So America got a jaw-dropping shock. India got two—the jaw-dropping one plus the nerve-wracking rupee maha-shock. The impact of the former will take a few months to unravel. The impact of the latter was instant like an electric shock. Much of the panic it caused was unavoidable because demonetisation with a view to unearthing black money needs to be planned secretly and announced suddenly. In the event, the secrecy and the suddenness were both admirable. The boldest government initiative in recent decades, it directly targetted corruption and fake currency as well as the black economy. It is a master stroke that deserves to succeed.
In the nature of things, the announcement also disrupted life across the country. The sudden denial of everyday cash for everyday essentials dealt a raw deal to the poor, the old, the petty traders, the daily wage earners and the many who are too backward to know what bank accounts mean. It hit the urban middleclass, too, as was evident in banks, petrol bunks and railway ticket counters where chaos reigned. Closer attention by the planners could have saved ordinary people from much of the trouble.
Actually, ordinary people rose to the occasion in spite of the problems they faced. From across the country there were reports of citizens saying that they would put up with short-term inconveniences in the interests of the nation. Television channels broadcast pictures of people lining up at petrol stations and in front of petty shops, saying how vexing was their experience and how they would bear with it since the abolition of black money was in their interest.
Will worthy intentions lead to worthy results? High-value rupee notes were demonetised in 1946 and again in 1978. On both occasions, the intention was to wipe out the black market. Obviously both attempts failed. In recent years the parallel economy had grown to 23.2 per cent of the GDP according to World Bank estimates. That would translate to about $479 billion. The government itself will have to admit that black money could not have grown that big without the active support of politicians in power.
Besides, let us not underestimate the genius of Indians to circumvent laws. Politics, crony capitalism and entrepreneurship have grown in India on one simple principle: Where there is a law, there is a loophole. How Indian ingenuity flowers in the days ahead will be of interest to sociologists as well as to income tax collectors. Every citizen will wish the government success because the government’s success against black money will be the people’s success. Meanwhile, former Chief Election Commissioner S Y Quraishi drew attention to the obvious when he said the currency reform would have “a big impact on upcoming elections”. In UP, for example, the Samajwadis and the Mayawatis will have no money to fight the elections. The BJP’s victory is assured.
The rupee drama will be as transformative for India as Donald Trump’s triumph has been for the United States. It wasn’t a narrow victory for the man who ran a crude campaign. The support he received from voters must have astonished him too. The acceptance speech, however, was delivered by a new, born-again Trump—gracious and conciliatory. But the hatreds and resentments had gone so deep that an unprecedented “He’s not my President” movement has already started. A divisive America may be a fact of life for the immediate future.
In policy approaches, Trump is unlikely to be as abrasive as he sounded during the campaigning. While his campaign rhetoric will no doubt be softened by the realities of power and the constrictions imposed by America’s political-administrative establishment, the basic tenets of the Trump philosophy are unlikely to change. His primary article of faith will be “America first”. He will hold on to his view that allies must pay more for the US troops stationed in their region. He is also unlikely to give up on his stated opposition to the multi-nation pan-Pacific trade pact that was the thrust of Barack Obama’s pivot to Asia policy. The military alliance with South Korea may survive.
Meanwhile, it is of interest to note that the six Indian-origin Americans who have got elected to the US Congress are all members of the Democratic Party despite the fund-raising celebrations conducted by the Republican Hindu Coalition. But the Coalition is far from discouraged. The Hindu Sena in Delhi distributed sweets when Trump won. A sizeable number of Indians seem convinced that Donald Trump is a BJP member.