Bombay Diary

January 2, 2017


Resuming this column after a mere six weeks, I find that the whole world has turned topsy-turvy. For starters (and middles and enders), Donald trumped Hilary. And Narendra Modi, India`s best Foreign Minister ever, and occasional Prime Minister, showed us why it would be good for the nation if he concentrated completely on his special interest, External Affairs.

Demonetisation – which some people insist is spelt ‘Demonisation’ – has certainly shaken up the country as no single measure has done for a very long while. The last time it was done was in 1978 (again by a non-Congress government), when H M Patel, Morarji Desai`s Finance Minister, demonetised notes of Rs 1000, 5000 and 10,000. This was the first time in independent India, although pre-independence (1946) it was also carried out, with Rs 500, 1000 and 10,000 replaced by new notes.

The monetary size of the notes tells you why this time the measure has caused immense hardship: Rs 500 was a huge sum in 1946, while in 1978 most middle-class people hadn`t even seenthe smallest note to  be cancelled (Rs 1000). In 2016, Rs 500 and Rs 1000 notes were used on a daily basis, with even your average chaiwala flush with 500s.

What made India`s First Chaiwala not look at these historical precedents before taking this step? If both in 1946 and 1978, demonetisation was known to have failed, why was it ever considered this time around? If we had notes of Rs 5000 and 10,000, and they were suddenly replaced, that at least had a  chance to flush out black money without making a victim of honest tax-payers and the very poor, who only work in a cash economy.

Human beings are always taught to admit their mistakes and learn from the experience; governments, on the other hand, never admit they are wrong. There is too much ego involved (and in the present case, that particular department is size XXXL), plus there is the political Opposition baying for the government`s blood. The net result is that the government digs in its heels and stays the course, whatever the pain and hardship. It makes life easier, of course, that the pain and hardship is suffered by other people, not by anyone in the government.

A clear sign that the government and its poodle, the Reserve Bank of India (post Raghuram Rajan), have been panicking is in the flurry of notifications that have been issued: in these momentous 50 days, as many as 74 notifications have come out, 53 from RBI and the remaining 21 from the Finance ministry. Even Narendra Modi, the man with the firm resolve, has changed his reason for demonetisation: To get rid of black money one time, to get rid of fake notes another, to tackle terrorism a third. All three aims of course, are laudable. Has even one succeeded? I doubt it.

In the days after demonetisation was announced, we knew we were passing a bank by the long, straggly queue outside, people waiting patiently to take out a meagre sum of money from their own accounts! Even now, after the 50 bure din are over, you can take out only Rs 24,000 per week of your own, legitimate, ultra-white money. Thus are the virtuous punished.

Surprisingly, the poor, the farmers and the daily wage-earners who are the worst hit, have proclaimed loudly their support of demonetisation. Could this be out of fear of our Dear Leader? I doubt it. I doubt it for the simple reason that India still hasn`t reached the fear-level of a dictatorship. So when victims praise the whip, it must only be because they believe that everyone`s whipped equally. Or even more so. You and I, comfortable in our urban, upper-middle- level existence, can scarcely imagine the wide-spread corruption at all levels which the urban poor and people in rural areas meet on a daily basis. For them, demonetisation is the panacea they have been waiting for. Sadly, it isn`t. We will soon have corruption with new bank notes.

Today being the second day of a new year, we should really be looking at the brighter side of life, shouldn`t we? In spite of the doom and gloom of 2016 — Brexit, European refugees, terrorist attacks and Donald Trump – we in India have some bright spots emerging rapidly, especially in the fields of culture and entrepreneurship.

Culturally, Mumbai has at last begun to look like a major city, because any metropolis of this size should be brimming with so many cultural attractions that making a choice of what to see on any given day is not an easy exercise. Art galleries bravely keep having shows in spite of the obvious decline of the art market. Lectures, discussions and book launches happen in different parts of the city all the time. Theatre groups still struggle, but more and more manage to keep their heads above water. The Symphony Orchestra of India is a major triumph for the National Centre for Performing Arts. Traditional Indian dance has shaken off its chains of orthodoxy, and experimentation on a large scale can now be seen – and successfully too.

As for entrepreneurship, every morning`s newspaper brings leaflets of new services being offered on-line or by phone — different cuisines to order, chemists to provide home-delivery after you have had too much of the first, and the latest – cashless ways of paying your bills. The expert on that, of course, is the government: it doesn`t have to pay for anything at all.

This article originally appeared at