While addressing the nation in the latest episode of Mann ki baat on Sunday, Prime Minister Narendra Modi attempted to blunt some of the main criticisms he has received in the wake of his decision to demonetise high-value currency notes. However, his arguments lacked conviction. For instance, a key criticism has been that Mr Modi has, in effect, shielded political parties from declaring their sources of funding even as he has put onerous demands on the common man. But on Sunday, he emphatically stated that some people were spreading rumours that political parties enjoyed all kinds of concessions. “These people are absolutely in the wrong. The law applies equally to all. Whether it is an individual, an organisation or a political party…”
But, the fact is that the law is not the same for political parties; for instance, they, unlike anyone else, do not have to furnish any details about donations of less than Rs 20,000 and this loophole potentially allows them to launder black money. Also in May this year, the government amended the Foreign Contribution Regulation Act, 2010, retrospectively, thus letting Mr Modi’s party, the Bharatiya Janata Party, as well as its principal Opposition, the Congress, off the hook in a case where the Delhi High Court had held them in violation of the law over foreign funding. This duplicity on the part of the government does not help its cause to morally exhort all other entities in the country to imbibe financial probity.
As the December 30 deadline — by when Mr Modi had promised that the country would be cleansed of corruption — approaches, it is far from clear if the decision to demonetise has really worked. For one, in sharp contrast to the government’s expectation, most of the banned notes are back in banks. There is also evidence of fake new currency notes. Neither of these developments is surprising, but they do show how effectively corruption has undermined demonetisation. As far as the move to a cashless economy is concerned, it did not require such a drastic step. While this tale of inefficacy has played out, India’s informal economy as well as its growth story have taken significant knocks. The government’s lack of preparedness is best captured by the 60 notifications it has issued since November 8, many of which violated the basic norms of trust between the government and citizens. There have been flip-flops over practically every aspect of the decision. But, possibly buoyed by a sense of public approval, Mr Modi seems to be in denial. Instead, Mr Modi chose to characterise the chopping and changing as evidence of his administration’s sensitivity towards people’s concerns. “The government, being a sensitive government, amends rules as required, keeping the convenience of the people as its foremost consideration…” he said.
The prime minister’s goal of curbing black money and corruption is unexceptionable. But, he must realise that his choice of policy instruments to achieve this is open to criticism, as it should be in a democracy. Accusing the Opposition of trying to “rescue the corrupt” by opposing demonetisation, just as Pakistan provides cover to terrorists for crossing the border, or comparing critics to a gang of pickpockets in a village fair is in poor taste.