Why demonetisation is an attack on the idea of people's democracy

Notions of democracy have been discussed extensively in the context of development and developing economies. For the aam aadmi, however, the basic principle involved is that of 'participation', not only in the selection of persons who will govern but also in the making of laws, the formulation of public policy and its implementation, and, generally, the whole process of governance.

Democracy, thus, should empower people, give them agency and voice. And the voice cannot just be a futile cry in the wilderness. It has to be something that those elected to govern listen to carefully and on which they act, to meet the basic needs expressed.

A democracy that permits public participation in free and fair elections but thereafter does not grant further 'participation' is, in some essential sense, a limited or truncated system. Such a denial of voice can occur at two levels - at the level of the permanent structures of state manned by professionals and necessary for governance and at the level of peoples' representatives elected to govern for a limited period.

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If governance structures are colonial relics imbued with 'colonial' ethos and the professionals manning them are sahibs 'born to rule' rather than 'selected to serve', it is quite likely that the vox populi would be heard through the fog of arrogance and personal aggrandizement only in extremis. For example, when public order is disrupted in sheer frustration due to denial of voice.

In the case of elected representatives, this 'deafness' is likely to arise if their primary motivation is acquisition of power solely to enjoy the material and psychological fruits thereof, and public service is only a mask or artifice to enable the acquisition. Here again, hearing returns only when the normal, comfortable status quo is disrupted seriously.

It is in this context that we have to interpret the rather disturbing statement by some representative of the ruling dispensation that demonetisation is not a problem because there are no riots in the streets.

An obvious interpretation of this rather wayward statement is that no problem afflicting the people needs be taken cognisance of until there are "riots in the street"; the vox populi can be ignored unless public order is disrupted.

One implication of such an attitude is that problems affecting the electorate are per se of no consequence -- it's only when they acquire serious nuisance value that they have to be dealt with.

This is a reprehensible situation and violative of the very essence of democracy. The people, their needs and problems are what the state's existence is all about: a democratic state is 'for' the people; to protect and to serve them and not the other way around.

Demonetisation, over the last 40-odd days, has caused widespread distress among the poor 'chhota aadmi', severe inconvenience to the not-so-poor 'middle class' aadmi, and no significant inconvenience to the 'upper class' empowered aadmi because he has enough resources to get the cash needed to manage life in a still very cash heavy economy. Those who have imposed and implemented demonetisation come in the last category.

Also Read: PM Modi to Cabinet before demonetisation announcement: If it fails, I am to blame

The pain of this policy is thus very asymmetrically distributed. The gains have yet to be demonstrated, much less documented. If, as was recently mentioned, there is no estimate of the extent of "black money" in the system, the putative "gain" from the destruction of such money can never be computed. The resuscitation of the amnesty scheme indicates that ultimately destruction of "black money" was not the objective of the exercise, enhancing tax revenues was.

The argument is that these additional revenues can be used to "do good". Regrettably, the track record of the Indian state in "doing good" for the people with its expenditure policies is patchy, to say the least. Special interests, through subsidies, get the gravy and the 'trickle down' is restricted largely to the catchment areas of the 'middle class'.

The unequal growth that has been characteristic of the economy since the early 1980s has produced a strange effect here. The resentments stemming from high and growing inequality have led to a Robin Hooding of the present dispensation.

The attitude of "I will suffer some inconvenience if that rich black money holder is wiped out" was characteristic of a segment of the population in the initial period after the fateful announcement of 8 November 2016. I suspect it was those who are financially relatively secure, but nonetheless very envious of the rising numbers of the very rich, who made up this group.

The question, however, is whether the poor and others deeply impacted by this exercise can survive for long on a negative - somebody else's loss -- especially now that the black money holder can take a hit but keep a significant portion of his ill-gotten gains without fear of prosecution. Thus, while everyone may love Robin Hood, just seeing the corrupt sheriff bested may not work for too long, especially if he is not really destroyed at all in the end.

Democracy should be a 'caring' system. "Tough love" may well work in war or in similar desperate circumstances, but not otherwise. The question that is now to be answered is whether this seriously bitter medicine was necessary (we know it is not sufficient) to tackle the parallel economy. Is this the only way to shift the economy to 'less cash'? Or is reducing the cost of cashless transactions, improving their security and educating people about their worth the right way? In a democracy do we persuade people or do we hold a gun to their heads to make them think as we do? Have the fundamentals been so changed by this measure that the desire and the ability to evade tax will be eliminated?

In the world's largest democracy, where a vast majority of transactions are conducted in cash, was demonetisation and its consequences necessary to further the welfare of the masses? Will it bring about the greatest good for the greatest number or just, perhaps, dissipate the financial strength of some political opponents?

Time alone will tell, or at least reasoned argument backed by comprehensive data, not mere assertions made with passionate intensity.

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