📰 Union Cabinet brings back MPLAD Scheme
MPs will get ₹2 crore instead of annual approved ₹5 crore.
•Citing economic recovery, the Union Cabinet on Wednesday restored the Members of Parliament Local Area Development Scheme (MPLADS) that was suspended in April 2020 subsuming the funds for the scheme in the consolidated fund of India.
•The scheme was suspended for two financial years (2020-21 and 2021-22) but the Government on Wednesday announced a partial rollback. The MPs will get ₹2 crore instead of the annual approved ₹5 crore.
•Information and Broadcasting Minister Anurag Thakur said, “I am happy to state that since we are on the road to economic recovery, with many sectors reporting a positive growth, the Union Cabinet has decided to restore the MPLAD Scheme for the remaining part of the financial year 2021-22.”
•When the suspension was announced last year, the Government had claimed that ₹8,000 crore that would have otherwise been spent under the scheme will go to the consolidated fund of India and will be used for fighting the pandemic.
•Opposition leaders pointed out that the Government so far has not given a record of how it spent the savings from suspending the scheme for a year.
•DMK’s Rajya Sabha member P. Wilson pointed out that the Centre, by way of suspending the MPLAD Scheme, withheld funds for the States during the peak of pandemic when they were battling with financial strain themselves. “Tamil Nadu has 39 Lok Sabha MPs and 18 Rajya Sabha members. So the State, through the MPLAD funds, is to get ₹285 crore annually. This is the money that the Union Government pocketed,” he said.
•Senior RJD leader Manoj K Jha said the Government should come up with a detailed account of how it used the money saved by suspension of MPLAD funds. “The Government should bring in a White Paper without any shade. The question is how was this money spent and how exactly did it help during the pandemic,” he said. During the pandemic, public representatives who got direct feedback from the ground could have done a better work in helping the people using this money, Mr. Jha added.
•Fully funded by the Government of India. the objective of the MPLAD Scheme is to enable MPs to recommend development works. Each MP is entitled to ₹5 crore that is released in two instalments after close scrutiny by the Union Government.
•Since the inception of the scheme, a total of 19,86,206 works/projects have been completed with the financial implication of ₹54,171.09 crore.
They agree on revised Statement of Intent to strengthen dialogue on defence technology cooperation.
•As part of efforts for co-production and co-development of defence equipment under the Defence Technology and Trade Initiative (DTTI), India and the U.S. agreed on a revised Statement of Intent (SOI) to strengthen dialogue on defence technology cooperation by “pursuing detailed planning and making measurable progress” on several specific DTTI projects, the Defence Ministry said on Wednesday.
•This was agreed at 11th DTTI group meeting between India and the U.S. held virtually on Tuesday. It was co-chaired by Secretary (Defence Production) Raj Kumar from the Indian side and Gregory Kausner, performing the duties of Under Secretary of Defence for Acquisition and Sustainment from U.S. Department of Defence.
•The meetings are normally held twice a year, alternating between India and the U.S. However, this DTTI meeting was held via video teleconferencing consecutively for a second time on account of the COVID-19 pandemic, a Defence Ministry statement said.
•The aim of the group was to bring sustained leadership focus to the bilateral defence trade relationship and create opportunities for co-production and co-development of defence equipment, the statement noted. Four Joint Working Groups focused on land, naval, air and aircraft carrier technologies had been established under DTTI to promote mutually agreed projects. “The groups reported to the co-chairs on ongoing activities and collaborative opportunities, including a number of near-term projects targeted for completion on priority,” the Ministry said.
•The two sides recently signed the first project agreement for Air-Launched Unmanned Aerial Vehicle under the Joint Working Group Air Systems.
•A virtual expo of the Defence Industry Collaboration Forum was also conducted on Monday. “This forum offers an opportunity for Indian and U.S. industries to be directly involved in DTTI and facilitates dialogue between government and industry on issues that impact industrial collaboration,” the statement added.
📰 Draft document of Glasgow pact says climate finance is insufficient
The document urges the developed countries to ‘urgently scale up’
•A draft document of the agreement that countries, including India, are negotiating in Glasgow, Scotland underlines that the promised climate finance by the developed countries is “insufficient to respond to the worsening climate change impacts in developing countries” and urges the developed countries to “urgently scale up.”
