If India’s motley crew of Opposition parties are right, then the Narendra Modi government’s decision to demonetise Rs 1,000 and Rs 500 notes is nothing short of a calamity. Saner voices, unfortunately drowned out by the cacophony of doomsday prophets, however, have taken a more principled position.
Yes, the dramatic move to clean the Augean Stables of unaccounted or “black” money will cause short-term pain. Yes, it may hit consumer demand and could well knock off up to half a percentage point from GDP growth over the next couple of quarters.
But the naysayers will do well to remember that it will also wipe out an estimated $70 billion in unaccounted money currently in circulation. This money feeds corruption, terrorism, the narcotics trade and other nefarious activities that eat away at the innards of the Indian economy and society, deprive the government of legitimate revenues and help perpetuate the cycle of poverty that Modi has sworn to eradicate.
That’s why I say Modi’s war on corruption is our war. It’s a war on terror, but is also a war on poverty. So those Bandwagon Babulals here in the UK who are up in arms and threaten to lead campaigns to protest outside India House at the ‘hardship’ of NRIs, should be stopped in their tracks. Just think about those families who have lost loved ones at the hands of terrorists and the goondas. The poor whose futures are robbed daily by the corrupt.
Let’s look at specifics. The demonetisation initiative is expected to reduce the Reserve Bank of India’s liability by $70 billion, or almost a full year’s borrowing!
This will help create conditions for greater private sector investments, lower interest rates and make large volumes of credit available both for entrepreneurs and farmers, who are the backbone of India’s growing economy. Then, it will drive more transactions into the “white” or formal economy.
And finally, it could come as a god-sent for foreign investors who fear to venture into India because of persistent demands for bribes from the lower bureaucracy, especially in the customs and direct and indirect tax departments.
The local elections this week in Maharashtra and Gujarat where Modi’s BJP have had overwhelming victories is ample indication that the peddlers of doom are wrong and the Indian public, inconvenienced as they are by the sudden demonetisation, by are willing to bear it for the greater common good.
As many people have said several times in the past, Modi is a bold political gambler. He senses the country is united behind him and is drawing sustenance from this support transform India from a ‘less cash’ to a modern digital cashless society. If we don’t stand shoulder to shoulder with Prime Minister Modi now, then when will we?
Manoj Ladwa is a political strategist and founder and chief executive of India Inc.
