The surgical attack against black money is just a farce -- Fr. Victor Ferrao

The sudden demonetization of high denomination notes has shown mixed reception.  The Government and its cheering team celebrated it as a bold step to check black money. Some even have gone to the extent of calling it a surgical strike. The manner in which the ordinary people of all walks of life reacted at a simple petrol pump, only shows that it cannot be equated to surgical strikes. Surgical strike only attacks the terrorists and not innocent people who may inhabit close to the territory under attack. This midnight strike is more closer to terror strikes as such attacks target also the innocent. With 80% of the currency in the market being that of the high denomination, this demonetization has affected almost every citizen of our country. Almost all opposition parties have questioned the timing of this attack while leaders of TMC have threatened to file a PIL in the High Court in Kolkota.

Social media is full of people who see conspiracy in the action. Some see the hand of Ambanis and draw a parallel with the 31st December which happens to be the common day for the closure of the free scheme offer of Reliance ‘Jio’ as well as the deposition of the notes of high denomination in the bank.  Others like Akhilesh Yadav think that the mid night attack has a political motive in view of Uttar Pradesh elections.  Some extend this motive even to elections in Punjab and Goa. Those in the legal field, like adovcate Jhamshed Mistry and Jabbar Singh have moved the Bombay High Court alleging that the demonetization was an illegal act as it was done through gazetted notification. They claim that de-monetization could be done only through an ordinance or amendment of the High Denomination Bank Notes Act 1978. 

It might help us to examine the effectiveness of the mid night action through a calm and critical lens.  The demonetization is not new to independent India though it has been greeted as an unprecedented action. Such an action was taken in 1946 and 1978 respectively. The difference at that time was that the banning of very high denomination notes like 1000, 5000 and 10,000 did not affect the poor as in those days poor never ever saw these notes as they amounted to a huge sum of money.  The difference of demonetization that we are facing today affects everyone, particularly the poor. Almost all the opposition parties have raised this issue. Some may argue that the government’s action ridiculously renders the poor as responsible for black money in our country. In a single mighty stroke, the Government has made all Indians guilty of black marketing.  This indeed

is unprecedented since our law threatens the hardest criminal as innocent unless proven guilty.  In the context of the mid night attack, in a single stroke every Indian has become guilty unless proved innocent of black marketing.  Hence, the social legality of this action leaves several questions unanswered.  Though the end is portrayed as noble in a short term and beneficial to all Indians, including our poor people in the long term, the means that are employed seem to fail to convince several among us.   But we must ask deeper questions. How does the criminalizing of the possession of even a single note of high denomination check the parallel black economy?  The presumption that seems to underlie this action is that notes of high denomination constitute black economy. Such a presumption appears to be faulty.  There is more to black economy than simply notes of high value.

The new notes

To understand this we may have to put on the thinking cap of Karl Marx. Indeed, we can safely say by expanding the ideas of Karl Marx that he would regard surplus wealth that is accumulated by the capitalist as dirty money. Just like black money is the surplus that is generated without paying the legitimate taxes to government, Marx saw surplus capital as being generated by denial of the legitimate payments to the workers.  Marx did not find fault directly with money that is merely the means of circulation and accumulation but drew our attention to the means of production that produces this inequality and surplus value.  The fact that the black money is the surplus capital that is generated without paying legitimate taxes cannot be debated. But by mere withdrawal of notes of high denomination is not going to affect the means of production of this surplus and parallel black economy.  Real surgical strikes should have attacked the means of production and not means of circulation. The midnight attack may have somewhat derailed this black economy but has not destroyed it. It can mutate and transform fast. Moreover, accumulation of wealth is not entirely accumulation of notes of high denomination alone. It involves accumulation of gold, assets and even business etc.  Hence, so called surgical attacks on the black money is ill fated to become toothless against the mighty black economy that has deep roots in our country.   The de-monetization of notes of high denomination might choke the black economy for a moment but will not destroy the means of production of black economy in our country.

Some of us have welcomed the so-called bold move of Modi Sarkar. The issue is will the same Sarkar have the required spine to outlaw the black economy that funds the political parties in our country? All parties with a very few exceptions receive donations in cheques.  When shall we have cashless donations being made mandatory to our political parties? By their own admission, BJP as well other parties receive more donations in cash than cheques. This suggests that the political

Fr. Victor Ferrao

parties to which the Modi Sarkar and allies belong are vulnerable to the acceptance of money generated by black economy.  When the ruling political parties appear to be neck deep beneficiaries of the black economy and would want it to survive, this simplified action of withdrawal of notes of high denomination appears to be only a short term distraction. Moreover, the introduction of even higher denomination notes amounting to 2000 seems to send wrong signals.  It seems to tell the poor you cannot have bread so eat cake. The withdrawal of high denomination could generate deflation and thus monetarily check inflation. But the coming of Rs. 2000 in the market might reverse these little benefits that the poor may get from the midnight attack.  All in all, the mid night strike is not a celebration of freedom at mid night but appears to be an (un)freedom forced on us at mid night.