•The provision of finance for mitigation and adaptation of the impact of global warming is one of the key sticking points. The United States, Canada, several countries of the European Union and the United Kingdom, among others, have dragged their feet on a commitment to provide $100 billion annually by 2020. India, along with several other developing countries, has for years pointed out that not providing this money implies that the developed countries’ demand to coerce major developing countries into a net-zero commitment by mid-century is unjustified. It also violates the core principle of equity and climate justice, they aver.
India’s commitment
•Last week, in Glasgow, Prime Minister Narendra Modi committed to India reaching net zero by 2070, two decades after 2050. Updated reports from the Intergovernmental Panel on Climate Change say that the earth’s best shot at keeping temperatures from rising beyond 1.5°C by the end of the century is most nations achieving net zero by mid-century. Net zero is when a country’s greenhouse gas emissions are balanced by removing an equivalent amount from the atmosphere. Mr. Modi also said that nearly a trillion dollars in finance was needed from the developed countries.
Final document
•The countries debating the agreement at the ongoing 26th Conference of Parties (COP) must have a final document in place by Friday, the concluding day of the summit.
•The draft document also says that it “recognises that limiting global warming to 1.5°C by 2100 requires rapid, deep and sustained reductions in global greenhouse gas emissions, including reducing global carbon dioxide emissions by 45% by 2030, relative to the 2010 level, and to net zero around mid-century.”
•It also called upon the nearly 200 countries which are part of the negotiations to “accelerate the phasing out of coal and subsidies for fossil fuels.”
•Though Mr. Modi has committed to dramatically increase the use of renewable energy by 2030, India is also likely to double its use of coal in the interim given how it sees the economy growing in the years ahead.
•“The funds necessary for adaptation must increase,” said Bhupender Yadav, Environment Minister. “Our consistent stand has been that developing countries such as India need transparency in terms of what kind of market mechanism will be in place. This is necessary to ensure that the developing and developed countries are on a level playing field.”
•The draft document also “welcomed” the contributions [of $413 million] to the Least Developed Countries Fund (LDCF), which represented significant progress compared with previous efforts.
•The LDCF is for a group of countries, several of them island nations, that have the least carbon emissions but also are at greatest risk. Since 2001, it has provided $1.7 billion for projects that help buffer the impacts from warming.
•Independent commentators appeared unimpressed. “The decision does not recognise strongly enough the extremely urgent need to close the huge 2030 emission gap, and to establish a high-level political process in 2020 to do so. At this stage, the draft only urges parties which have not yet submitted new or updated commitments to do so before 2022, yet many have submitted NDCs that are not at all improved or enhanced and/or are nowhere near sufficient for the Paris agreement’s 1.5°C limit,” said Bill Hare, Founder, Climate Analytics.
•“The UN Secretary General should be invited to convene world leaders at the end of 2022, specifically to address closing the 2030 mitigation and finance gap. If this is pushed off until 2023 then the process will really only be addressed here commitments for 2035, nearly 15 years away, leaving the massive gap in 2030 unaddressed,” said Mr. Hare.
📰 NSA meet seeks urgent help for Afghans
Dialogues must not complicate situation: Russia
•The Third Regional Security Dialogue on Afghanistan held here on Wednesday called for “urgent humanitarian assistance” to the Afghan people. The call was given in the meeting chaired by the National Security Adviser Ajit Doval, who urged close cooperation and consultation among the regional countries over the Afghan scenario. Russian representative Nikolai P. Patrushev said multiple dialogue mechanisms “should not complicate” the unfolding situation in the Taliban controlled Afghanistan.
•A joint statement titled the ‘Delhi Declaration’ issued after the meeting called for “collective cooperation” against terrorism and drug trafficking in the region and “expressed concern over the deteriorating socio-economic and humanitarian situation in Afghanistan and underlined the need to provide urgent humanitarian assistance to the people of Afghanistan”. The statement emphasised that the assistance should be provided in an “unimpeded, direct and assured manner” and that the help should be distributed across the country in a “non-discriminatory manner across all sections of the Afghan society”.
