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On November 8, when the Rambo prime minister of India, Narendra Modi, decided to “address the nation,” few knew what to expect. Hogging airwaves since he came to power and spending taxpayers’ money in the process, has been an unhealthy norm.He had not had it good in the past weeks, this megalomanic figure, uncomfortable with criticism and a fair, investigative media. None of the adventurist gambles of his administration had paid off, even with the television media’s corporate-driven blind eye. The “surgical strikes” against Pakistan, though, drummed up to use the ultra-patriotic card in four state elections, had left more questions than they answered. And then there was the move to impose a 24-hour ban on one of the more respectable television shows, which caused an outbreak of protests on social media.
Instead, he announced, without proper consultation, that from midnight on November 8, with immediate effect, Rs 500 and Rs 1,000 currency notes would thenceforth be illegal currency. Black money and corruption were his target, and he had failed either to blow the lid off of illegal offshore accounts or “return Rs 15 lakhs to every Indian into her/his bank account”—a preposterous election promise in 2014. This “surgical strike of de-monetization” would redeem the faith.
A fortnight down, it is safe to say the ill-considered move has completely backfired. Thanks to rural distress of a high order, panic sales have led to 70 deaths of working- and middle-class Indians so far. These are not the black-market hoarders, they are farmers, fisher women, vegetable dealers, the cityworking classes (who do not own credit cards or have bank accounts), pensioners, students living in hostels and even the personnel of the police, army and paramilitary. Last Saturday, farmers and dairy owners in Modi’s home state, Gujarat, dumped milk and grain at the offices of the district administration in protest and anguish.
Most critically hit by this decision is the small trader of north, western and central India—a large chunk of which finances the supremacist Rashtriya Swayamsevak Sangh (RSS), the ideological backbone of Modi’s party. Although usually quick to speak—even to make abhorrent statements on lynchings, inter-community marriages, etc.—the RSS has been conspicuously silent.
The Supreme Court of India, approached by several citizens against this arbitrary bombing, has called it “carpet bombings against your own people.” Are these the signs of a government leader who is out of touch with the popular base that brought him right to the very top?
Meanwhile, at least five central agencies or commissions in Delhi have been sitting on a tranche of documents that allegedly show Modi has accepted bribes in excess of Rs 55 crore, or $8 million. It is unclear from the documents whether there were 13 separate transactions that involved Modi and came to a total of Rs 55.2 crore or nine transactions totalling Rs 40.1 crore. In the documents, there appears to be a repetition of four specific transactions, which took place between Oct. 30, 2013 and Nov. 29, 2013 and have been accounted for under two separate headings.
From these documents, journalist Paranjoy Guha-Thakurta, editor of the Economic and Political Weekly (EPW), wrote up a story that has only been published by EPW, Caravan Magazine and Sabrangindia, although some newspapers have hinted at the scam. Modi’s writ still holds sway on Indian television; there have been no “discussions” on news hour about this corruption-laden scam.
The documents were revealed in the course of a court hearing for senior advocate Prashant Bhushan’s group Common Cause. They indicate that, during his tenure as chief minister of Gujarat, Modi—along with a number of important politicians—was paid large amounts of cash by individuals associated with Subrata Roy, the founder-chairman of the Sahara India Group. These documents also suggest that the recipients of such favors included, among others: Shivraj Singh Chouhan, the chief minister of Madhya Pradesh; Raman Singh, the chief minister of Chhattisgarh; Shaina NC, the treasurer for the Bharatiya Janata party in Maharashtra and Sheila Dikshit, the former chief minister of Delhi. This could be the mere tip of a frozen iceberg implicating a man who claimed he was squeaky clean.
