In the wake of Modi’s bold and utmost courageous deci-sion to demonetise the high value currency notes of Rs. 1000 and Rs. 500, India is a sharply divided lot, both politically and economically. As the impact of this giant landmark move gets more and more visible, the pol-ity polarisation is a deep chasm. A vigilant income tax and en-forcement department, which is preventing any large scale mon-ey laundering of the old curren-cy notes, has only added to the political ire. While the likes of Mamta Banerjee, Mayawati, Mu-layam Singh and Lalu Prasad, are understandably berating the deci-sion and have collectively brought the Parliamentary proceedings to a standstill, apparently betraying its adverse impact on their own funding channels and perhaps the questionable interests that they seem to represent, those like the Congress, the fountainhead of India’s chronic corruption, though impacted by the move, have given a muted response, ob-viously finding it uncomfortable to openly oppose a structural move, that the public perceives to be bonafide and designed to clean up the system. At anoth-er end are the likes of Kejriwal, who baselessly find fault with all that Modi does, utterly surprised that Nitish Kumar, another Modi baiter solidly supports the move. Even local regional parties are said to be reeling under the move, finding their election funding channels severely disrupted by the demonetisation move. The public perceives those who oppose demonetisation, as the ones who prospered from the scourge of black money and corruption. With wide spread political ramifications in their respective fiefdoms, unmindful of their public image, the likes of Mamta have taken the political revanchism to the next level, not just by shockingly accusing the army of a coup against her, but by also adopting an obstinate stance of non cooperation against the impending roll out of the GST. The PM has marshalled all his forces to defend the move, drawing strength from the just concluded local body elections in Gujarat/ Maharashtra, where the BJP scored stunning gains, indicating strong ground level support for the bold demonetisation decision.
In the midst of this gigantic currency exchange exercise in India, where the public is now facing a huge currency shortage and alternate cashless transactions take time to off, a number of businesses have suffered a huge beating. The shopping malls look empty and so do retail stores, facing the loss of impulse shopping, for want of cash in the pockets of shoppers. As people bank their cash and hurriedly adopt the cashless mode of shopping, not only have car and mobike sales suffered, but so have street sales of fruits and vegetables, prompting auto makers to offer huge discounts, to revive sales. The real estate sector, which has anyway been down in the dumps, is now in coma, deprived of the huge cash, that generated its sales. The initial rush of conversion of cash into gold, has also subsided, due to widespread income tax raids on jewellers, such that even in this busy mar-riage season, the jewellers look to be an abandoned lot, easing gold prices in turn. It has been a terrible season for all those connected with India’s $100 bn marriage economy, where huge ostentatious expenditure is through cash spending. The worst imparted perhaps has been the farm sector, where farmers have had no cash to buy seeds and fertilisers, due to which the rabi sowing season has suffered. The naysayers predict that In-dia’s GDP will take a 2% beating due to this demonetisation drive. While all the world agrees that the demonetisation decision was a prudent and courageous move by Modi, it has not been well managed at the ground lev-el. The new currency supply has been grossly inadequate, with banks in cities like Surat even putting up public boards that they have no cash to give. The worst impacted are the rural ar-eas, where not only banking is yet to reach, but also those few banks are cash deficient. The public dif-ficulties are fertile grounds for political battles, but the fact is that the ordinary public supports the move.