•“This is the third meeting of the process that was initiated by Iran in 2018. We had the second meeting there as well. We are grateful to Iran for that. We are meeting today to discuss matters related to Afghanistan. These have important implications not only for the people of Afghanistan but also for its neighbours and the region. This is a time for close consultation amongst us and greater cooperation, interaction and coordination among the regional countries,” said Mr. Doval, initiating the discussion among heads of the national security establishments of all the Central Asian countries, and Russia and Iran.
•Pakistan and China too were invited to participate in the consultation but both stayed away. The meeting, however, did not have any representation from the erstwhile Afghan government or the Taliban, which has not been recognised by New Delhi as a legitimate political player in Afghanistan. A team headed by Amir Khan Muttaqi, the Taliban’s foreign minister, will participate in a regional dialogue to be held in Islamabad on Thursday.
•This is the first meeting of the security heads of the participating countries that India has hosted since the Taliban took power in August after dislodging the government of President Ashraf Ghani. Mr. Doval was accompanied at the meeting by Samant Goel, head of the Research and Analysis Wing; Foreign Secretary Harsh Vardhan Shringla; and other Indian diplomats who have been a part of Afghanistan-related initiatives in recent months.
•Addressing the meeting after Mr. Doval, Rear Admiral Ali Shamkhani, Secretary of the Supreme National Security Council of Iran, said there is a need to establish an inclusive government in Afghanistan. “The solution comes only through the formation of an inclusive government with the participation of all ethnic groups,” said Mr. Shamkhani, highlighting that there is a need to find a “force” within the Afghan society that can create an inclusive government.
•Karim Massimov, Chairman of the National Security Committee of Kazakhstan, highlighted the many obstacles that prevent the formation of an “effective government” in Afghanistan. “We are strongly concerned with the appearance of the Central Asian fighters [in Afghanistan]. It’s necessary to increase humanitarian assistance for the Afghan people. It is highly important to increase concrete actions,” said Mr. Massimov.
•Addressing the meeting, Kyrgyz Republic’s Marat Imankulov raised the possibility of terrorism spreading from the territory of Afghanistan and said, “We need to extend help to the Afghan people.” Secretary of the Security Council of the Russian Federation, Nikolai P. Patrushev, praised the role of various regional dialogue mechanisms that have been framed to deal with the political situation in Afghanistan. However, he appeared to favour, the Moscow consultation, which he praised for “broad participation” by all sides.
•“Such dialogue mechanisms should not complicate the work of each other but rather complement each other. The Moscow format of consultation on Afghanistan retains its important potential because of the broad participation of the stakeholders,” said Mr. Patrushev, asking for stability in the region around Afghanistan.
📰 New online certification system puts exporters in a fix
Many reporting outages on the DGFT portal
•After crossing $30 billion for seven successive months, India’s merchandise exports have hit a home-grown stumbling block in the first 10 days of this month — a new system mandating online issuance of Certificates of Origin (CoO) for every outbound consignment from November 1 that has put exporters in a tizzy.
•Several small exporters are facing challenges in registering on to the Directorate General of Foreign Trade (DGFT) portal which requires high-quality digital signature certificates, with many reporting outages on the portal that was earlier used only to issue CoOs for shipments to countries with whom India had a preferential trade pact.
•“For the last four days, we have been trying to register on the platform and get a CoO issued for a consignment,” said a Mumbai-based exporter, adding that the process used to take much less time earlier. “This used to take an hour earlier through the State’s industry chamber and other agencies that were allowed to issue certificates,” he said, raising concerns that his shipment may even reach the destination port before the certificate is generated.
•The Government said the move was to improve the ease of doing business in line with its ‘Digital India’ focus, but industry bodies from several States have flagged concerns with its implementation. Most critically, existing export facilitation intermediaries such as customs house agents (CHAs), who handle most of the export paperwork, have not been able to share data on exporters’ behalf, as the DGFT has not shared the API (Application Programming Interface) for the new system.
API-sharing system
•“For CoWin and Aadhaar, we have an API-sharing system so that information can be shared. Unfortunately, this facility is not there and we have flagged the issue but there hasn’t been a favourable response,” said an industry representative.
