Butterfinger Policy Making: striking parallels between demonetisation and surgical strike

Butterfinger Policy Making: striking parallels between demonetisation and surgical strike

Without any further ado, let us all acknowledge that India is going through a socio-political transition that has caught the nation off guard.  Narendra Modi is a far from reticent PM; he continues to be a full-time BJP karyakartha, who actively participates in electoral enterprise and crafts his governance in a way that it has kindred spillovers on his party. The PM assumed office in 2014 with an absolute majority. His high pitched campaign was woven around promises to create jobs, deliver peace, allay corruption and replicate the Gujarat model of development in the nation. Two years down, in 2016, the nation was beginning to get impatient for lack of tangible results. To acquit himself of a poor appraisal, PM Modi very deftly announced strikes against terrorism (surgical strike) and corruption (demonetisation) to absolve himself.

September 2016: Burhan aftermath engulfed the Kashmir valley in July 2016. While locals resorted to stone pelting, armed forces used pellet guns which rendered several civilians blind. Pakistan used this as an opportunity to criticise India for using force on Kashmiris. However, things went awry for India on September 18; 19 Indian Army soldiers were killed when militants attacked the Uri army base in Jammu and Kashmir. There was high pressure on the BJP, which is in alliance with PDP, to play a material role. Eleven days after the Uri attack, the Indian army announced that it had conducted surgical strikes in the contentious PoK region. The PM utilised this as an opportunity to show his regional strength and establish himself as a valorous administrator.

November 2016: Uttar Pradesh was due to for polls in less than four months, along with Punjab, Goa, Manipur and Uttarakhand. Well aware that the electorate across, was fatigued with corruption and there was little that the PM had done to redeem the State or even his own constituency, Narendra Modi decided to plug the gaps by resorting to a quick fix, in the garb of demonetisation. He called this as a surgical strike on black money, reclaiming his slogan, “Na khaaonga, na khaane doonge”.

Stunning parallels can be drawn between both these strikes, which were conducted within a gap of 40 days. Not only were they precipitous, they stoked uncertainty, they were patchwork policy decisions, and their impact continues to remain unmeasurable.

Impact

  • Surgical strike aimed to contain militancy, through forewarning and sending a strong message in the region. India shares boundaries with seven nations of which two are sensitive borders, Pakistan and China. After multiple negotiations and diplomatic dialogue, India answered back in an offbeat way. Unfortunately, the parade of power was unable to reach the goal post. As per the information released by Ministry of Home Affairs, there were 341 incidents alluding to terrorism during 2017 compared to 311 in 2016 (November 2016 to 31 October 2017)
  • The primary objective of demonetisation was to curb corruption and attack the stock of black cash that corrupt actors in the system had hoarded over a period of time in the form of 500 and 1,000 bills. Unfortunately, we did not find anecdotal evidence to suggest that sacks of cash were reduced to ash. To a question raised by Rajya Sabha MP Shri KTS Tulsi, the Minister of State in the Ministry of Finance has responded that as on June 30, 2017, an estimated value of Specific Bank Notes (SBN) is INR 15.28 trillion i.e. ~99 percent of the SBNs in circulation as on November 8. 2017. Moreover, data released by Corruption Perceptions Index suggests that the cesspool of corruption continues to be all pervasive in the nation. India ranked 79, with a marginal improvement in its score from 38 (2015) to 40 (2016). It would be worth mentioning that the goal post shifted from black money to digital economy without the former even being a part of the original plan. “At the time when demonetisation was being rolled in, the Hon’ble Prime Minister in his speech neither mentioned that the same was being adopted for digitization of the economy nor was it mentioned that this was to make India a ‘Cashless Economy”, Rajya Sabha MP Shri KTS Tulsi. The digital economy would have been a spillover, had the demonetisation achieved its initial objective which eventually would manifest into a transaction trail and thereby, naturally curb corruption; Calling this as an objective of demonetisation is a rather naïve cover up. That was not to be. In December 2016, 311 million transactions (value: INR 52220 crore) were recorded through debit and credit cards.  As the process of remonetisation gained velocity, cash recovered; debit and credit cards fell to 243 million (value: INR 45719 crore).

It is palpable, that the impact of both strikes is yet to be played out for the common man to discern any tangible impact.

Image

In the battleground of politics, perception can be a game changer. So, while we can continue to mull over the impact of these strikes (or lack of it ), they surely gave a boost to the PM’s image. In times of post-truth, notions matter and this is exactly what these two bold reforms helped the PM achieve. The PM claimed bravado on surgical strike followed by relentless chest thumping, in order to gain political mileage. He undermined all the previous efforts that were intended towards dealing with militancy in the valley. Bombastic verses of courage during public addresses, (from Mann ki Baat to the demonetisation speech to the new year address to relentless election campaigns) accompanied by calling the previous Government diplomatically inept, effortlessly transformed the PM from “Pradhan Sevak” to Shaktimaan. At the same time, demonetisation institutionalised the PM as a politician who was committed to conquering the malaise of corruption for the sake of poor and downtrodden. He championed the art of political messaging when he convinced the poor that the rich had been brought to task and every individual who stood in the serpentine bank queues was to be blamed for their plight.

Limited impact of the two strikes in bringing about granular change cannot be gainsaid. Moreover, these reforms also go on to reiterate that governance should not be myopic or constrained by limited objectives. Every reform should eventually have a larger objective, which is the welfare of the nation. We cannot have a battery of reforms that slip in meeting their result areas and we move on to some more reforms.  Economic losses incurred during demonetisation and the trust deficit in local Kashmiris have not only made these reforms over-priced, they have failed to echo beyond their window of time. Militancy cannot be effectively tackled without a buy-in from the local population. The PM needs to engage with the valley, create jobs for them, and empathise with them, to cover any meaningful ground. To vanquish the demon of corruption, we need to attack the big-ticket transactions like gold and real estate. Oil and land transactions need to be pulled under GST and electoral funding, the conduit of sizeable corruption needs to be dealt with some sustained sincerity.

Disclaimer: The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NEWSD and NEWSD does not assume any responsibility or liability for the same.

Gunja Kapoor is a policy analyst based in New Delhi. She tweets at @gunjakapoor

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