Tilting at windmills in the name of patriotism4 min read . Updated: 13 Dec 2016, 03:10 AM IST
The most galling aspect of this demonetisation campaign is the exhortation of patriotism'Bear it for your beloved India!'
When a nation is at war, leaders make an appeal for self-sacrifice. Citizens respond with nationalist fervour. However, some wars are totally misguided as they are driven by a quixotic crusade launched by a leader bent upon tilting at windmills.
It is not clear how long it will take for people to realize that their sacrifices have been in vain and that Modi’s demonetisation drive will penalize 85% of their countrymen who toil in the informal sector rather than black marketers and corrupt leaders. It seems that out of the Rs14 trillion of cash in circulation, Rs12 trillion has already been deposited in the banks. While it is true that all the money deposited in the banks is not ‘white’ money, the expectation was that a large chunk of the black money will not come back. Now it is going to be a Herculean task for the income tax department and success is uncertain.
It does seem like some of the Bharatiya Janata Party leadership is beginning to wake up to this harsh reality. In their desperation, they have covered themselves with a shroud of denial regarding the enormous costs borne by the most vulnerable sections of society. Maharashtra chief minister Devendra Fadnavis has claimed that farm gate prices have not declined as a result of demonetisation. Union minister of state for power, coal and renewable energy Piyush Goyal believes that there is no collateral damage. It is easy to persuade the salaried urban class about such a virtual reality, but how will they persuade the small farmers and artisans and shopkeepers whose lives are being rocked by this tsunami?
Tukaram Bhoye is a tribal farmer from a village in Dindori taluka, which is about 60km from Nashik in Maharashtra. In his two acres of land, Bhoye grows vegetables. After a good monsoon this year, following three successive years of drought, Bhoye had hoped to earn a decent income. But his hopes were dashed when the traders in the agricultural produce market committee (APMC) mandi stopped the auctioning of produce. Three days after purchases resumed, prices crashed. Bhoye’s main produce, brinjal, was hit badly. Prices tumbled from Rs40 a kg to Rs4 a kg. But it was not just brinjal—most vegetables saw a fall in prices.
Big swings in vegetable prices are not uncommon. The virtual absence of any post-harvest infrastructure and yield fluctuations owing to weather conditions are bound to cause these fluctuations. But this time, the fall was too steep to be explained by increased arrivals. The price trend generally reverses in a week or two. But prices plummeted after demonetisation and have not recovered. In the case of some vegetables like tomatoes, it became unaffordable even to bring them to the market yard.
But apart from this big income loss that Bhoye has to bear, there have been other painful fallouts. Vegetable production is highly labour intensive. Even a small farm can generate significant local employment. But the cash Bhoye received from the traders was all in old currency which labourers refused to accept. When labourers stopped coming for work, both Bhoye and the labourers lost—and in all likelihood, nobody has gained in this monumentally thoughtless campaign.
In many places, there is a dual price system, farmers receive a lower price if they insist on being paid with new currency. In the harvesting season, standing in the bank queue is unaffordable, especially when you know that the bank could run out of cash as rich and well-connected farmers withdraw unlimited cash.
A fall in prices and inadequate cash in hand compel farmers to curtail the use of necessary inputs, almost certainly lowering yields in the next harvest.
While the effect on prices received by farmers in the APMC mandis is one way of judging the impact of demonetisation, for non-perishable produce the drop in arrivals in the mandis is also an indicator. Studies show that for many commodities there is a huge drop in their arrivals compared to the period prior to the prime minister’s announcement of demonetisation. This could be either due to the artificial labour shortage generated by a shortage of legal tender or due to farmers’ reluctance to sell at such low prices. Bhoye is not an isolated but a representative example. Much of India looks like him rather than like the salaried urban folks with credit cards.
Sharad Joshi, a farmers’ leader in Maharashtra, had viewed the country as made up of two disconnected lands—Bharat and India. Bhoye and an overwhelming majority of Indians live in Bharat, engaged in some sort of self-employment in the informal sector. According to Joshi, Bharat has always suffered due to the policies enacted by India. He would not have been surprised at the travails of Bhoye.
The most galling aspect of this demonetisation campaign is the exhortation of patriotism—“Bear it for your beloved India!" If patriotism means the love of one’s country, how does it translate into supporting an ill-thought-out policy that is certain to fail in snaring much of the black money while heaping misery on a true representative of India—Tukaram Bhoye, a resident of Bharat?
Milind Murugkar writes about contemporary economic and political issues.