The Failed National Improvement Scheme That Was Demonetisation

The new India being forged through the pain of demonetisation makes a clear distinction between the ‘us’ and the ‘other’.

The year 2016 was one of surgical strikes. Just when we were recovering from the patriotic adrenaline rush of being in a state of semi-battle with Pakistan, we witnessed ‘a surgical strike ‘on black money, terror funding and drug money’. Two years on, we continue to reel under the effects of demonetisation. With the benefit of hindsight, this is a good time to ask: what on earth was it about?

Demonetisation as neoliberal yet participatory development

An obvious reading aligns with the Narendra Modi government’s agenda of neo-liberal development. The current regime, like its predecessor UPA, has embraced globalised, business-friendly development. Here, the market is expected to deliver economic growth. However, the market is not a level playing field. The government tends to ally with specific businesses interests.

In this partisan state-business alliance, the population at large needs to be brought on board. It has to be somewhat enthused about the unfolding economic story, and participate in this as labour, aspirational consumers, or even investors.

Viewed from this perspective, demonetisation was a vast exercise in increasing cash flow to banks, to strengthen their position as lenders to business. How do the rest of us come on board? We come aboard as ‘active participants in the benefits of economic progress’. We are feted as ‘honest citizens… fight(ing) against corruption, black money, benami property, terrorism and counterfeiting…’ in the words of the PM during his ‘Demonetisation Day’ speech. We become fighters standing in queue to exchange our old money for a newer version of the cash, as also ourselves.

Also read: The Ghost of Demonetisation Still Haunts Marathwada’s Farmers

As we endeavour to go digital, we boost the efforts of our government, and their international sources of policy influence, towards governance that is transparent and supposedly more accountable while also being business-friendly. Our financial transactions are increasingly networked. Through Unique IDs and Know Your Customer (KYC) initiatives, we have a growing digital imprint. Demonetisation, and its link with digitisation, is a step towards this financialised, purportedly more open, transparent, better-governed society.

Of course, some of us are the worker bees in this march to digitisation. We fill in the paperwork and go through the oft frustrating motions of passwords, security, KYC, OTP, online literacy that are required of the digitised citizen.

And then there are the queen bees, such as the digital wallet Paytm, which was one of the biggest beneficiaries of demonetisation. Paytm hit a record 70 lakh transactions within 15 days of the demonetisation announcement. It is not surprising that its proprietors carried full page newspaper advertisements the day after the measure was announced, congratulating the PM on ‘taking the boldest decision in the financial history of independent India.’

Demonetisation as moral, nation-building exercise

Nations are imagined communities, often driven by the power and circulation of ideas. When the PM announced demonetisation, he drew a distinction between ‘anti-national and anti-social elements’ and ‘honest, hard working people.’

The PM urged us to ‘bear the pain’ to help him deliver ‘the India of our dreams’. The new India being forged through the pain of demonetisation makes a clear distinction between the ‘us’ and the ‘other’. The other is to be shunned as dirty, corrupt, undesirable. In the context of demonetisation, this ‘other’ can be anything, from the trope of the Pakistani – read Muslim terrorist – to the Kashmiri stone-pelter, who is also usually Muslim.

The ‘other’ of the new Indian ‘us’ should also be the tax avoider and cash hoarder. S/he is as anti-national as the challenger of India’s sovereignty. However, this anti-national is tougher to pinpoint. The ambiguity in defining the economic ‘other’ is not a coincidence.

When business forms a core support base of the party in power, or indeed any major political party today, pinning moral otherness on it would be suicidal. Given the general business-friendly, neo-liberal embrace of the state, the building of a social and religious other is more politically prudent.

This ‘other’ can be joined by a constellation of others such as the more recent construct of the Urban Naxal: activists, intellectuals, Dalit politicians and others who question the current regime.

Also read: On Demonetisation, It’s the Process, Stupid

Demonetisation was premised on forging a new moral community, one which participates in everyday corruption almost as a way of life but externalises the guilt in hyper-nationalist talk. To cleanse ourselves of the moral and social other, we in general are expected to bear temporary pain. It is no surprise that a decidedly moral language of sacrifice, sores, surgery and healing has emanated from the government around demonetisation.

This moral, nation-forging project, the active construction of ‘us’ versus ‘them’, is not new. It continues the BJP’s mission of ‘one nation, one culture, one people.’

A man puts a notice inside his eatery in Mumbai, India, November 9, 2016. Credit: Reuters

Schemes to improve the human condition that have failed

Demonetisation as an economy- and society-making-initiative was highly ambitious. Modi is not the first powerful ruler of a country to use a vast canvas to impose his will and vision on a people. Like many such ambitious schemes to improve the human condition, was this scheme also bound to fail?

The will to improve has characterised modernising rulers the world over. The harnessing of nature, including human nature via institutions, has characterised modernity. The ‘rational’, ‘modernising’ state is at the forefront of such projects of command and control.

We see this in colonial modernising projects like the Tanganyika Groundnut Scheme (1946-51), where 5000 square miles of East African scrubland were cleared with decommissioned Allied war tanks to mass-produce groundnuts. The purpose of this modernising exercise was to transform the land, and the people who would work it, under colonial tutelage. It helped that the groundnuts reaped by natives practicing mechanised agriculture would feed the cooking fat shortage facing post-war Britain.

Enter in this context the improving, zealous state high on techno-rationality, and the corporation that would process groundnuts for the British household: Unilever.

The win-win marriage of the colonial British, modernising, heavy handed state in Tanganyika sounds eerily familiar to demonetisation. This process was the coming together of “NaMo-for-DeMo” with the technical, post-modern fixes offered by digital payment platforms and banks, alongside the omnipresent brokers and middlemen who have also exchanged old notes for new in acts of jugaad.

Also read: Demonetisation’s Failure Won’t Hurt Modi, He’s Already Changed the Narrative

By most indicators, demonetisation has been an economic failure. To gauge its chances of moral success, we could look at history for pointers. Spoiling the state-corporation party in colonial Tanganyika, as also contemporary India, is a seemingly foot-dragging populace that refuses to be improved. It refuses to be tipped over into the utopias of colonial modernisation in one case, and digitised, morally superior financialisation in the other.

In Tanganyika, the brush refused to stay in place. It grew back despite war-like efforts to tame it. The people who were supposed to work it too proved recalcitrant. Nature of all types is not easily given to improvement as imposition. In the case of demonetisation, and the larger national improvement project that it represents, perhaps we can have faith in the ‘weapons of the weak’, in their heterogeneity and obstinacy, to deliver us from ruling wills.

Nikita Sud teaches at the University of Oxford.