Will Demonetization Cost the Modi Government in the 2019 Elections?
Despite widespread perception, Indians are not gullible and emotional followers, and many have quickly forgotten the repercussions of demonetization. However, the economic and social fallout continues to hold significant weight as we approach the 2019 elections.
Short Memory and Emotional E accompanying Success
Often, people forget the harsh realities of historical events, especially those with complex and violent undertones. From massacres, arson, looting, serial bomb blasts, to natural disasters, people tend to forgive and forget. Emotional blackmail and outright lies work with a population that values immediate gratification and emotional attachments. This phenomenon, often referred to as crony nationalism, allows candidates to manipulate public sentiment effortlessly.
The Demonetization Policy: A Spectacular Failure
Demonetization, presented as a panacea for India’s economic malaise, was a flagship policy that turned out to be a complete failure. The move to wipe out 86% of the country's currency overnight triggered significant economic turmoil. The immediate and long-term consequences of this policy remain evident in various sectors of the economy.
Economic Impact: Loss of GDP and Inflation
Indian economy saw a dip of about 1.5% of its GDP due to demonetization. The Reserve Bank of India (RBI) had to spend close to Rs 13000 crore over the next two years to remonetize the country. In 2016-17, Rs 7965 crore was spent on printing new notes, including both old and new demonetized notes. For 2017-18, this figure was Rs 4912 crore.
Social Impact: The Human Cost
The social impact of demonetization extended beyond mere economic disruption. The demonetization series of events brought about unimaginable hardships for individuals. A poignant example is the story of an old lady who stood in a queue in Bangalore with just 1700 rupees in her bank account, unable to withdraw cash due to the absence of 2000 rupee notes. Her story is a stark reminder of the real human cost of such policies.
Enduring Consequences
Amidst the political and social narrative, the economic impact of demonetization remains a contentious issue. The lack of cost-benefit analysis is a major criticism, pointing to the lack of genuine benefits amidst the chaos. The social impact, especially on vulnerable sections of society, underscores the need for a more balanced and nuanced approach in policy-making.
Will Demonetization Be an Issue in 2019?: Yes, and it Should Be
Given its profound economic and social impact, demonetization will indeed be a critical issue in the 2019 elections. It was a poorly planned scheme that inflicted significant damage on the economy and led to widespread hardship. The policy’s failure to deliver its intended benefits and its delayed recovery signal a deeper need for policy introspection.
The Modi government must address these challenges if they wish to regain public trust. Demonstrating accountability and transparency in handling such issues is not just a matter of political survival but a step towards building a more resilient and equitable society. Whether it will be enough to secure their electoral victory remains to be seen, but the issue is too significant to be ignored.