Tag Archives: demonetization

A tale of two surgical strikes

It is time to pause and reflect on the outcome of the surgical strikes along the Line of Control on September 29 and the “surgical strike on the Indian economy” on November 8 and do a cost benefit analysis. Such a narrative should begin with a statutory declaration that it does not involve the question of nationalism. We all love our country as we love our families.

Ever since the Modi government had publicly declared that the Indian Army had carried out surgical strikes along the Line of Control targeting the terrorist launch pads, exchange of fires along the LoC has been a daily affair. Since then, we have lost more than 26 soldiers out of which two of them have been beheaded and their bodies mutilated. Besides, 12 civilians have been killed, 70 army men and 76 civilians have also been injured in the Pakistani firing and shelling. More than 300 ceasefire violations by Pakistani troops have taken place along the Line of Control and International Border after the surgical strikes. Compared to the previous year, infiltration has increased by 100 per cent in 2016.

The recent Nagrota incident and killing of seven Army personnel, including two officers, is a clear signal that nothing has been changed positively on the ground. Only the situation has been deteriorated with a spurt in attacks, infiltration and killings. May be the army action would have deterred the militants and the Pakistani soldiers from acting against India, but the machismo of the Modi government to make it public proved counter-productive causing loss of lives and property on this side of the border.

Apart from making a strategic army action public, the government did nothing in terms of economic and diplomatic offensive to contain the situation. A lot was said about review of the Indus Water Treaty and the MFN status to Pakistan but all the action ended in TV studios and social media platforms. The prime minister declared in Punjab that the water that belongs to India will be stopped from going waste in Pakistan. But, he is silent on how he intends to do it and to question his intention will be construed as anti-nationalism. In response to a Rajya Sabha question, the commerce minister Nirmala Sitharaman has replied on November 23 that no decision has been taken on review of the MFN status provided to Pakistan. So, the trade goes on, the diplomacy goes on and so also escalation of tension along the LoC.

While the Modi government still remains in celebratory mode turning a blind eye to aftermath of “surgical strikes”, the question still remains what is India’s strategy towards Pakistan? Tit for tat, offensive, defensive or long term solution?

Now let’s deal with the second tale of “economical surgical strike” and look at certain bare facts which separate the wheat from the chaff. The prime minister while announcing the “surgical strike on the Indian economy” on November 8 had outlined three objectives: recovery of black money and to curb its further generation, to stop terror funding and prevention of counterfeiting of currencies.

How far the demonetization succeeded to achieve these goals? As on November 29, 60 per cent of the

Rs 14.5 lakh crore have been returned to the banking system either in the form of deposits or exchanges and the fate of the remaining 40 per cent will be known after December 30. Further, as the demonetization process is not intended to touch the flow of resources, bulk of the black wealth will remain untouched. Therefore, it is an exaggeration that with the demonetisation process, the problem of black money will be over. It certainly requires comprehensive reform which is much more than note-bandi. If the proposed amendment to the Income Tax Act which has been passed in the Lok Sabha as a money bill is of any indication, there is serious doubt on the intention of the Government to fight against black money. If the objective was to convert black money into white by another disclosure scheme, why the common man who has nothing to do with black money is sweating before banks and empty ATMs?

Recovery of new currencies from terrorists, increasing terrorist activities and instances of counterfeiting signify that demonetization has largely failed on these objectives as well. There is a Sanskrit sloka in the Abhigyan Shakuntalam which roughly translates as follows: “when the fishing net was torn and fish leaped into the water, the fisherman becomes dejected and consoles himself by saying that he will get the punya for allowing the fish to escape.” This is exactly what our prime minister has achieved through the demonetization policy.

Notwithstanding what the prime minister outlined as the objectives of demonetisation, repercussions of the policy have already been visible. GDP growth in the second quarter of the financial year has been recorded at 7.3 per cent against 7.6 per cent during the corresponding quarter in the previous financial year.

Moreover, this is an agriculture led growth figure. Ratings have already lowered GDP growth forecast for this fiscal to 6.9 per cent from 7.4 per cent citing demonetization as a prominent reason. Demonetization has also had its impact on investors’ confidence on our currency which was one of the reasons why Rupee has crossed the psychological barrier of 68 against US dollar.

Though exact figures are not available, 70 people have reportedly died due to causes directly or indirectly related to demonetization. They include bank employees also. Farmers were happy that they had a good monsoon this year but the demonetization effect had reduced them to paupers. Neither they are able to buy seeds and fertilizer for the rabi crops nor finding market to sell their kharif produce. By denying the cooperative banks to exchange and deposit old currencies, the government made the lives of the farmers and the rural poor miserable.

Tourism sector, including medical tourism, has been badly hit due to the sudden withdrawal of currencies and it will have its repercussions in the GDP figure. Foreign tourists are taking to street performances to deal with the currency crisis.

The poor, the marginalized, daily wagers, farmers, migrant workers and the tribals who are outside the formal banking sector are the hardest hit. Rural economy is the worst victim of demonetization and it will have serious impact on the formal economy because the informal sector accounts for 20 per cent of gross domestic product and 80 per cent of employment. Job loss in the unorganized sector will adversely affect the rural economy which will further affect the formal economy due to impact on consumption and savings.

Certainly, things could have been planned better. The decision was taken without proper application of mind and without taking into consideration that Indian economy is a cash economy where 98 per cent of all transactions are conducted in cash and 2/3 rd of the total population do not have bank accounts and 96 per cent of people do not have plastic cards. These figures were simply ignored while taking the decision.

And, the consequence is people are dying in queues and soldiers are dying on border.

Source : http://www.mydigitalfc.com/op-ed/tale-two-surgical-strikes-565?fromNewsdog=1