Demonetisation update 15 – the dharma of demonetisation

IAS Officer Srivatsa Krishna calls demonetisation a WhatsApp moment and, more importantly, does bat for reduction of stamp duty such that real estate transactions become less cash based.

The economy needs a moral and ethical underpinning, no doubt. But, there has to be a superstructure which does not compel the public to turn to immoral and unethical modes of functioning. The State should also facilitate legitimate economic activity. Much more can be done. The State cannot just be adversarial to those who wish to rob the State. The State must also support and facilitate the aspirations of those who are doing their duty for the State and for the country. I had emphasised that in my cover story for Swarajya linked above and in previous blog posts too.

That brings us to a piece by Prof. Makarand Paranjpe of JNU in DNA. He tries to explore the reason behind the public support for demonetisation that is still holding up. He says that it is so because it is deemed to be a strike against adharma and for dharma. But, if it is to sustain, then he says that the following must be the underpinnings of the move:

This dharmic turn in Indian economics must however be true and sincerely motivated. It cannot subsist on hypocrisy, duplicity, pretense, and falsehood. The ethical turn of Indian economics must not be compromised either by vested interests or the compromised political or business classes. Only then can it contribute to making us a great and prosperous nation again.

I agree with him and I would add what I had said above: it would succeed only if the same imagination is shown in unleashing the productive and economic potential of the people. That is yet to happen.

Gita Gopinath of Harvard University wrote:

Modi’s policy intervention is bold, and the economic principles motivating it are beyond reproach. [Link]

Former Chief Economic Advisor Kaushik Basu wants the demonetisation rolled back, at least partially. Usual observations on hardships. Otherwise, no new argument.

Veteran journalist T.N. Ninan offers his comments. Nothing original nor insightful. How does he even know that net benefits would be small? That lens is too myopic and its horizon is too short-term.

Aditya Puri, MD of HDFC Bank, bats for the move despite short-term pain. Not a big surprise but, it is the other side of the debate: weighing the long-term benefits more than the short-term costs. No new argument either.

Shekhar Gupta talks about the political battlelines that are being drawn up.

The ‘Economist’ magazine had a piece calling up on the Indian electorate to teach a lesson to Modi. It may not have been so direct but it was there, nonetheless:

By designing a scheme that was needlessly callous and which is becoming increasingly unpopular, he has squandered political capital. In future he needs to consult more widely, centralise less decision-making in his own hands and acknowledge that not all criticism is partisan or special pleading from the corrupt rich. India, fortunately, is not North Korea, and is aware that leaders are fallible. Its federal, democratic system will give voters plenty of chances to let it be known how badly Mr Modi has messed up his rupee rescue. [Link]

If so, it must gladden Mr. Modi’s heart because voters do not see the world the way ‘Economist’ sees it and rightly so. Whether they have suffered more hardship than the benefits they see is something that the voters would decide and, mercifully, they won’t depend on ‘Economist’ to guide them.


3 thoughts on “Demonetisation update 15 – the dharma of demonetisation

  1. Please comment on Manmohan Singh article today “Leaders and governments have to care for their weak and at no point can they abdicate this responsibility. Most policy decisions carry risks of unintended consequences. It is important to deftly balance these risks with the potential benefits of such decisions. ” This in context to your comment that we need a strong leadership but is strength measured only in terms of decision taking or planning and thinking thru the whole process.


    1. With respect to this blog post of mine, where I have mentioned the need for a strong leadership? I have not. Even if I did, where is the implication that strong leadership is measured only by the decisions taken and not by the quality of decisions.


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