Demonetization in the Village

Sometimes we dislike an action because we dislike the person doing it. That is hate clouding judgement. The fact is sometimes people we dislike may do smart things. At that time it is gracious to accept.

I don’t write political posts in this blog, but demonetization is well beyond politics. What does it mean to the Kumaoni Villager? In the village the incomes are from agriculture or small trading or jobs. Most people are below the tax bracket anyway. All dealing is cash – little happens in banks. So demonetisation naturally creates big problems here which go well beyond inconvenience. Too many people are unable to get necessities despite owning banknotes. The community always helps here in emergencies. Most people grow at least some food, and that is shared around. Informal (not card based) credit is extended because people know each other.  But even that is a chain – the next link is how much credit the wholesaler will extend to the retailer and so on. Since mandi’s run on cash, so the vegetable and fruit retailer clearly is in pain. The assumption underlying short term informal credit is a quick return to normalcy but no new banknote has reached the SBI in Mukteshwar or the ATM in Sitla, and the banks project another week of a 2K exchange limit. This pain is real, current and impacting livelihoods. The community cushion – in the village people help each other in ways city people cannot imagine – helps, but that too has its limits, especially when everyone is feeling the same pain. To top it, many do not understand why it has been done, or why it is important.

But that is the Micro level. At the Macro level, the benefits of demonetization are game-changing. People with the wrong principles will finally be hurt in the right places. (First imagine having 10 crores in cash. Then imagine all of it catching fire in front of your eyes).  The hard-working people who regularly pay their taxes won’t feel like losers. Paying taxes does have cynicism attached to it in India, but the fact is it should be done equitably. With demonetization, the government revenues will jump in the near term, and hopefully many citizens will start thinking paying taxes is better than dealing with such uncertainty. The world has taken notice – it realizes that India is serious about the cleanup, which gives confidence to the FIIs. With black money turning white, it will seek legit investment destinations. Both these will pump up the stock market.

Back to the villager, though – the only windfalls happen from land sale. The land prices might slide a little but will correct to real levels. The next land deal may have more cheque payment or people will simply convert the cash proceed to gold immediately. But normal life in, say, December will continue largely as before.

So what should the government do, and what should we?

The government should ensure the return to normalcy and liquidity is as quick as possible, in every village. The implementation has been shoddy, and the government needs to catch-up. We were four people who stood in a line for 2 hours today to convert a total of 12k. I think there is a lot of pressure on that front, and that should stay.

And what should we do? Should we oppose this policy or support it? Our sectarian, criticism-sensitive leader has demonstrated leadership in a critical area, and that part of his work at least, we should support. Don’t let hate cloud judgement. I think the move needs our support, because this is a critical battle in the war against corruption. We’re almost there. Backtracking now would be like asking for an abortion after hours of labour pains.

We need to back our side to the hilt. I am reminded of the many posters used in America in the second world war.  Words like perseverance and fortitude were flaunted.  To fight this effort would be to fight change and vote for the status quo – which is what we cry about at all other times. The swastika in this WW2 poster is the status quo. Time to give it some heat.