India has seen this movie before.As Donald Trump’s decisions on tariffs wreak havoc on the US economy in 2025, the parallels to Narendra Modi’s 2016 demonetisation are impossible to ignore.Both leaders, driven by populist bravado, authoritarian hubris and a penchant for disruptive theatrics, implemented policies that exposed their economic illiteracy, sidelined institutional advice and inflicted widespread suffering on ordinary citizens – all while shifting goalposts to justify their actions, and leaving their nations grappling with chaos.Modi’s decision to suddenly demonetise Rs 500 and Rs 1,000 currency notes was inspired not by rigorous economic analysis but by a chance meeting with Anil Bokil of the Arthakranti Sansthan. Bokil’s simplistic proposal claimed that demonetisation could eradicate black money and encourage digital transactions. Modi, captivated by the idea’s populist appeal, decided to act unilaterally. This impulsive approach bypassed institutional checks, including the Reserve Bank of India, which had critiqued the government’s justification for demonetisation before reluctantly recommending it just hours before the announcement. The harebrained idea had already been rejected by Raghuram Rajan when he was the RBI governor. Well, it turns out Trump got his ideas from a fictional economics expert. [See Rachel Maddow below].Trump’s punitive tariffs on dozens of countries may have been “paused” for 90 days but echo Modi’s overnight invalidation of 86% of India’s cash. Both policies were rooted in a fundamental misunderstanding of economic mechanics. Trump’s belief that trade deficits equate to “losses” mirrors Modi’s flawed assumption that erasing cash would erase black money. Economists warned against both: the Tax Foundation think-tank estimates Trump’s tariffs could slash US GDP by 0.8%, while India’s growth plummeted from 8.3% in 2016 to 4% pre-pandemic after demonetisation. The collateral damage? Small businesses. India’s cash-dependent MSME sector collapsed, wiping out jobs, just as US agricultural and manufacturing sectors are now bracing for tariff-induced inflation and retaliatory measures from Canada and China. Both leaders have displayed an inability to grasp the complex ripple effects of their policies on global and domestic economies.Secrecy defined Modi’s decision-making process. All ministers including senior ministers were kept in the dark until hours before his televised announcement on November 8, 2016. Justice B.V. Nagarathna of the Supreme Court later criticised this approach, noting that such a sweeping decision should have been enacted through legislation or an ordinance rather than a mere executive notification. This lack of transparency mirrors Trump’s tariff strategy, where decisions were made without consulting trade experts or economists, not to speak of his cabinet members, prioritising spectacle over substance.Also read: Danger From Trump Tariffs Remains, Impact on India May Be Greater Than Thought: Arvind SubramanianBoth leaders gaslit publics with ever-changing justifications. Modi’s demonetisation began as a war on black money, morphed into a push for digital payments, and ended as a nationalist “sacrifice”. Trump’s tariffs, initially framed as correcting trade imbalances, now masquerade as national security imperatives. The outcomes? Modi’s policy ended up recycling 99.3% of the cash he had invalidated, exposing its futility, while Trump’s tariffs have already triggered a $4 trillion stock market wipeout and risk escalating into a global trade war.The human toll of these policies is staggering.In India, demonetisation caused massive disruption in the informal economy, which employs over 85% of the workforce. Farmers and daily wage earners faced liquidity shortages, small businesses collapsed, and unemployment soared. Over 100 people reportedly died waiting in queues to exchange their money. Justice Nagarathna’s dissenting opinion in the Supreme Court highlighted how the government bypassed proper procedures under Section 26(2) of the RBI Act, undermining institutional safeguards. Trump’s tariffs have similarly hurt vulnerable sectors like agriculture and manufacturing. Higher consumer prices and job losses in export-dependent industries are pushing US unemployment toward 5%. Both policies disproportionately harmed ordinary citizens while rich elites largely escaped unscathed.In January 2023, more than six years after the event, the Supreme Court upheld Modi’s demonetisation by a 4:1 majority but offered little solace to critics. The majority opinion deemed the decision proportionate and legally valid, but Justice Nagarathna dissented sharply. She reasoned that demonetisation was unlawful due to procedural flaws and should have been enacted through legislation or an ordinance. Her judgment underscores how secrecy and haste undermined democratic processes, an authoritarian tendency equally seen with Trump’s unilateral tariff impositions. As is currently being witnessed in the US, India’s Supreme Court could have done much better.As could have the country’s big media.Media critical of Trump did report the disaster the Trump tariffs were for the US and the world trading system, though even they felt compelled to run pieces trying to make sense of the underlying, nonsensical policy. Once the stock markets gave their verdict and crashed, of course the reporting got even sharper. In the case of demonetisation, however, Indian newspapers and particularly television channels either praised the move sky high, not asking questions, and portrayed a sense of normalcy around Modi’s sudden decision making. It was made out to be a policy decision where newspapers reported the decision on the assumption that there was a clever-clever reason why, actually, demonetisation made total sense and was good for the public. Economic rationale and governance goals were ascribed to Modi by editors and analysts who found it hard to state that ignorance, caprice and nihilism were – and remain – the drivers of his politics. In trying to find shape, pattern and method in the chaos created then, they misled the people into believing that a grandiose secret plan was at work when there was none.Also read: Modi’s Tariff Silence: Is India No Longer the Voice of the Global South?Trump’s tariffs and Modi’s demonetisation are cautionary tales of strongman politics, of policies propelled by a dangerous mix of ego and ignorance rather than knowledge and expertise. Modi asked for 50 days and said he should “be hanged in public” if demonetisation failed. Trump has been smarter than him in not making such a claim. But both sidelined institutional advice, prioritised tamasha and not reasoning, were left unchecked by courts, parliament and a section of the media, and inflicted widespread harm on their economies. Their actions reveal a dangerous pattern: when leaders in a democracy are not held accountable for their decisions, the people pay the price.India should have learned this lesson in 2016; America will hopefully learn it now.Democracies must demand deliberation, consultation, transparency – and above all, accountability – from their leaders. If not, megalomaniacs risk turning governance into vanity projects of ignorance, lighting bonfires of economic prosperity and public welfare.A version of this piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.