The Modi machine that was geared in the runup to the 2014 elections in India had drawn unprecedented corporate support. India’s laws regulating political spending by parties, as opposed to individual candidates during elections, remain loosely framed. This allows big spending for the party to disproportionately benefit a set of candidates. Despite being on two sides of the political and ideological divide, both the BJP (Modi’s party) and the Indian National Congress (which held power in Delhi from 2002 to 2014) have struck a compromise to “post-facto allow corporate funding of their outfits,” even from foreign corporations that have an office incorporated in India. This was accomplished through the 2016-2017 budgetary orders, not through legislative debate and criticism, drawing sharp criticisms from the left. As the general secretary of the CPI-M (Communist Party of India-Marxist), Sitaram Yechury, said with regard to his speech on de-monetization debates in Parliament last week:
During my speech on demonetisation, the Finance Minister intervened to explain the amended Foreign Contribution Regulation Act (FCRA), 2010 as a mere “technicality”, and not having any effect on the funding of political parties. This is, yet again, a sleight of hand.
The FCRA was amended from retrospective effect, not by introducing and debating a bill in parliament. The government, instead, brought an amendment to FCRA in February 2016 through the 2016 Finance Bill to avoid scrutiny. It amended Section 2(1) (j) (vi) of FCRA, 2010, by adding a proviso with retrospective effect. The Representation of People’s Act bars political parties from receiving foreign funds, but after this amendment, they can receive funding from foreign donors which will bypass government scrutiny.
The amendment was brought in retrospectively because the ruling party was charged with illegally receiving foreign funds for political activities from U.K.-based Vedanta Group from 2004 to 2012, thereby violating FCRA provisions. The case is still being heard in the Supreme Court.
After the amendment, a foreign company—often foreign multi-national giants—through their Indian arm/entity (where they may have more than 50 percent Indian holding) can fund Indian political parties. Effectively therefore, foreign companies can fund Indian political parties, through this arm. This raises serious concerns about circumventing the Representation of People’s Act for foreign funding of Indian political parties.
Apart from this technical compromise that will certainly spare the two largest political players from intense scrutiny, there was the political ground reality of an India that has polls in four states next year. A victory for Modi and his entourage is critical if he wants an absolute majority in Parliament. In the upper house (Rajya Sanha), the aggressive BJP is in a minority, a fact that has certainly influenced Modi’s rare appearances in this House. Not man to brook political attacks and sharp criticisms, he had even reduced legislative and executive accountability in Gujarat, where he was chief minister for 13 years, to something of a farce. In a given year, the state assembly sittings had been reduced to just less than two dozen days, inviting sharp observations from the vice president of India, Hamid Ansari.
Of the state polls next year, Uttar Pradesh (Feb-March 2017) and Gujarat (December 2017) are crucial for the party and the regime. A week after the “surgical strikes” on Pakistan, opinion polls showed the fast-diminishing popularity of the Modi magic in the state, bringing the vote share down from 41 percent to just 31 percent, as compared to the national elections of May 2014, and leaving the party short of a majority in the state assembly.
Worse for Modi and the BJP, votes polled showed that, as far as preferences for the chief minister are concerned, of India’s most populous and politically significant state, as many as 37 percent of the voters wanted a woman and a Dalit—the redoubtable Mayawati, supremo of the Bahujan Samaj Party (BSP)—as the chief minister. Her reputation of ruling a lawless and patriarchal state, with escalating crimes against women and other marginalised sections, through thefour terms when she has been chief minister, evokes a strong positive connect, even today. Memories of a state free of gang crime and bullies driven by caste and community leave the poor and deprived longing for her return. According to the opinion polls, however, she is still short of three per cent in the popularity vote, giving her rival, Modi’s BJP, an edge with as many as 65 to 70 seats.
Uttar Pradesh has a high concentration of Dalits and Muslims. Only her core supporters among the former vote had stuck with her in May 2014 when the Modi image was sold to rural pockets through What’s App and other modes of technology. If today she attracts more than 50 percent of the Muslim minority vote (the polls show already that 20 per cent of this beleaguered minority is batting for her already)—the UP election results could be another blow for Modi, the RSS and the BJP.