•The Commerce and Industry Ministry which oversees the DGFT, entrusted with formulating and implementing the foreign trade policy, told The Hindu that the online CoO portal had a simple registration process and its design allowed the principal user or the exporter to provide access rights to the other secondary users such as the CHAs.
•The Ministry didn’t respond to a query on whether API-sharing is being considered, but said 85 agencies were ‘now enabled on the portal’.
•On hardships faced by exporters in registering to the online system, the Ministry said: “No problem has been reported on this account based on our experience with the preferential exporting community.”
•“It is not a simple process at all. Many exporters are facing issues and we have sent emails to the DGFT and called on their call centre, but to no avail,” countered an exporter, adding that the problem is particularly acute for micro, small and medium exporters in smaller towns and cities.
Separate payments
•Even larger exporters, with multiple shipments heading out at a time, are facing challenges due to a norm that stipulates separate payments for each certificate issued. “Issues relating to bulk fee payment, etc. are areas which can be looked at in a phased manner based on the extent of interest shown by various users,” the Ministry said.
•The Federation of Indian Exporters’ Organisations said that while the new digital portal was a step in the right direction that would address a number of concerns of exporters and importing countries, teething challenges needed attention and permitting API integration would facilitate faster on-boarding of the exporting community into the new system.
•Over seven lakh preferential CoOs have been issued from the online DGFT portal since its launch in September 2019, the Ministry said. With all merchandise exporters now required to use the same platform, the volumes to be handled by the portal have gone up. Asked if the portal’s capacity has been enhanced accordingly, the Ministry said the portal had scalability and was hosted on a cloud server.
•“All IT systems being dynamic in nature, can be tweaked to accommodate the larger concerns of a majority of users based on the exporter feedback. In fact, a number of changes were implemented recently in October 2021 based on the exporter feedback and user experience of authorised agencies,” it said.
•Nashik-based Santosh Mandlecha, president of the Maharashtra Chamber of Commerce, Industry and Agriculture, told The Hindu that exporters, including those dealing with perishable farm produce consignments, had been facing challenges since November 1 for myriad reasons, including difficulties in registering their digital signatures on the DGFT portal.
•“The online certificates are a good idea but the Government must consider allowing both offline certificates and online certificates till the on-boarding challenges are resolved. We have been taking this up with the Ministry for a few months now,” he said.
•Earlier this year, the DGFT, through a trade notice, announced that the electronic CoO issuance system is being expanded to cover certificates for non-preferential trade as well. After extending the implementation timeline a couple of times, on October 18, the DGFT said the offline CoO issuance system would not be extended beyond October 31.
•“Many workshops were conducted to sensitise and handhold the designated agencies and at their request the implementation date has been extended twice already to accommodate most of the agencies to on-board the CoO platform,” the Ministry said.
‘Adds credibility’
•“This online facility provides ‘ease of doing business’ to the exporting community and gives a verifiable authentication mechanism to the partner countries to confirm the genuineness of the issued CoOs through a QR code which adds credibility to the issued eCoO,” the Ministry said.
•“With the ‘digital India’ focus, most of the export interfaces require paperless filing, including at Customs, for which a digital signature certificate is a pre-requisite. The common platform will help in not only providing a paperless facilitation to the exporter but will help in weeding out the ‘fraudulent’ certificates which are reported from time to time,” it underlined.
•“The Department of Commerce, with a view to further the ‘trade facilitation’ initiatives, has envisaged implementation of all its processes with an end-to-end IT implementation and extending eCoO portal for the non-preferential origin certificates is a step in that direction. Moreover, analytics generated on ‘origin’ based information can become an important component in our decision making and help us in our FTA negotiations and more informed export planning,” the Ministry stressed.
