Musings on India's tryst with demonetisation & an endeavour to become cashless

The Indian middle class and the ruling elites are rejoicing the country's elevation as the world's sixth largest economy surpassing Britain. The celebration is a function of India's increased importance in the committee of nations, broadly made possible by a trajectory of higher economic growth and technological globalisation and is manifested by unbound patriotism, not so much based on pluralistic values and all round development but mostly on cultural and philosophical supremacy. A similar self belief on intellectual and ideological supremacy once influenced the leftists to think of themselves as the saviour of the world and the custodian of the progressive mindset.

The celebration, however, overlooks the fact that India is still home to one-third of the world's poor and around one-fourth of Indians are yet to be illuminated by the enlightenment of conventional education. These make it irrelevant for the Indian poor as to whether their national economy is the sixth largest in the world or even higher in the pecking order.

It would possibly have, had the "Trickle Down Hypothesis" - the basic proposition of which was that take care of the rich and the poor would look after themselves based on the residual income trickling down from the enhanced affluence of the rich - worked in today's complex world. The proponents of the Trickle Down Hypothesis may have envisaged a much simpler proposition that the rich gets richer and also pulls some poor out of poverty, but in today's complex world the rich gets richer only at the cost of the poor and more often than not under state patronage and political tautulege.

For the poor every day is a struggle often made worse by the fancied expediency of the state which is supposed to look after their interests. The decision of the Indian government to demonetise higher currencies was first dished out under the garb of a patriotic zeal to create a corruption-free country. Soon it was taken over by the prime minister's desire to evolve a cashless economy with the simplistic assumption that a cashless economy is a precursor and a precondition of a corruption free or a controlled corruption economy.

I am in favour of a cashless economy as it secures me from the risk of misplacing paper currency and also saves me from accessing cash. But the prerequisites of the introduction of a cashless economy revolves around the trust on plastic as an alternative to paper money, reliance on banks and their reliability as an important instrument of economic activities, a certain level of literacy and numeracy, adequate technology to run a cashless economy and the ability of the people to adapt to it and the general awareness about the benefits of a cashless economy to name a few.

Unfortunately, India with its size, diversity and demographic profile is yet to be ready to take such a plunge. Moreover to assume that being cashless is a way of becoming corruption free or at least controlled corruption is too simplistic an assumption to make. Had it been so, the West would have been able to weed out much of its corruption as it is widely cashless.

Rather than being dependent on the use of currency for transactional purposes, corruption is more a function of inadequate policies, poor implementation, political will and lack of collective awareness and wisdom about the pitfalls of corruption. The agents of corruption re-calibrate their mechanisms every time there is a new legislation to stamp it out and re-adjusts the risks involved. Resorting to corruption is a parallel trade and the agents modify themselves to adapt to every possible changes to enhance their efficiency.

Rather than using demonetisation to weed out corruption in the garb of corruption and to satisfy queer personal ego, the government should rather focus on reforming the institutions like poll funding which in itself is the fountainhead of political favour in the form of quid pro quo, expanding the tax base by incorporating agricultural income under the purview of income tax, encouraging the people to pay their due tax by streamlining the tax structure and creating awareness about the benefits of progressive taxation.

The ever increasing Indian middle class and the upward mobile are however in favour of a cashless set up without adequate infrastructure as they are in favour of a streamlined lifestyle. This emanates from a false sense of importance caused by a steady rise in income and oppulance following economic liberalisation.

The irony is that the ever increasing middle class is yet to take over the impoverished and the deprived sections of society. Snowed down by abundance and increased level of comfort, the middle class is rendered myopic about the plight of the majority.

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