Published in Mtimes Friday 12 October 2018
Some of the hawks in Government believe that they can regain some of their lost credibility, due to a proliferation of scandals and blunders over the past three years, through a demonetisation exercise involving high denomination notes to curb counterfeiting and money laundering which will certainly help to reverse the situation.
Their arguments are that it will deal a severe blow to the scourge of black money in the economy. We will not to have to depend on our sole Hector Tuyau to hunt down and dig out those millions from “coffres forts” or “treasure coves” so common among the businesmen, traders, professionals, drug dealers, even hawkers… Is the MRA on leave or have they taken some long vacations approved by Government?
Besides curbing corruption and money laundering, they argue that demonetisation usually has a positive impact on the liquidity structure, on inflation, on the stock exchange, on tax collections, on e-transactions, on interest rates and investments , in the real estate sector with increased transparency in dealings, and it will definitely help to boost economic growth by a few percentage points. They also argue that Indian PM Narendra Modi dared to go for it in such a complex and not so monetised economy like India, despite warnings from eminent economists that it would be a disaster – true is it that it was not well planned, thus delivering mixed results and the banksters ensured that the gangsters got through the nets.
The hawks are also trying to convince their supporters that it will be a booster for the government and a surgical strike against Mafiadom and "hawala" or black money. Even if in economic terms, it might turn out to be a flop, it would be a huge success in political terms. And deep down, the hawks know very well that that’s the real goal of the demonetisation exercise -- as it has been the case in India all along. The PM will be personally praised for his courage; after trying to follow in the footsteps of his father in tackling the drug dealers, he will come out as a champion of the fight against illicit wealth and money laundering. That’s the main benefit.
The doves, however, are not that sure; they are of the opinion that we should not try anything that might disrupt the economy which is gearing itself for an above 4% growth rate powered by capital intensive infrastructure projects. In our case, our defaulters have long ago converted their black money to either shares and real estate or placed them in safe havens abroad, especially in Dubai. Demonetisation will hit only small-time concealers of income who keep their money in cash; it hit such people hard, not the big fish. For the doves, the losses may outweigh the gains, and it may not achieve anything. Bureaucratic and political corruption will be back just as before.