📰 Death by hospital fire: On operational fitness of hospitals
While catering to demand during COVID-19, hospitals must ensure operational fitness
•There is no greater betrayal than when what people believe to be safe havens turn into killing fields. The large number of hospital fires being reported in the last couple of years in the country, taking victims at their most vulnerable, could well be a case of criminal negligence and apathy. At least four infants are reported to have died in Monday’s fire in the special newborn care unit of Kamla Nehru Children’s Hospital in Bhopal. Early November, 11 patients died in a fire that broke out at the COVID-19 ward in Ahmednagar, Maharashtra. In March this year, 10 people were killed in a fire that broke out in Sunrise Hospital, Mumbai. These are only the latest in a series of hospital fires that have, as per some estimates, led to the deaths of over 120 people, most of them COVID-19 patients. Several minor and major fires have been started in hospitals, the former causing damage to property and anxiety for patients, and their loved ones, while the latter proved to be deadly for patients but also for some hospital staff. In most of these cases, hospital staff also had to see to the immediate shifting of patients to other safer units.
•The link that has been made out between rising hospital fires and the burden of COVID-19 cases is not artificial. Hospital administrators and forensic analyses have laid the cause for the historically high number of cases that hospitals have had to deal with. With the number of cases rising in the first and second waves of the pandemic, demand far exceeded capacity. Hospitals tried to expand their facilities to accommodate as many patients as possible, while there was scarcely any time for infrastructure expansion. While beds and mattresses could be marshalled at short notice, and oxygen cylinders, sometimes, with herculean effort, hospitals could not add extra power lines, or distribute the load with additional transformers or power units. Ventilators were also pushed into use 24 by 7, certainly not the norm before COVID-19, and with high power requirement for this, it naturally pressed existing infrastructure into overdrive. Single air conditioner units were also operating full time. These resulted in electrical short circuits, and possibly aided by the presence of flammable substances — alcohol-based sanitisers, high oxygen and PPE kits — sparks grew into full-scale fires. It is essential for hospitals that pulled more than their share of the weight during COVID-19 to not only do fire safety audits but also electrical audits, to ensure operational fitness, and specifically to ensure there are no fires. States may mandate it, or incentivise such a procedure in order to draw it up the priority list of smaller and medium-sized hospitals. Hospitals, after all, must remain healing zones, and to ensure that fire accidents are avoided, must be a non-negotiable requirement.
📰 Does India have a right to burn fossil fuels?
Chalking out a greener path to development will help India rather than arguing for more coal production
•There has been quite a lot of debate on India’s dependence on coal against the backdrop of the Conference of the Parties (COP26) meeting. While the coal lobbyists may have obvious interests in continuing that dependence, it comes as a surprise when the progressive circles also provide theories to justify this. Despite the Environment Minister adopting a similar position on the eve of the COP26, the Government of India has, for the first time, made a commitment to achieve the net zero target by 2070. It remains to be seen whether the government will indeed walk the talk since the experience on this count (or other issues) does not necessarily inspire that confidence.
•The crux of the theoretical argument is that India needs to develop, and development requires energy. However, since India has neither historically emitted nor currently emits carbon anywhere close to what the global North has, or does, in per capita terms, it has no reason to commit to declining dependence on coal, at least in the near future. If anything, the argument goes, it should ask for a higher and fairer share in the global carbon budget. There is no doubt that this carbon budget framework is an excellent tool to understand global injustice but to move from there to our ‘right to burn’ is a big leap. It is like arguing that since India was colonised, it has a right to do the same and stopping the country from doing that is injustice.
•For development, do the countries in the global South necessarily need to increase their share in the global carbon budget? Thankfully the answer is ‘no’ and it does not come at the cost of development, even in the limited sense as development is defined generally.
The question of development
•One, there is no doubt that economic development requires energy but that does not translate into energy by burning coal. If there are other cleaner forms of energy available, why persist on the usage of coal? Normally the argument in favour of coal is on account of its cost, reliability and domestic availability. Recent data show that the levelised cost of electricity from renewable energy sources like solar (photovoltaic), hydro and onshore wind has been declining sharply over the last decade and is already less than fossil fuel-based electricity generation. On reliability, frontier renewable energy technologies have managed to address the question of variability of such sources to a large extent and, with technological progress, it seems to be changing for the better. As for the easy domestic availability of coal, it is a myth. According to the Ministry of Coal, India’s net coal import went up from ₹782.6 billion in 2011-12 to ₹1,155.0 billion in 2020-21. India is among the largest importers of coal in the world, whereas it has no dearth of solar energy.