In light of this, was monetization more a political decision than an economically sound one? These facts and some figures would strongly suggest so. This decision has been soundly contested, both in the courts (Supreme Court, Kolkatta high court and Chennai high court) and also by senior counsel. Indira Jaising, senior advocate and staunch feminist, writes:
the money you and I hold in hand or in the bank is a debt guaranteed by the government to us. Currency thus represents a ‘public debt’ owed by the government to the holders of the bank notes, you and me. The notification issued by the Central Government on 8 November 2016 has been purportedly issued under Section 26(2) of the Resrve Bank of India Act(RBI Act), 1934. Going by this meaning, the government under this power can only scrap the legal tender of a series of a bank note of any denomination.”
She says further that, if
the Legislature had intended that the government was to be invested with the power to withdraw the legal status of all bank notes of a particular denomination, as has been done in this case, the use of the words “any series” would be entirely superfluous, and redundant. Hence I conclude that Section 26(2) was never intended to be used as measure of dealing with the withdrawal of black money form the economy, nor was it meant to withdraw legal tender from all bank notes of a particular denomination.
That may have been the reason why previous attempts at demonetisation have been undertaken by the Ordinance route, followed by a Legislation.”
The courts, reasonably independent as they still thankfully are, will no doubt adjudicate a crucial issue. Why did strongman Modi again decide to bypass the time-tested legislative route, and instead flex his muscles with bombastic aim? His move has invited sharp criticisms of India becoming a banana republic. As crucial is the analogy “Marie Antoinette Modi” popularized by the left.
Has Modi then, drunk with absolute power, failed to assess the impact of this apparently narrow and politically vicious move?
In India, of the 139 crore Indians, only 2.6 crores have credit cards. There are just 14 lakh card readers available out there for retail outlets for 130 crore people. India’s is an 80 percent cash economy, which is called as payment and settlement system. There is only one country in the world that has a cashless economy and that is Sweden as they have 100 percent (inter)net penetration.
Even worse is the fact that demonstrates the claims of the regime at tackling “bad corporate to be hollow.” Politicians and responsible writers have enumerated on how the State Bank of India has waived off Rs 7,000 crores of bad debt, held by influential corporates. Black money, as eminent economist Prabhat Patnaik puts it, “is not a stock, it is a flow, the bulk of it.” There may be a stock of stashed-away cash, but this is a bare 5 to 6 perecnt of the total stock. No measures have been taken to uproot the flow.
Significantly, of the Rs 14.18 lakh crores that is under circulation, 0.028 percent or 400 crores, is the counterfeit currency. To ostensibly get at this 0.028 per cent, the Modi government has burdened crores of the Indian people. The rationale of bringing in the even higher denomination Rs 2,000 note is also baffling. Counterfeits of these have been already seized by law enforcement. One of the bribes caught by the police,reported by NDTV on November 16, was of a significant bribe amount of Rs 2.9 lakh in the new Rs 2,000 notes, launched only on November 11, and these were seized in Modi’s home state of Gujarat. Officials were reportedly “stunned” because the maximum amount which can be withdrawn by an individual in one week is Rs 24,000. Were, then, the new notes already in circulation for those favored by the ruling dispensation as reports from Mumbai and Delhi also suggest? Will the source of this leak and the trends be fairly investigated?
As bad as the decision to unilaterally—and without democratic consultation—demonetize is, the flip flop and irrational decisions of various wings of the ruling party apparatus have been staggering. One state government ruled by the BJP, the Maharashtra government, announced that for cinema tickets, the old notes would be allowed. Meanwhile, petrol pumps have been allowed to exchange old currency. But India’s farmers, until November 21, were not permitted to buy seeds and fertilizers with the old cash.
