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LATEST NEWS UPDATES | The politics of demonetisation -Zoya Hasan

The politics of demonetisation -Zoya Hasan

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published Published on Jan 30, 2017   modified Modified on Jan 30, 2017
-The Hindu

As Parliament prepares to convene again after a winter session washed out due to the Opposition’s protest on demonetisation, it is worth asking why political mobilisation against the exercise is proving to be so difficult

Demonetisation has been the most hotly debated topic since November 8, when Prime Minister Narendra Modi announced that the high-denomination notes then in circulation would cease to be legal tender. In a single stroke, nearly 86% of the currency in an economy powered by cash transactions, with 54% people without bank accounts, was wiped out. The move disrupted the lives of ordinary people, led to widespread hardship for the poor, major job losses and over a hundred deaths. Despite the huge distress and disruption, the general sentiment seemed to be in favour of the decision.

The shock move invited widespread criticism. It provoked protests and a lot of anger and agitation, but most of it was directed against local irritants, particularly banks. There are numerous reports of angry crowds locking up banks and jamming roads to protest against the non-disbursement of cash. As for more organised opposition, the winter session of Parliament saw Opposition parties locking horns with the government over demands for a vote on demonetisation. The tussle between the government and the Opposition washed out the entire winter session. Opposition parties staged several protests in different parts of the country, but this did not coalesce into a larger expression of protest against the government despite the pain caused by demonetisation to the poor who have suffered overwhelmingly because of it. The question that needs to be asked concerns the relative importance of social and political influences that generated greater support than opposition against demonetisation.

Diversionary tactic

Much of the debate on the demonetisation move has focussed on its economic consequences; not enough attention has been paid to the politics of this drastic decision which can possibly explain the lukewarm opposition to it. One of Mr. Modi’s big campaign promises was to end corruption. But that didn’t happen. The growing criticism of the government’s failure to deliver on the promise of bringing back black money stashed abroad and depositing Rs. 15 lakh into every bank account as promised at the time of the Lok Sabha polls led the Prime Minister to do something bold to offset the negative feelings in the context of impending State elections. It was seen as a dramatic measure that would enhance the regime’s credibility in fighting corruption and black money and divert attention from its perceived failures on this and other fronts. Instead of finding ways to tackle graft through the tightening of regulations and controls on real estate and political party funding, demonetisation was promised as the ultimate solution.

As a political decision, demonetisation was aimed at setting the agenda for State Assembly elections. The timing of the decision clearly indicates this: it was announced three months before five Assembly elections, particularly in the crucial State of Uttar Pradesh. It was unleashed as a political strategy to checkmate regional parties (by threatening their cash reserves) and expand the BJP’s support base in the Hindi heartland by projecting demonetisation as a pro-poor measure.

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The Hindu, 28 January, 2017, http://www.thehindu.com/opinion/lead/The-politics-of-demonetisation/article17104627.ece?homepage=true


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