Of all the financial buildings headquartered in Mumbai, the Reserve Bank of India at Ballard Estate’s Mint Street is perhaps unique: not so much for its architecture as for what it represents.
The RBI edifice stands tall and aloof, indifferent to the everyday bustle of the city. Thousands go past it every day, barely paying attention, secure in the knowledge that the institution is keeping the nation’s money safe.
The Preamble of the Reserve Bank of India lists among its purposes, “...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”
Since November 8, however, the solid RBI’s eye on India’s currency has created turmoil across the length and breadth of the country because of the demonetisation of Rs500 and Rs1,000 currency notes.
The city’s other big financial institution Dalal Street does not seem happy too. The Sensex and Nifty have both been slumping for over a week. Moreover, those who forecast economic trends are sounding bearish.
Even a city like Mumbai – richer than most, cosmopolitan, up-to-date and consumerism-driven -- finds itself faltering, more than a fortnight later. Lines at ATMs and banks have reduced somewhat, but this seems more because of fatigue and frustration than relief.
Supply of usable currency of the right denomination for everyday functions remains very limited. This has had a cascading effect down the buying and spending chains, the repercussions of which are only just beginning to show.
Inevitably, this is being exploited politically at the national level. Most opposition parties are in uproar. On Thursday, former Prime Minister Manmohan Singh emerged from the woodwork to launch a scathing attack on the government in the debate in Rajya Sabha.
In a dramatic switch from batting like stonewaller Trevor Bailey to playing ferocious attacking strokes a la Virender Sehwag, Manmohan Singh called the demonetisation scheme “organised loot” and “legalised plundering”.
Singh obviously represents his party’s political position, and the Congress’s credibility, it must be said, still hovers around shin level. But even so this was significant.
The former PM is also a world-renowned economist whose views are widely regarded and carry heft -- at home and internationally. This cannot be obscured by bluster and fulmination.
In my opinion, there are three inflection points in the impact demonetization has had. The first was shock and awe in people, at the suddenness of the scheme. This is something the government wanted.
The second was admiration and approval. The touted purpose of the scheme of the scheme and the sheer temerity to put it in motion was widely lauded. For the government this was a massive plus point.
But as days have passed and the pain of making the change hasn’t subsided, there is growing fatigue and skepticism about how well planned the demonetization scheme was: indeed, if at all.
Propagating findings from specious surveys on WhatsApp and high-fives from lapdogs in the media or lackeys elsewhere, either from conviction or otherwise, is beginning to wear thin. Clearly something more needs to be done.
The objective to flush out cash hoards of black money is above reproach. Not a single person would dispute this. It is a malaise that has dogged Indian life for decades and needs to be addressed.
But terrible implementation is taking its toll – materially and mentally. It is hitting people where it hurts most: for the poor and rural in their stomachs, and for a large number of others psychologically as they struggle to access their own money.
Somewhere the government is mixing up good intention with cussedness. Being contrite about goof-ups in planning for demonetization is not an affront to governance. Rather, it would be seen as empathetic to hardships of people, which is more important than political one-upmanship.
Prudence would suggest the government spell out how it plans to remove hurdles and pain caused. Simply saying, “bear with us, in the long run everything will be fine” is just not cutting ice.
Irrespective of whether one is clued into Keynesian theory, or heard Manmohan Singh quote the famous economist on Thursday, in their heart of hearts, everybody acknowledges the truism: In the long run we are all dead.