First and foremost, it’s important to acknowledge that this move is bound to have certain serious short-term repercussions on the economy and daily lives of people, especially those from the marginalised sections of the society. Major opposition parties’ argument that rural economies are heavily dependent on cash transactions requires no further emphasis. Prime Minister Narendra Modi did acknowledge this on several occasions over the past few days. Former Prime Minister Dr. Manmohan Singh’s cautioning on the possible impact this move could have on the GDP also commands significance in this context. The opposition parties questioning the cost effectiveness of replacing 86% of the total value of currency in circulation is also well-founded.
However, what we need to do is to examine if we are to be content with meeting short-term goals and leaving long-term goals unattended. It’s true that John Keynes once remarked that in the long run people are dead and gone. Though this is relevant, we must also pay heed to the fact that the Indian society is going to exist forever. Generations may come and go but it’s our duty to pass on a clean and a robust system to our future generations. The vision of demonetisation by the government to tackle counterfeit currency and combat terrorism while making a slow and steady transition to a digital world would resonate well with the generations to come.
Ills of corruption and red tapism have prevented us from making much deserved progress over the years under socialist inclined governments of the past which patronised crony capitalists over liberal rigours of capitalism and healthy competition. At this stage, it’s also important to handle this vital question: Is it wise to scrap policies of significance considering that many people from the margins or the country as a whole aren’t equipped enough or is it wise to support people and train them through a successful phase of transition? The former is extremely shortsighted while the latter provides a brilliant opportunity to capitalise upon.
Thus, demonetisation as a whole presents a tremendous opportunity, despite its short term limitations. Only the government’s commitment to provide the vulnerable sections of the society with the suitable means to cope with this transitional phase will decide the fate of this mega initiative.