Demonetisation: Prudence or Adventurism?

THIRUVANANTHAPURAM: It was a harrowing time for Mohammed Shafeek on Sunday at a private hospital in Pattom in the capital city after they didn't take the demonetised Rs 500 and Rs 1,000 banknotes. His wife Anzi Beevi was being discharged after a cesarian. Initially, the hospital authorities were firm in their stand that the Anchal native has to pay in the new denominations. When one of the major yardsticks of good governance and modern democracy is the impact of the policy on the lowest strata of the society, hapless people like him has to run from pillar to post. When the Union government had come out with a directive that the old demonetised notes would be accepted at hospitals, they did not mention anything about the private hospitals. This has come in favour of private hospitals where people like Mr Shafeek have faced the brunt of the BJP Government's decision.

His brother, A. Shafeek told DC that they had deposited Rs 40,000 initially and the remaining Rs 44,000 had to be paid at the time of the discharge. "Since the newspapers had mentioned that hospitals would take the demonetised notes, I did not bother to change the existing currencies. But when the hospital authorities denied taking them, I approached the bank, and they also could provide me only Rs 4,000 notes. I am a small time trader and do not have a debit card,” he said. After six anxious hours, the issue was finally resolved after a lady superintendent accepted the money citing that the old currency notes would be remitted in the bank on Monday. Shafeek had lucky escape. But there are millions of people like him who have been directly or indirectly affected by the demonetisation.

State finance commission chairperson Dr B. A. Prakash called it an act of political adventurism that unnecessarily pushed the country into an acute economic crisis. "What the move has done is suck out 85 percent of the total money value in circulation in one go. To say that such a massive drain out of currency from the system would be replaced in a few weeks would be too optimistic," he said. "What's more, more than 80 percent of national transactions are cash-based. Never before has such a foolish decision been imposed upon the country." Citing census figures, he said 41 percent of households in the country had no bank linkages.

"This figure demonstrates how significant cash transactions are for the economy of the country. The wealthy can transfer money using electronic transfer but what about the drivers of the rural economy like petty traders and farmers. Their incomes will be severely affected," he said. He argued that the move was implemented without understanding the ground realities. "The predominance of Rs 2,000 notes, too, is causing significant liquidity issues for the lower-middle classes and the have-nots. What is the poor going to do with a surfeit of Rs 2000 notes in their hands,” he asked.

But former BJP state president P. S. Sreedharan Pillai says the Malayalis have been affected mostly because the state government tried to 'politically exploit' the situation instead of rallying behind the Union government. He said the state's finance minister T. M. Thomas Isaac had immediately rejected the decision announced by Prime Minister Narendra Modi six days ago. "The current imbroglio will be sorted out in no time. Instead of appreciating such a remarkable decision which has affected the hawala and black money owners hugely, the state government had given out directions not to accept the monetised notes. Even during Indira Gandhi's time in 1969 when 14 banks were nationalised, it sent shockwaves across the country," he said.

When liquidation affected co-operative banks, he said, millions of consumers were affected. So he feels the left government has converted the Modi Government's decision into a 'celebration festival' which should have been avoided. He said BJP workers were camping in Attapadi and other tribal hamlets where people are ignorant of the demonetisation and enlightening them on the initiative. Social worker and managing trustee of the Centre for Consumer Education Dijo Kappan feels the idea of Modi to demonetise Rs 1,000 and Rs 500 notes was excellent, but the way in which it was implemented has been an utter failure.

He says there have been no advance preparations which has badly affected cross sections of the society, especially the lower strata. "If Modi wanted to bring down the black money, why did he introduce Rs 2000 currency notes? I had to pack off my labourer as there has been a dearth of smaller denomination notes. So he has lost work all these days, and I have asked him to come after two weeks hoping that things will improve," he said. He feels the rich and the mighty are not bothered about getting smaller denomination banknotes as they make transactions online but the poor, especially villagers who are not internet savvy, face the brunt of the situation.

(With inputs from R. Ayyappan)