Thomas Isaac makes a perfect political masterstroke

Thiruvananthapuram: At worst, finance minister Dr T.M. Thomas Isaac has created a scare. But his fierce public demand for at least Rs 1200 crore for the state on the eve of pay day on December 1 was a political masterstroke, more to do with discrediting demonetisation than fiscal management. By saturating the media with his operatic demand for money, as if it was the end of the world for the state, Dr Isaac has emerged as the only political leader in the country who had quite tellingly exposed the unpreparedness of the demonetisation exercise.

Dr Isaac’s was opportunistic politics at its best. He knew the RBI did not have enough physical currency at its disposal, and he went for the kill on the day before pay day. Truth is, the Rs 1200 crore he had asked for is more or less the imprest money (essentially reserve money) the state customarily requests from the RBI at the end of every month to meet salary and pension expenses. It is a well-oiled automatic process. In fact, the imprest money is sought at the end of every day, and the RBI had never failed to keep its side of the bargain even after demonetisation was declared. Dr Isaac himself has conceded this.

But if the finance minister made a song and dance about it towards the end of November it was not because he thought the RBI would refuse the money but because he knew that it would be impossible for the central bank to transfer all the money the state had asked for. He knew the RBI would fail but he wanted the world to see it was failing. This is why opposition leader Ramesh Chennithala’s charge that Dr Isaac had woken up late for the challenge is way off the mark.

The finance minister struck when the iron was hot. The salaried middle class, the non-entrepreneurial class, was largely insulated from the sucker punch of demonetisation. Pay day was the right time to remind them of the effects. Therefore, to give it a dramatic emphasis, Dr Isaac argued for the worst case scenario. “What if all government employees and pensioners, given the uncertainty of the moment, decide to withdraw all the Rs 24,000 they are entitled to a week,” he asked. However in doing so, Dr Isaac did put the jitters in old pensioners, who mostly put their money in treasury savings bank accounts.