are we willing to get involved in that process? Or are we going to say “Its THEIR job. Not ours”? Clearly, the government and we, as a society, have to answer these tough questions to bring real change to our local communities.

This modern day “panchayati raj” is what, I think, will carry India forward and it can only be powered by, as I mentioned at the start of this piece, the extraordinary spirit in our people. We don’t need to fight for Independence but maybe its time to pursue true swaraj and demand the right to make our own contributions to nation-building (beyond beating up people who don’t stand up for the national anthem in a movie theatre).

Jai Hind.

Image source: Mellisa Anthony Jones via Wikimedia Commons

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