PM Modi’s Note Ban ‘Yagna’ Burns the Poor And Spares the Corrupt

Demonetisation has not eradicated corruption but only made the corrupt more ingenious and creative.

4 min read
PM Modi’s decision to say ‘RIP’ to Rs 500 and Rs 1,000 notes has elicited much reaction. (Photo: Rhythum Seth/ <b>The Quint</b>)

Our Prime Minister has a way with words and needs no Goebbels to help him put an appropriately seductive spin on the witchcraft that statecraft has been reduced to. What began as a surgical strike against black money is now a massive Yagna – a passage through fire we must all forcibly go through to learn how to behave in a clean ‘cashless’ society, which is the new normal.

It does not matter that the caches of dirty cash that were expected to be left behind by the fleeing marauders could not really be found and those that did exist have easily and swiftly found their way into millions of conveniently available zero balance laundry accounts as though designed and created precisely for that purpose. New? No, washed in Surf.

First, the aim was getting rid of the cancers of corruption, black money and counterfeit currency. Just suffer for fifty days, and the blow that will be delivered to the corrupt will be one they will never recover from, we were told.

Only this prime minister has had the courage to punch so hard, we were told. Any short-term setback to the economy will be more than made up by the windfall the RBI will receive – a part of which will be redistributed a la Robin Hood to all the 250 million PMJDY accounts and another part will be used to create spanking new, smart infrastructure.

If we raised our eyebrows, questioned the prudence and effectiveness of this buccaneering approach to governance, we were told that we were smarting because we were caught unprepared. This is just the first blow and there will be a slew of reforms aimed at unearthing black wealth – whether stored in real estate or gold or secret foreign accounts. Just wait and see.

Prime Minister Narendra Modi. (Photo: Reuters)
Prime Minister Narendra Modi. (Photo: Reuters)

Black Money Does Not Look Very Black Anymore

Now that we know that most of the black cash that was expected to be ‘extinguished’ is back and does not look very black any more, we are being told that ‘extinguishing’ anything and getting windfall gains was never the idea.


Demonetisation has now become a massive ‘yagna’ to help create a clean ‘cashless’ society.

The new narrative is that getting money back into the banking system and not ‘extinguishing’ black money was always the plan

Demonetisation has unwittingly or otherwise, opened up opportunities for corruption in the guise of fighting corruption.

Becoming a cashless economy does not make the economy clean or more ethical.

Demonetisation does not hit the corrupt hard. It only makes him more ingenious and creative in his corruption.

Getting everything back into the banking system was apparently the purpose so that all the tax hounds who have been straining at the leash can be let loose and sniff out the black from all those 250 million new accounts. Nothing is black or white until Big Brother declares it to be so.

The perversity of this exercise is breathtakingly audacious. We know that the smart black income earner does not store his illicit gains in cash. He spirits it away through a labyrinth of underground digital passages into tax havens abroad, or he buys properties in Mayfair and Kensington Palace Gardens, or buys gold and diamonds. He keeps a small part in cash as his spending money or he supplements his working capital to buy and sell.

Most of the cash is held by the poor because the banking system does not reach them or they prefer the safety and comfort of cash kept under the mattress to the trudge to a bank ten kilometres away. It is this cash which has been sucked into the banks and unless it is proved otherwise has to be treated as legitimate and ‘white’.
Rs 500 and Rs 1,000 notes were discontinued from 8 November as a step to curb black money. (Photo: PTI)
Rs 500 and Rs 1,000 notes were discontinued from 8 November as a step to curb black money. (Photo: PTI)

So what will happen to all the 13 lakh crore (and more to come) which has come back into the system? First, a whole new window will have opened up for the taxman, the bank manager and their friend in the RBI and MOF to expand their rent seeking and extortion opportunities to hitherto undreamt of levels. Armed with Big Data and new algorithms, the extortion capacity increases manifold.

We always forget that corruption is directly and causally related to the opportunities that the coercive power of the State provides. More the government, more its policing powers, more the corruption. So whether or not the prime minister advises his taxmen to be soft and considerate, he has, unwittingly or otherwise, opened up opportunities for corruption in the guise of fighting corruption. The corruption of anti-corruption. The ultimate perversity.

Two myths need to be debunked. First, becoming cashless and making all money transactions go digital and plastic makes the economy cleaner and more ethical. Changing the currency of transactions does nothing to the nature of transaction. Vijay Mallya did not take sackfuls of Rs 500 and Rs 1000 notes to London to buy his properties there. He siphoned off money from the banking system. As does any corporate fraudster.

Second, that demonetisation hits the corrupt hard. It does nothing of the kind. It only makes him more ingenious and creative in his corruption. It hits the honest and the poor hard.

(The author is a former IAS officer. This article first appeared as a Facebook post on the author’s timeline. The views expressed above are of the author’s alone and The Quint neither endorses nor is responsible for the same.)

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