India’s national political discourse has been overwhelmed by high denomination note withdrawal better known as demonetization.
Now the politics is divided into two camps—those supporting the withdrawal of high denomination notes of 1000 and 500 with a push towards digital transactions and opponents to it. Prime Minister Narendra Modi, who announced to the nation on the night of Nov 7 calls it a “war against black money that is creating millions of poor and impoverishing the nation.”
For many, including businesses and individuals, the demonetization came as a bombshell after Diwali festival’s spending binge. The move saw strict withdrawal limits and most ATMs going dry with no cash. When the Rs 1000 note was withdrawn a new denomination of Rs2000 was launched, but that failed to quench the demand. Now after 50 days of assured normalcy, the situation is nowhere near normalcy. But the saving grace was that the nation accepted it despite pains with no riots anywhere.
The central bank, Reserve Bank is earning the flak as preparedness to handle the new challenge was missingModi’s Gain
The ruling party has tied its fortunes to the politics of demonetization with the argument that note withdrawal will break the backbone of extremism, terrorism, fake currency and level inequities including tax evasion. Indications from any local council polls also indicate despite hardships, people are supporting the move as BJP candidates are winning.
Within the ruling front led by BJP, known as National Democratic alliance, all parties are not backing the move which includes Shiv Sena and Akali Dal. The demonetisation saw as much as 86 percent of currency in circulation ordered withdrawn making a cash crunch in the country even as the government and RBI had no adequate backup plan for the replacement of the retreating currency.
The cash crunch hit many sectors, mainly informal sector jobs got slashed and consumption fell.Opposition Protest
The opposition protest is led by Congress and regional parties like Delhi’s Aam Admi Party with more vocal being Delhi chief minister Arvind Kejriwal and Bengal’s Trinamool Congress led by CM Mamata Banerjee. Meanwhile, the Opposition, Congress is hoping to build up anti-Modi sentiments over the issue and announced a nationwide anti-demonetisation campaign, beginning January 6, 2017.Already the economic wizards of Congress such as former PM Dr. Manmohan Singh and ex-Finance Minister P. Chidambaram have spoken out dubbing the move as a blunder and undercutting of the economic growth. During the Congress campaign, a national conference of party leaders on demonetisation will be held in Delhi. “Congress will start a nationwide anti-demonetisation protest campaign in three phases, which will continue till January 30. Our leaders have organized press conferences at national level till now. The Congress leaders will go to all districts/blocks and tell people about the reality of demonetisation,” said Congress Communication Head Randeep Surjewala. In a smart move, Prime Minister Narendra Modi addressed the nation on the New Year eve and sought to soothe the hardship of note withdrawal with sops like interest rate subsidy for housing for the poor and farmers. He also assuaged elder citizens with assured interest rates for their savings. Modi saluted the spirit of solidarity by Indians and their sacrifice in fighting black money. “The problems which the people have faced for the betterment of the country are an example in itself,” Modi said, in the speech aired all over the country.
Modi also assured an increase in the credit guarantee for the small traders to Rs 2 crore from Rs 1 crore as the MSMEs sector was the worst hit.