On November 8, 2016, cynical Indians that had almost given up on politicians coming up with a lasting solution on eradicating corruption in the country were in for an awkward but pleasant surprise from Prime Minister Modi’s splendid announcement of demonetising 86% of the currency in circulation. The decision of a clampdown on currency was on the assumption that most money made by crooks through dishonest means was stored in the form of hard cash and any attack on it, would render a severe blow to the crooks.
Naturally a disruptive decision like this would have its share of collateral damage, as many small businesses usually hold their legitimate working capital in cash. But the government seems to have thought through it, by providing a window for these businesses to deposit their currency upto a certain limit. Over and above that limit, would naturally invite questioning by the concerned authorities and rightly so.
Citizens all over the country including Goans were put through a severe cash crunch, and it turned out to be a huge task to even withdraw money from your own bank or deposit cash they had on them at the time. But then the Prime Minster had invoked the patriotic card and asked for patience, frankly people did not mind the inconvenience, because they were shown a bigger vision that demonetisation was just the first step in the bigger goal to eradicate corruption.
Naturally, speculation was rife and social media abuzz as to what the next steps might be, so as to deliver the knockout punch on corruption. Honest and sincere citizens suddenly felt a spring in their stride, because they finally felt they will be rewarded in terms of creating a level playing field, for staying truthful to the country. Finally there was going to be some differentiation between clean money and dirty money. Hopes were risen because here was the Prime Minister even with limited financial knowledge, willing to take bold risks, notwithstanding state elections that were round the corner, to go after the corrupt. Opposition noises were best ignored by citizens, because the more they spoke against it, the more they sounded like they were stuck with their own cash and no place to hide.
The idea seemed great at the time, but chances of it not succeeding were also bigger, if the next steps that were lined up did not come in quick time. After all, to cook a blockbuster dish, we not only have to put several ingredients, but they also have to be inserted at the right time. Any delay not only jeopardises the dish, but can turn the dish into an utter flop. If crooked wealth was the primary target of demonetisation then the Prime Minister ought to know that a crook will always use the investment asset allocation theory and diversify his wealth, demonetisation or no demonetisation. Cash is just one component, and unless all constituents are under attack at the same time, chances are a crook will take a limited hit, survive to fight another day, he just needs to tinker his asset allocation ratio. Steps such as demonetisation without follow up measures means he loses the cash component of his crooked wealth while his other physical assets are in safe haven mostly untouched. Even the cash component is not entirely at risk since most crooks have protected their cash by laundering it through their more than willing greedy constituents, by taking advantage of the minimum limit allowed to deposit.
Prime Minister Modi despite all the criticism he faced for secretly taking such a high handed decision on demonetisation must be appreciated for having the courage to go through it despite so many obstacles on the way. There is a possibility that criticism from all sides got the better of him and frightened him from taking further steps that are much needed to make demonetisation successful. Unfortunately for the Prime Minister time is running out and he will have to make that big call if he wants himself to be remembered as man that took on corruption sincerely. Just by merely changing the demonetisation goals as digitisation goals for the country, will not justify such a huge decision. The more there is a delay in further action on crooked assets, the more honest citizens will be demoralised and then start to believe that demonetisation was carried out, not to take on corruption, but as a means of indirect capital infusion for struggling public sector banks.
If the Prime Minister wants to make a real dash for a second term and if he believes that measures already taken on crooked wealth is enough to get him through, then he better take a lesson from his party’s performance in the recently concluded assembly elections in Goa. Although the government was formed through some heavy bulldozing they were not the majority party, despite their better administrative performance and lesser corruption then Party C of the previous tenure. They must realise that they lost the elections to Party C because they went back on their word to punish the corrupt elements of Party C. They let some of these elements so loose, that they infact gave them a chance to prevail over them, making many believe that this is a case of scratching each other back.
Goa’s Chief Minister is a smart man and probably has the right honest credentials to undertake a surgical hit on the corrupt of Goa. Otherwise the way the corrupt are having a gala time in Goa, by splurging their wealth, is not only a slap on the Chief Minister’s face, but also on every right thinking sincere taxpaying citizen of the state. All this needs to change provided there is will to take on the corrupt and deliver that knockout punch. For that to happen, the Chief Minister needs to take courage and emulate the Prime Minister and the way he handled the demonetisation episode, without caring about the impending elections that were lined up during that time. If corruption in Goa cannot be cleaned up even at the Chief Minister’s second attempt, it will provide an opportunity for Party A that is waiting in the wings to take up the job. They might be down at the moment but not completely out.
(The author is a business consultant)