•Two, why should the global South be aping the North in the development model it wants to follow? During the debates of post-colonial development in the Third World, there were two significant issues under discussion — control over technology and choice of techniques to address the issue of surplus labour. India didn’t quite resolve the two issues in its attempts of import-substituting industrialisation which worsened during the post-reform period. But it can address both today. The abundance of renewable natural resources in the tropical climate can give India a head start in this competitive world of technology. South-South collaborations can help India avoid the usual patterns of trade between the North and the South, where the former controls technology and the latter merely provides inputs. And the high-employment trajectory that the green path entails vis-à-vis the fossil fuel sector may help address the issue of surplus labour, even if partially. Such a path could additionally provide decentralised access to clean energy to the poor and the marginalised, including in remote regions of India. So, it simultaneously addresses the issues of employment, technology, energy poverty and self-reliance.
Types of injustice
•Three, the framework of addressing global injustice in terms of a carbon budget is quite limiting in its scope in more ways than one. Such an injustice is not at the level of the nation-states alone; there is such injustice between the rich and the poor within nations and between humans and non-human species. A progressive position on justice would take these injustices into account instead of narrowly focusing on the framework of nation-states. Moreover, it’s a double whammy of injustice for the global South when it comes to climate change. Not only is it not primarily responsible, but the global South, especially its poor, will unduly bear the effect of climate change because of its tropical climate and high population density along the coastal lines. So, arguing for more coal is like shooting oneself in the foot. It is true that mitigation from the South alone will not make the difference required to stop this catastrophe but burning more coal will not necessarily solve the problem either.
•But none of this answers how the wrongs of the past will be righted, the basic premise we started with. We have argued in this very newspaper that one of the ways in which this can be done is by making the global North pay for the energy transition in the South. Chalking out an independent, greener path to development may create conditions for such negotiations and give the South the moral high ground to force the North to come to the table, like South Africa did at Glasgow. The current lack of action against climate change both in the North and South has been maintained by dividing the working classes of these two regions — the North justifying operating coal mines since the South continues to emit more and the South negotiating for a higher share in carbon budget based on the past emissions of the North. This is a deadlock. The need of the hour is a global progressive agenda that does not pit the working class of the North against the South but the working people of the world as a whole resisting the global ruling elite in its aggressive and dangerous model of competitive emissions. Even if one is pessimistic about this path of righting the wrongs of the past, at the very least, it is better than the status quo.
📰 The case of demonetisation in India
Five years on, the trajectory of the policy demonstrates that popular narratives can trump economic facts
•Popular narratives play a much bigger role in economic policymaking than economists and policymakers acknowledge. If, indeed, these narratives are grounded more in myth than reality, the impact of such policy can be devastating. The demonetisation of high-value currency in India in 2016 is a classic case of policy based on faulty narratives. Paradoxically, the failure of the policy does not appear to dent the narrative and, consequently, there is very little price to pay for its failure.
Across time, the impact
•Narratives are often intertwined in the cultural belief systems of the society. Thus, the Great Depression of the 1930s came to be associated with the excesses of the “roaring twenties”, though many economic factors were responsible. The Weimar hyperinflation of 1921-24 is so deeply embedded in the German consciousness, that even now, nearly 100 years after the event, German society treasures financial stability and distrusts public debt. Fiscal conservatism remains the dominant narrative and has inhibited the post-2008 recovery in Europe. Though the recent novel coronavirus pandemic crisis has led to Keynesian remedies on steroids in many countries, there is already a murmuring of fiscal imprudence fuelling inflation.
•Indeed, narratives in economics, as in other social sciences, create myths which endure despite rational appeal to facts. The demonetisation story in India is also based on popular myth, the folklore of black money and its association with physical cash. The idea of demonetising large denomination currency as a tool to flush out undeclared hoards of cash was not new. It was done on two previous occasions, in 1946 and 1978, with poor results. But, unlike the limited impact of the previous events, the demonetisation in 2016 caused widespread disruption in the economy, whose costs are still to be properly reckoned.
