Till the Assembly elections in Uttar Pradesh in February-March this year, Prime Minister Narendra Modi's much-boasted demonetisation was considered a success. But now it has been revealed that the economic adventure which was undertaken at 8 pm on November 8 last year did not prove to be as rosy as it was expected.
According to the data revealed by the government on Wednesday, May 31, India's Gross Domestic Product slumped to 6.1 per cent in the fourth quarter from seven per cent in the third. It is also the lowest growth rate India has seen in the last two years, resulting in it losing the tag of the fastest growing economy it had gained in 2015, overtaking China. In the January-March quarter, China's economic growth took place at a rate of 6.9 per cent. And if the analysis is done at a more micro level, the actual GDP growth would be an appalling four per cent.
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The revelations have now settled the question whether demonetisation was a good thing to have happened for the Indian economy, something the government had been drumming since the release of the GDP numbers of the October-December quarter. All those experts who had warned against the long-time implications of the demonetisation drive were dubbed close to "anti-nationals" for PM Modi can certainly do no wrong in today's India.
India's politicians often try to manipulate economics for populist gains
But the truth remains unaltered that politicians in this country have always hijacked economics for their own populist gains. Modi did not anything different but did things differently. He aligned a key economic issue with aspects that have disturbed our nationalist conscience over time, like black money, corruption and terrorism.
By scrapping two popular currency notes in one stroke, PM Modi gave the message that he is an uncompromising statesman and is undeterred to take action that requires courage. By calling for demonetisation, Modi conveyed to the change-seeking countrymen that he is going after the unscrupulous who indulge in black-marketing, stash illegal money abroad and also mint fake money to harm the country's economy. The move attracted a huge audience, even more than Donald Trump who was winning an interesting election in the US the same night.
The following days were chaotic as the common people ran from pillar to post to find ways to run their households since the old notes went out of practice. But yet the common man kept faith on Modi saying the pain is short term but the gains will be long term.
The said targets were black-marketing, corruption, terror funding; the real aim was UP polls
However, Modi was actually targeting the UP election as it meant a lot for him in the run-up to the Lok Sabha elections of 2019. By scrapping the big notes of Rs 500 and Rs 1000, the BJP ensured that its opponents, who were still dependent on the traditional cash politics to keep their vote-banks and vote-catchers glued to them, received a deadly blow. It was also alleged that the BJP had set its own house in order before the PM called the decisive shot. So while demonetisation had its explicit targets for the common people, winning the UP election was the implicit aim for Modi and he did it in style.
But now, with the UP election a thing of the past and the third quarter's report coming out with shocking facts, PM Modi will have a new challenge to beat. For the experts, losing the race for the fastest growing economy to China is not a great deal for the latter is a much bigger economy than India but for those who bank on daily doses of nationalism, falling back behind the Asian competitor might not be an easy fact to digest.
Modi will now need true experts's advice to bring economy back on track
PM Modi has so far driven the demonetisation project politically by making economics subservient to the wave he is riding. But time might have come now for him to set things in order and for that, he will require support from the real economists and not the pseudos. With the economic growth under the NDA government being a jobless one, PM Modi is already facing flak from various quarters. And now, if the economy as a whole also starts tumbling because of gambles for political gains, Modi's UP euphoria could be over in no time.
As far as Modi's opponents and critics are concerned, the GDP's fall might seem sweet as it vindicates their stand.
