It’s been over 2 years and 1 day since PM Modi’s announcement of demonetization. During this a lot has been said about him and his tactical step. Media tried to make us believe that our economy was destroyed as a result of this “mistake” and that we may not recover for a very long time.
From the layman’s perspective, doing away with 86 per cent of India’s currency in one stroke, in an economy half of which runs in cash – can easily be labeled as foolhardy. But for Prime Minister Modi things work differently, if there is a policy that will benefit the masses and is in national interest he will not shy away from taking it up ‘come what may’!
He did the same with demonetization, indeed it was a hard call, people had to withstand long queues which became the daily routine of every Indian, for over a month. Demonetization, like anything had its share of pros and cons and we don’t intend to talk about it all over again but here we will discuss how it created a new class of ‘Modi haters’.
The erstwhile affluent Modi supporters during the time of 2014 were under the impression that this government would stand shoulder to shoulder with them come what may. Typically upper caste, upper class businessmen who had amassed wealth in the UPA era by avoiding taxes thought they could continue doing the same in NDA era too but sadly, things didn’t turn the way they expected it to. Demonetization and the subsequent cash deposit required everyone to prove that the money they had ‘hoarded’ was from legitimate sources.
A strong message was sent with this announcement, as PM Modi openly announced that he was above partisan politics and will not hesitate in implementing strict policies, even if it meant dissatisfying his core voter base. This class of voters, after the demonetization drive, which hit their illegitimate gains hard, turned Modi haters overnight and have since come out in different facades to oppose the Modi government.
One of these facades is advocating for NOTA. NOTA warriors are a special breed of people, mostly sponsored pawns who peddle a narrative that voting NOTA somehow serves the country and will lead to the formation of ‘good government’ that will provide ‘good governance’ to the masses.
Nevertheless, it was being speculated that post demonetization BJP will lose many state elections but that wasn’t to be the case. Vijay Rupani, the Chief Minister of Gujarat said, “Despite demonetization, Bharatiya Janata Party (BJP) has continued to win elections across the country which includes the party pocketing 80 per cent on the 10000 gram panchayat seats in Gujarat.” Furthermore he said, “I clearly remember that elections for the gram panchayats were held immediately after demonetization. The polls were held for 10000 gram panchayats in December 2016. In these elections, 80 per cent of the gram panchayats were won by the BJP.”
“Thereafter elections were held in Maharashtra where BJP won. Then state assembly polls were held in five states and BJP emerged victorious with thumping majority in Uttar Pradesh and Uttarakhand. Congress was swept away. The verdict was out. Congress failed to garner the support of the masses on the issue of demonetization,” he added.
Demonetization was an assault on tax evasion. In order to achieve this, the government initiated many income disclosure schemes however, the tendency to evade taxes continued as there was no real penalty that was levied upon those who evaded taxes and the probability of getting caught was less. Thus, there was a need to change the chronic behavior of individuals whereby they preferred to evade taxes. Let us first explore whether the behavior has changed or not.
This data categorically demonstrates that there has been a shift in the behavior of Indians post 2016, but the key thing to understand is what caused this sudden change in the behavior. While most critics have often termed demonetization as a failure, I believe they’re giving far too little credit to the scheme as they’re heavily discounting the benefits while significantly jacking up the costs. Let me put it on record that virtually nobody can claim demonetization to be a pleasant or a convenient experience, it wasn’t and it definitely wasn’t a no-expense exercise. But the idea behind any policy intervention is to see whether the benefits outweigh and outlive the costs or not.
In that context, when we view demonetization as an exercise, it does appear that the benefits have outperformed the expectations and beyond that it does appear to be the case that initial assessment regarding the long-term nature of these benefits was spot-on.
The changed behavior of this class of voters also showed their fickle and opportunistic allegiance to PM Modi and BJP. As long as BJP was seen working in their interests they supported the party and lauded PM Modi, but as soon as PM Modi took a tough decision in national interest, they deserted the party en masse. The BJP can very well do without these kind of supporters!
