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Modi’s Demonetization, Black Money and Surveillance: Baidurya Chakrabarti


(But before we move on, an aside. This demonetization exposes how the nostalgia for socialist development has fuelled the rise of Modi. Disenchantment with neoliberalism has produced an obscene amount of nostalgia for the pre-liberalization days among the Indian middle class, especially among the left-leaning ones. However, now that a gesture right out of those hoary days have returned to our world, it turns out to be a nightmare.)

The only rationale behind demonetization relies on the idea that high-currency notes are essentially used for hoarding and not for circulation. However, RBI statistics shows that 80% of monetary circulation in India consists of Rs 500 and Rs 1000 notes. Demonetizing Rs 500 or Rs 1,000 in India is not the same as demonetizing the 500 euro note; Modi’s demonetization would have made sense if it was accompanied by devaluation of currency. In other words, Modi’s demonetarization is announcing more than 80% of this country’s monetary economy to be suspect and henceforth made pariah. If the 80% of a country’s (monetary) economy is ‘unaccounted-for’, is in all probability ‘black’, then can that really be called ‘black money’? Lest we start calling the largest economic sector of India—the Informal sector—‘black’, we should give up on this absurdity of ‘black money’. Black money, like all parts of capitalism, is primarily about profit, and thus about circulation. Hoarded money does not grow, and is thus anyway a by-product and not the mainstay of the black economy. Modi’s demonetization has a very different aim than to curb black money.

Consider the simple paradox of the Rs 2,000 note: if you in principle believe that high-currency notes lead not to circulation but to unaccounted hoarding, why would you introduce an even higher denomination? Ergo, this has nothing to do with black money or hoarding. The effort is to create a sudden scarcity, an abrupt disruption, in the cash economy—the economy of the ‘common man’—where everybody must once again look solely to the state for recovery.

This is a continuation of the Last-Mile strategy of the Indian government. While Adhar Card was and is an effort to render the entire population enumerable and perhaps traceable, Modi’s demonetization wants to achieve that in an even more coercive manner. It is important to note here that while Modi’s demonetization might end up bringing a large part of India’s informal economy under the tax regime, it will not extend any rights whatsoever to this economy. The marginalized will be further pauperized to satiate the ‘collective conscience’ of a select few.

That voice not only belongs to Modi in this instance; that voice is Modi.

The masochistic boasting by the middle-class of ‘sacrificing for the nation’ is underlined by their usual guilt and overlaid by their obnoxious righteousness.

 Terror produces conforming citizens. 9 September 2016 is the Kristallnacht of Nazi India, and we have thoroughly enjoyed it.


Dr. Baidurya Chakrabarti is an independent scholar. He did his doctorate from English and Foreign Languages University, Hyderabad