•Five years later, most observers have concluded that this policy was a failure. Very little of its declared objectives — of eliminating black money, corruption, moving towards a “less cash and more digital economy”, or increased tax compliance — were achieved. Expectations of windfall gains of some ₹2 trillion-3 trillion failed to materialise as more than 99.3% of the cancelled notes returned to the banks. If black money had existed as stockpiles of illegal cash, clearly all of it was very efficiently laundered. If the objective was to register a permanent upward shift in the tax base, it failed miserably. Perhaps the most telling evidence of the failure is that the cash-in-circulation has now exceeded pre-demonetisation levels.
Touching a chord
•And, post-COVID-19, reliance on cash is much higher, and with more higher denomination notes in circulation. By every measure, demonetisation as economic policy was a gross failure. But, as a narrative, it was presented and received in an altogether different light. Despite its manifest failure, the power of the narrative was such that it succeeded in creating a favourable or positive view of the policy.
•The folklore of black money and the vivid imagery that accompanies it is easily recognised and understood by the common people, who witness corruption in daily life and see it play out in the cinema, newspaper stories or in daily conversation over the years. The very term, black money, is a loaded phrase, where the specie itself acquires a symbolic and a substantive form. The wealth, representing ill-gotten gains, is perceived to be accumulated invariably in stacks of currency notes and gold, hoarded in safes, boxes, or ingeniously concealed cupboards.
•The idea of dramatic action and the striking of a powerful blow against this wealth is deeply satisfying psychologically. It is the stuff of epics. The spectre of black money has been invoked frequently in Indian politics, sometimes truthfully and more often cynically. The narrative of black money is almost always couched in deeply moral terms.
•It does not matter, as repeatedly emphasised in several economic studies, there is nothing to distinguish black or white money, except in the way it comes into being. Although income from corruption or criminal activities is by definition black money, most black money is earned through perfectly legal activities though not declared to the tax authorities. More importantly, black money is not really kept in cash except in small quantities but mostly accumulated through real estate and other assets. However, the way the narrative was framed made it hard for critics to explain their opposition. To denounce it outright would suggest that they have a vested interest in defending black money and corruption.
•When it became clear that the cancelled currency was being returned to the banks in larger numbers than expected, the narrative changed focus from black money and fake currency to digital/cashless payments, the latter being elevated to some higher purpose than what it actually is, a mere technological change.
Linked sub-themes
•A key point in selling the story was to introduce complementary sub-themes to reinforce the main narrative and, at times, to obscure the facts on the ground. Virtue signalling was key: appeals to nationalism and patriotism are always handy, while modernity and change are implied as means to progress towards some form of technological utopia.
•The call to sacrifice has deep resonance in India, as elsewhere. The act (of demonetisation) was an act of collective sacrifice. The people in long queues were reminded of the sacrifices of the soldiers guarding the nation’s borders and not to think of their own suffering. Indeed, there was satisfaction in being told that the rich had it worse. In reality, the sacrifice called for was somewhat skewed in its impact, and the suffering of the poor was disproportionately greater.
•The real irony lies in the fact that the moral high ground claimed by the demonetisation narrative worked better than contesting narratives of observed reality. It worked because it understood the nature of the moral economy of the poor. For the poor, long used to being at the receiving end of the state and its representatives, the impact of demonetisation would be one more blow in a series of blows with which they had to perforce deal. At least in this instance, there would seem to be a measure of justice if the rich really did suffer more.
•Despite the overwhelming evidence to the contrary, five years after the event, the Government does not acknowledge any failure, or have even a smidgeon of doubt. Noticeably, however, there have been no tall claims of success either.
A self-inflicted shock
•Most of the studies, opinion polls, media reports and anecdotal evidence showed an overwhelming support for the policy. Despite personal hardship, long queues, and the loss of income and savings, there was a degree of ambiguity in criticising the decision. Most tended to distinguish the intention from the reality. That the policy was good but perhaps not implemented well seemed to be the main theme. This effectively insulated the original sin — that the very design of the policy ensured its outcome.
•The case of demonetisation demonstrates that popular narratives can trump economic facts.
•It is clear that where narratives succeed there is very little political cost. A failed policy that carries no cost is likely to generate more such policies. Unlike most economic shocks, which could be traced to endogenous or exogenous causes, demonetisation was an entirely self-inflicted shock, which was very likely carried out as much in a sincere belief in the narrative as in cynical political calculation.
