It is extremely rare for an Indian Prime Minister to make an address to the nation. Usually, when he (or she) does, something seriously is amiss. The last time, I recall, a Prime Minister making “an address to the nation” was in 2014, where a serious looking PM Manmohan Singh bid adieu to the nation. Thus, a PM’s address is a bad omen. Not surprisingly then, when PM Narendra Modi did the same on 8th November, you knew something was up, it was his first “address” in over 2 years in office. And sure it was. A dour looking PM then in the 20 mins made an announcement that sent the whole country in a tizzy. He announced a war on black money with almost immediate demonetization of 500 & 1000 Rupee notes. “The arrangement of buying and selling through existing 500 and 1000 notes will not be available. These will be just worthless piece of paper”.
Never before in the history of modern world, 86% of currency in circulation was turned into worthless in a matter of 2-3 hours. And this was done with absolute planning. The decision came out at 9 pm, and the 500 & 1000 notes ceased being a legal tender at 11.59 pm. In this time, the black money hoarders could do precious little to convert it into another assets like gold or other precious metal. While the government would circulate a completely new (500 & 2000) denomination notes, the banks would be closed for a day, there would be limits on withdrawals, and so many other dos and donts. Come to think of it, there was hardly another way to bring about such demonetization, it has to be hard and it had to be sudden.
Immediately after the announcement, people hit the streets trying to exchange the ubiquitous 500 and 1000 bucks, by making small purchases or things like that. But as the word spread, the exchange stalled. No one was ready to touch the currency with a barge pole. Shopkeeperrs would smile indulgently on being offered these notes. Outside ATMs, there was a huge queue of people, withdrawing 400 bucks at a time. Ditto, long queues at petrol pumps, as people tried to use the notes to tank up their vehicles. Even on the television, you could all these people standing outside ATMs and petrol pumps trying to lay their hands on whatever 100 or 50 they could lay their hands on. People across the board were confused, irritated, and even angry at the way their Tuesday night had been laid waste. But yet, almost all were in agreement that it was a bold, necessary and welcome move by the government. There was hardly a soul on the road, who did not support or complement PM Modi on this move.
So how is that when so many people were troubled and disconcerted with a policy action, yet they seemed to be happy and glad for it? Continue reading