After several half-hearted and unsuccessful attempts by various governments over the years to untangle the Gordian's knot of black money, Prime Minister Narendra Modi has used the celebrated method of cutting it at one stroke.
The fallout may have been hugely disruptive for the common man, if only because the banks and post offices – rarely the epitome of competence – have been unable to respond effectively to the sudden change. Hence, the International Monetary Fund's advice for managing the transition prudently.
But the dramatic step has exposed the futility of negotiations with the Swiss authorities or specifying a period during which the government promised that no questions would be asked about large bank deposits.
To the denizens of the infamous "parallel" economy, who have revelled for so many years in their dexterity in evading the long arm of the law, Modi's "surgical strike" could not but have come as a rude shock.
It will take time for the economy to feel the effects of the bold initiative, but the immediate impact of the demonetisation of the Rs 500/Rs 1,000 notes on those who merrily hoarded them will be little short of bewildering.
For them, the sudden realisation that they have been rendered virtual paupers for the time being must be disorienting, for they have to forsake the habit of spending lavishly on friends and families.
The first signs of demonetisation are likely to be noticed in the forthcoming assembly elections in Uttar Pradesh, Punjab, Gujarat, Goa and Manipur.
Cynics may say that more than a desire to keep the promise to unearth hidden wealth, the ruling Bharatiya Janata Party (BJP) has used the economic measure to boost its own prospects by demonstrating its seriousness in tackling a problem that has plagued the country for decades.
But they cannot deny that the step will eliminate the kind of excessive spending in the elections, which is suspected of occasionally influencing the outcome in a number of constituencies, and which underlines the root cause of corruption at various levels and is responsible for the pernicious politician-bureaucrat-criminal nexus.
What is surprising, however, is the almost universal condemnation of the Centre’s decision by the opposition parties with the Congress spokesman, Ghulam Nabi Azad, describing the move as reminiscent of Nadir Shah’s style of functioning and Bahujan Samaj Party leader Mayawati seeing the promulgation of an economic emergency.
They seem to have realised that Modi now has another effective propaganda weapon in his hands in addition to the surgical strikes on terrorist camps in Pakistan.
Any indication that he has set the cat among the pigeons where the treasure trove of clandestine earnings is concerned is bound to tilt the electoral scales in the BJP's favour.
It is possible that the parties out of power will feel the pinch of insolvency more than the ruling parties with their greater access to resources. But there is little doubt that next year's elections will not have the carnival atmosphere that has become customary over the years.
Notwithstanding the harassment to which the ordinary people have been subjected because of the need to stand in serpentine queues and meet the requirements of providing photocopies and fill up application forms, they have shown remarkable understanding of the government's objective.
They also know that suddenness was the essence of the measure. It could not have been announced earlier lest the targeted culprits found ways and means of evading the falling axe, although Delhi Chief Minister Arvind Kejriwal believes – in keeping with his penchant for suspecting the worst – that the BJP's friends had been made aware of what was going to happen.
For the opposition parties, and also the BJP, the task of rebuilding their assets will be an onerous one. They have always been chary of disclosing their sources of income. The prime suspects in this context – businesspeople – have also not been forthcoming.
Now, the parties may have no option but to resort to austerity, not only because their funds have run dry, but also because those in the corporate world and elsewhere who came to their help are in a similar predicament.
It is not only the politicians who will be affected. The film industry, too, will face the pinch of deprivation. The kind of affluence that enabled the more glamorous of the tinsel stars to live in a fairytale world will be out of their reach for some time. The clout of the underworld dons will also be diminished.
It goes without saying that at least over the next few months, India will be a different place with lavishness becoming an exception rather than the rule. The current exigency may also kick-off a move towards transactions based more on credit/debit cards and cheques than on cash.
This will entail a level of modernisation where computers and mobiles will be used by an increasingly large number of people.
Arguably, only a Prime Minister who is known for his spartan lifestyle despite his sartorial elegance could have outlawed unaccountable stacks of currency. It can be called a big bang reform for which the country has been waiting.
(Amulya Ganguli is a political analyst. The views expressed are personal. He can be reached at amulyaganguli@gmail.com)
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