Where is the sound reasoning and common sense that one should legitimately expect from a democratically-elected government? Finally, there is the emotionally charged issue of terror funding through counterfeit currency. Proper monitoring of electronic funds transfers is more likely to stop or arrest terror funding than any other measure. Demand and supply is the basics of any system, legal or illegal, and unless the government seriously tackles the supply side of black money corruption, the unofficial economy will continue to flourish. This corruption can only double with the newly introduced Rs 2,000 crore notes.
Finally, there is a need for the state funding of elections, in which the expenditures are properly accounted for and scrutinized. There should also be a cap or ceiling on how much money a candidate can spend. Today, if Modi and the RSS-controlled BJP use a dozen helicopters every day for a month for a dozen central ministers (as they did in the state elections in Bihar that went to polls around this time last year), and these choppers are owned by favored corporate honchos like the Adanis or others, should or should not the expenses be added up in the final tally?
The unkindest cut of all was dealt to Modi by a former close aide and admirer, Yatin Oza, from his home state of Gujarat. In an open letter to the prime minister he has made serious allegations, for which he says he has documentary and video proof. Among a series of serious charges, he says:
all the district cooperative banks controlled by people close to the BJP had been busy exchanging the old 500 and 1000 rupee notes from 8 a.m. to 5 a.m. on November 8-9 2016. I have a video recording to prove this allegation. .
In fact, your above move was to enrich your near and dear ones, your party and your party workers by apparently putting forward the national cause and interest. I have a video recording with me which will clearly and beyond reasonable doubt prove that all the near and close associates of Shri Amit Shah since November 8, 2016 till today are engaged into exchange business. There is a big queue outside their office and residence for conversion of black money into white at a discounted rate of 37 percent, people have queued up outside their office and residence. One has to go without identity with at least a sum of Rs. 1 Crore which will be counted by the employees and a bag containing Rs. 63 lakhs of valid denomination would be handed over. I could have easily parted with that video but as I know you, you will punish those standing in queue rather than booking those persons engaged in the business who are near and dear to Mr. Amit Shah. However, I will show the video to two or three senior journalists and intimate you about the same so that you can cross check and verify the genuineness of my statement from the journalists…
…This in my respectful submission was permitted to be done in Gujarat because all district co-operative banks are controlled by people committed to BJP. These banks right from 9 PM on 8/11/2016 till 5 AM on 9/11/2016 exchanged Rs.500 and Rs.1000 currency notes against smaller denomination. You had through RBI called for the details of exact cash with denominations from all banks of the country on 08/11/2016.
The people of this country would also like to know that apart from those fortune 300 industrialists how much money builders, contractors more particularly contractors who have been awarded government contracts, miners who are more particularly involved in iron ore mining, other industrialists and above all politicians and bureaucrats have deposited the money. Unless the people of this country have the above information as to who has deposited what amount, the allegation that the hoarders of 50 percent of black money i.e. those 10-12 like industries have been blessed by you by prior intimation will stand proved. Moreover, at least poor and helpless people who have stood outside the bank in queue for petty amount would like to know what is the amount of deposit made by those 10-12 industries whom you allotted the land worth more than 1 lakh crores and who did not generate between themselves employment worth 7000 people. The publication of deposits on website would also throw light as to who are the persons who have deposited 300 to 400 crores and what action Income Tax department would take if they deposits either do not match with the return or known source of Income. I request you to also inquire the purchase of gold & diamonds sold on 7th and 8th before 8 PM and by whom. This will enable people to think as to why few top notch needed purchase of huge amount of gold and diamonds.
These are serious allegations that will hopefully—despite the non-critical and compliant media—be investigated. The opposition has stalled Parliament demanding a Joint Parliamentary Committee to probe various aspects of the move and its impact. The Supreme Court of India and several courts have also seized on the matter.
Hopefully, through these fora and the investigations, India and the world will get to know some of the truths behind this brazenly insensitive move. That has brought Indians of all caste, religion and color to the streets to simply claim what is theirs by right. Whose money is it anyway, Mr. Modi