The Prime Minister has a flair for the dramatic, especially of the crude kind. But even in the annals of the Modi Chronicle, demonetisation—or rendering 86 per cent of legal tender in the country illegal—is a stop-the-press kind of event. The objective is to attack black money, unaccounted cash lying in secret safes of the rich, as also the terrorists flush with ISI-printed Indian currency of high denominations. The rest of the country is collateral damage, from vocal people on social media who suffered the least but made the most noise, to the millions of unbanked people, and unorganised sector workers.

The economic impact of demonetisation is still to be seen, and a better picture can only emerge months from now. Some points, though, are clear. It is a one-time assault on black money held in currency, accurate estimates of which are not available. It also attacks small traders, and shopkeepers who largely transact outside the system. Their meagre unpaid taxes will not a nation build. Also, it will be business as usual once the contractor-babu-neta mafia games the new order.

It is a massive shock to the financial system and to an individual’s perception of money. It has the potential to impact spending and savings behaviour. The jingoism by the likes of Paytm, which launched a massive advertising campaign using the Prime Minister’s photograph, shows how euphoric these companies are.

Cash is legal, fast, anonymous, and preferred by most for everyday transactions. Does it need to be replaced by digital systems that collect a great amount of personal data in a country where privacy norms are in their infancy?

On the political front, so far, Modi is on a firm wicket. This is in spite of his administration’s rank incompetence in handling the fallout. His message has gone down well with people most inconvenienced by this blunt-force approach to a complex problem. He tapped into the patriotism of the poor, and their resentment of the rich—two things the mainstream English media fails to get. The campaign for 2019 has truly started, and Modi will try to make it a referendum on his abilities. In love with “bold” decisions, there is every chance of the PM making some more before the next elections. It’s a risky play. This confidence to stake it all is what separates Modi from his predecessors. Courage has its rewards, and foolhardiness has its price. When the time comes we will know what the November 8 gamble was all about.

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