The liquidity crisis of unprecedented dimensions that the Modi government has unleashed shocks the economy, drives people to despair and ruin and threatens consequences that have not been fully fathomed yet.
PRIME MINISTER NARENDRA MODI surprised the nation on November 8 with his “master stroke” of demonetising the two central pillars of the Indian currency system—the Rs.500 and Rs.1,000 notes —in his war on the black economy. But within a couple of days even he must have been surprised by the utter lack of preparedness that pushed the country into a crisis of a kind the world has rarely seen.
As those at the helm dithered, revised, reviewed and modified the scheme, almost on a daily basis—changing the terms on which millions of Indians could exchange the dud currency they were saddled with or to simply draw cash to meet their everyday needs—it became evident that there simply was no plan. By the tenth day it became clear that those responsible for the massive self-inflicted upheaval—the Prime Minister, the Finance Ministry and the Reserve Bank of India (RBI)—were witless and clueless about how the exercise was unravelling. Above all, the government was shown to be callous, having utter disregard for either the nature of the Indian economy or how the people earn their livelihoods. The simple truth that cash is not the last refuge of the Indian scoundrel but the lubricant that drives the vast swathes of the Indian economy has been lost on the policy pundits, the bhakts seeking a techno-utopian fix to weighty and long-standing problems and the elite who see India in their own image.
This story is from the December 9, 2016 edition of FRONTLINE.
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This story is from the December 9, 2016 edition of FRONTLINE.
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