Free Press Journal

Demonetisation: Narendra Modi’s cashless drive has a class bias


Varanasi: Prime Minister Narendra Modi addresses the gathering in Banaras Hindu University in Varanasi on Thursday. PTI Photo(PTI12_22_2016_000042B)

The real reason behind demonetisation may still be shrouded in mystery. And yet everything seems to be falling in place. There has been a calculation behind the so-called currency reform, the cloak of secrecy and the constant shifting of goal posts since November 8, when Prime Minister Narendra Modi administered the shock therapy on an unwilling nation. If the avowed objective was to fight black money and corruption, the sequences in the last 50 days reveal a hidden agenda – make India into a cashless, digital economy and force “behavioural” change among the citizens.

If you believe I&B Minister Venkaiah Naidu, the PM wants the people to change their behaviour. Spiritedly defending the demonetisation, Naidu, inter alia told the Rajya Sabha (November 16): “Sir, the Prime Minister wants a behavioural change in the country. The behavioural change, change of mindset……” It was the fag end of the first day of winter session and Naidu was countering Opposition charges against the reckless implementation of note bandi. As usual, the House was in turmoil and Modi’s espousal of a mindset change went unnoticed and unchallenged by the Opposition.

A call for behavioural change is not the brief of a head of state or government. People elect a PM to govern and not to enforce mindset changes or moral codes. Such a fiat, if any, betrays an autocratic propensity and presupposes and bestows a superior but undesirable halo over the PM. Naidu did not elaborate on his thesis but anticipating that his lingo may spark an outcry, he took pains to clarify what the PM meant by behavioural change; that is “there should be a change in the thinking.” He was simply telling the people not to do “open defecation” and stop “female foeticide” and “bring about purity of body, mind and wealth”.

There is no harm in Modi trying to bring societal “transformation”, but going beyond that is asking for trouble. The social atmosphere is already vitiated by the phony nationalism narrative spun by political and religious zealots; the cultural police have been dictating what one should eat, wear, sing and what movie to watch. Is going cashless also part of the behavioural change that the PM is envisaging? Unfortunately, compelling people to go digital without adequate logistics and preparation is being justified by some right wingers with a coat of economic nationalism. The ill-advised drive has hit the poor and marginalised the most, claiming the lives of some 132-odd people in just 49 days. If there was a moral force like the late Jayaprakash Narayan (JP) today, he would have converted his fabled “total revolution” into an “ATM revolution”.

Why is the PM taking a huge political risk fast-tracking cashless economy and wreaking havoc on the common man at the cost of his credibility as a reformer and performer? Even as Modi and his cheerleaders put up a brave front, a section of BJP leadership and the RSS brass have grown edgy as ground level reports from poll-bound Uttar Pradesh are far from flattering. The gains from the surgical strike in Uri have since evaporated thanks to cashless banks and ATMs.

In May, during his Mann Ki Baat address, Modi made a call towards a cashless economy “as the whole world”. A recent Bloomberg report has nailed his misleading assertion. It said even the most developed economies in the world are not fully digital.  Germany and Austria have 80 per cent cash transactions, Australia 65, France, 55, Canada 52, Netherlands 50 while United States is 46 per cent cash. Austria has only 02 per cent credit and 15 per cent debit cards and Netherlands has only 01 per cent credit and 40 per cent debit cards, France 01 per cent credit and 30 per cent debit cards.

In India about 30 per cent people are still outside banking system and millions do not own smart phones. A few months ago, internet was blocked in Srinagar by security agencies and early this week trouble-torn areas in Manipur also witnessed connectivity blockade. How will cashless economy work in such terrains and situations? Domain experts including Chipset maker Qualcomm have cautioned that “wallets and mobile banking applications in India are not using hardware level security which can make online transactions more secure.”

Sensing opposition to his cashless drive, on November 8 Modi shrewdly packaged the demonetisation pill as a bold initiative to root out black money, corruption and choke terror funding. He killed many birds with one stone. People readily endorsed the “anti-graft” move and no Opposition leader could criticise the politically correct drive. An additional bonus was that cash cache of political rivals was rendered worthless ahead of the crucial Uttar Pradesh elections while leaving BJP with cash-rich election machinery. And once the people were mentally conditioned for the 50-day inconvenience, Modi began to unfold his hidden agenda – cashless economy.

Praveen Chakravarty, political economist and a visiting senior fellow at IDFC and founding trustee of, a data driven non-profit, public interest journalism platform, has in a detailed analysis captured Modi’s changing narrative between November 8 and November 27. “On November 8, the PM uttered the word ‘black money’ 18 times (75 percent) during his 25 minutes speech and fake currency/counterfeit notes five times.”And after his return from Japan, between November 13 and 27, Modi made six speeches across the country. While there was zero mention of digital or cashless economy on November 8, by November 27, he used the phrase digital 75 percent.

Even 49 days after demonetisation cash rationing continues prolonging the agony of the common man. The other day, Wall Street Journal succinctly summed up the “bizarre war on cash” in India saying “in a cashless society the State has far greater means to harm the public, both through inept policies and abuses of power.” Countrymen: “Beware the Ides of March.”