Gambits and Game Changers: Relooking the Indian Economy

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Mihir S. Sharma, Ram Gopal Agarwal, Aruna Roy and Surjit Bhalla in conversation with John Elliott

By Arjun Bhatia, Official ZEE Jaipur Literature Festival Blogger

 

On November 8 last year, India’s Prime Minister Narendra Modi announced the demonetisation of all banknotes of Rs500 and Rs1,000 denominations, effective from midnight that night. The Indian government cited the need to clamp down on counterfeit currency used to fund illegal activities and terrorism. In the weeks after the announcement, a prolonged shortage of cash created ripples across the nation, disrupting the economy as well as the daily lives of Indian citizens.

In what turned out to be a ping-pong match of arguments, the ZEE Jaipur Literature Festival session began with British financial journalist John Elliott asking if Prime Minister Modi had created a crisis with demonetisation. Writer and economist Surjit Bhalla expressed mixed views on the same, arguing that India, a country dealing with several economic issues that has historically ‘performing below potential’, did not need another crisis, but sometimes a ‘big bang’ move was needed to capture people’s attention. ‘India, after all, is one of the worst countries in terms of tax compliance,’ he remarked, only to be countered by Mihir S. Sharma and Aruna Roy, who raised questions over transparency in clamping down on tax defaulters.

Sharma, Opinion Editor for the Business Standard, mocked how, in India, there is a general approval for someone doing ‘at least something’ about solving a problem. ‘Since when has doing something become equivalent to doing the right thing?’ he argued, to loud applause from the audience. ‘While it’s true that sometimes we progress through crisis, one must not go seeking a crisis,’ he observed.

Elliott posed the question of why, despite general dissatisfaction with the move, there wasn’t much protest in the streets. Roy answered that to protest, one needs time and money, neither of which the poor have, between working to earn their daily wage and standing in queues outside banks and ATMs that stretched for ‘miles and miles.’ She drew further attention to their plight by narrating anecdotes of people succumbing to death due to starvation and medical problems as a result of the cash-crisis. She questioned whether PM Modi’s decision was ‘oligarchic,’ whilst lamenting the way questioning voices had been silenced with the invocation of nationalistic ideals and the government’s appeasing promise to deposit Rs150,000 in every bank account.

Roy also remarked that the idea that black money is simply stashed in the form of cash is a ‘fallacy,’ and one must also bring ‘land, bullion, and restaurants on highways’ under scrutiny, if corruption is to be dealt with in earnest. Illuminating the other side of the argument, veteran economist Ramgopal Agarwala said that cash ‘moves quickly’ and one cannot deny that it is a very big facilitator of corrupt activities. ‘Through demonetisation, an atmosphere has been created under which corrupt practices such as money laundering by political activities can be brought under the scanner, it is a good starting point.’

The IMF and World Bank have recently lowering their growth forecast for India’s economic growth, following industrial slowdown in the aftermath of demonetisation. Bhalla assured that the increased tax revenue and agricultural output will compensate for the present dip in GDP. Sharma once again challenged the argument by questioning the efficacy of the model used for measuring the GDP figures: ‘Data from the informal sector, which is what has been affected the most by demonetisation, is practically guessed.’

India, as Agarwala pointed out during the session, is an ‘argumentative society.’ This was clearly evident throughout the session, and the spirited debate continued both on and off the stage, even after the session was called to an end.

 

Photo Credit: Rajendra Kapoor

 

 

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