PERHAPS no other public policy debate in post-independence India has seen as much of an “inversion of reason” on the part of the government as the demonetisation debate. When critics were pointing, on the basis of government statistics themselves, to the palpable failure of the demonetisation measure to achieve its purported objective, which was to cripple the black economy, the government kept harping, in its justification, on the extraordinary“boldness” of the move.
FINANCE capital is always opposed to the use of fiscal measures for stimulating an economy. This is because any such fiscal stimulation undermines the social legitimacy of capitalism, and especially of that segment of it which constitutes the world of finance and which is peopled with “functionless investors” in Keynes’ words or of “coupon clippers” in Lenin’s words, ie, of entities that play no role in the production process. If State intervention comes to be seen as necessary for stimulating the economy, then the question may arise in the public mind: why do we need all these entities?
Professor Amartya Sen in his new book Collective Choice and Social Welfare which is a considerably expanded and updated version of his 1970 book with the same title, emphasizes that democracy must be understood as “government by discussion”. The idea of democracy being “government by discussion” really belongs to John Stuart Mill, though this particular phrase was coined by Walter Bagehot.
The same term is often employed by different people with different meanings, and this can be a source of immense confusion. The World Bank has done this to good effect in the past, taking over terms that are being used in a particular sense, especially by the Left, and using them in a very different sense, in order to create deliberate confusion and exploit in some way the sympathetic feeling that the term had attracted from people in its initial usage. “Structural adjustment” is a prime example of such appropriation by the World Bank.
THE annual budget has an impact on the economy over the year it covers; additionally it is also an indicator of the direction of policy of the government for the future years. Any budget has to be judged on both these counts. And on both counts, the Modi government’s 2017-18 budget is ominous for the people. It will worsen the recessionary crisis unleashed above all by the demonetisation measure; and it also portends an economic strategy that, in the face of the protectionism being introduced by Donald Trump, will further import unemployment into the economy.
THE point here is not that the Reserve Bank of India imposed on the working people of this country an utterly witless and utterly oppressive demonetisation; the point is rather that it had very little say in the matter.
THE demonetisation of 86 percent of the currency of the country, a virtually unprecedented measure anywhere in the world, has brought immense hardship to the working people of the country, and will damage their living standards permanently (since the Modi government plans not to replace the entire value of the demonetised notes by printing new ones). Many however believed that it was a step being taken for the greater social good, for achieving certain important social goals.
NARENDRA Modi had asked for 50 days’ time for his demonetisation measure to work: the people were supposed to suffer for 50 days, by the end of which the wonderful results of demonetisation were to become evident. He was even willing to get “hanged” if proved wrong at the end of this period.
WE are seeing in India at present a remarkable inversion of reason. The more the common people suffer from the impact of Modi’s demonetisation, the more he is lauded for the “courage” shown by him in undertaking it. An economic measure should be, and normally is, judged on the basis of how it benefits the people, and any measure that brings distress to the people is derided for that reason. What we find in the present case however is just the opposite: the more demonetisation brings distress to the people, the more it is applauded for its wisdom and courage.