No proof required: Battle of the elites

The old elite — politicians, corporates, left-intellectuals, academics — won’t give up their privileges easily. They will try to derail the structural transformation happening in India and object at every turn

Written by Surjit S Bhalla | Updated: June 17, 2017 7:13 am
BJP, congress, narendra modi, Nehru dynasty, india dynasty politics, demonetisation, farmers riots, indian express columns The dominant arm of the elite was, of course, the Congress, which was in power from 1947 until 2014 except only for 13 years (1977-1980, 1989-91 and 1996-2004).

The present news trend, and expert opinions, are very confusing. You have a marked improvement in agricultural growth, and you have farmer riots in two large states — Madhya Pradesh and Maharashtra. You have an economy that has been slowing since June 2016, and inflation now at historical lows, and you have economic experts stating that the RBI/MPC decisions have been valid because the wise MPC is looking beyond the “temporary decline” in inflation to 2 per cent brought about by demonetisation.

One of the major objectives of demonetisation was to diminish the role of cash (read black money) transactions. However, if the expert headlines are to be believed, the volume of digital transactions is contracting. What we are witnessing in India is a historic transformation — one that occurs rarely in most countries. It has never occurred in India before, never. But it is happening now. It is a changing of the guard — more appropriately, a changing of the elites.

The single most critical factor in Indian politics, from its independence in 1947 until the birth of the Modi administration in 2014, was that the same elite ruled the country. Regardless of political affiliation, this elite had broadly the same political and economic philosophy, characterised by Western-style social liberalism and Fabian economic socialism. In addition, traditionally, the elite was heavily anti-American.The dominant arm of the elite was,

The dominant arm of the elite was, of course, the Congress, which was in power from 1947 until 2014 except only for 13 years (1977-1980, 1989-91 and 1996-2004). And except for five years (1991-1996), a Gandhi family leader was the PM or in charge (as was the case during the 2004-2014 period when Manmohan Singh was the PM, but Sonia Gandhi was in control).

The influential English-language press shares the basic Congress worldview. Thus, they could not possibly believe that Modi, an unabashed Hindu leader, would win in 2014. There was a parallel belief that the BJP could not possibly win in the largest state of Uttar Pradesh (UP) in 2017. Of course, the rise of a new cosmology represented by Modi wasn’t an overnight phenomenon, as things were gradually changing. Starting with Narasimha Rao, India began to distance itself from heavy state involvement in economic activities. Economic reforms (especially for industry) were introduced in 1991, tax reforms in 1997, and the beginning of disinvestment in 1998. With the signing of the nuclear deal with US President George Bush in 2008, the first major step towards the American camp was taken by India.

As time went on, however, it became increasingly clear that the old elite had failed to notice and respect that India had changed from the illiterate and feudal order prevalent at the time the Nehru dynasty assumed control. There are complex factors feeding into each other to explain the public’s increasing mistrust in the old elite, but it can safely be pointed out that the educational level of average Indians has risen; the old elite mismanaged the economy — and power corrupted the old elite.

The Indian people are asking more questions and demanding greater accountability from dynastic political leaders. But the old elite — politicians, corporates, left-intellectuals, academics — cannot be expected to give up their privileges so easily. They will try to derail the transformation and object at every turn: If that means fake analysis, they will do so. If that means intellectual gymnastics, they will do so. The key point is that they must do so.

This is a long drawn-out battle, and a healthy battle. This is what checks and balances are all about. Should the new elite emerge without being questioned? No. Can the new elite just be allowed to roll over the old elite? Definitely not. Will the old elite use all its instruments, and cash in all the old I-owe-you(s) in order to influence the debate, even with fake news and even flakier analysis, if need be? You bet. This is one movie India has never seen before. Sit back, learn, comprehend and enjoy.

The battle is joined from all sides. Even from within the BJP. The new elite wants to rewrite history. That is its privilege. But do they have to distort history as much as they claim the Congress did? And do they have to ban documentaries, just like Indira Gandhi did with the banning of Louis Malle’s nine-hour documentary Phantom India? Or, the later banning of The Satanic Verses?

It is important that history be re-written — all new-born elites have done that since time immemorial. But why write history in as distorted a manner as the previous 70 years — by obliterating any mention of Nehru? And will you next sink as low as previous historians who find that the actions of General Rawat (defending parading an innocent as a human shield) and General Dyer (who oversaw the Jallianwala Bagh massacre) are comparable? Invoke Savarkar if you will, but also mention that he was not opposed to cow slaughter. And remember your Hindu Vedic ancestors, who not only did not infringe on the diets of others, but also ate beef.

In my previous article (‘Just why are farmers rioting’, IE, June 10), I documented that because of good weather, agricultural growth in 2016-17 was much better than the previous two years (4.9 per cent in 2016-17 vs an average of 0.5 per cent in 2014-15 and 2015-16). Farmer incomes had improved — so, riots now and not before? Some experts pointed out that flower sellers had suffered because of demonetisation — true; some others pointed out that vegetable sellers had suffered, especially those cultivating potatoes, onions and tomatoes. And many, indirectly or directly, attributed all of the price decline to the disruptive policy of demonetisation.

The same experts are silent on what happened to fruit prices, also a perishable crop and subject to bad demonetisation — fruit prices (wholesale and consumer) are up 5 per cent y-o-y. And they are silent on sugar, rice and wheat farmers — their prices are up 10-15 per cent. How many vegetable farmers in India? Less than 4 million. How many rice, sugar and wheat farmers — close to 90 million.Now, demonetisation. This is a

Now, demonetisation. This is a parallel to the “farmers-are-justified-in-rioting-with-record-crop-output” flake news. And that is that demonetisation was a comprehensive failure because its simplest goal — reduce cash transactions — has not been achieved. The evidence offered by several experts — RBI data on cash and non-cash transactions since November 2016.

There is a basic flaw in this lazy approach to ideological analysis. The “experts” only process data from November onwards, and are not willing (because of the results?) to look at the change in non-cash transactions over the last three years. They compare April to March 2017, find the volume of transactions lower, and conclude that demonetisation was a failure. The old elite could not possibly do a worse job!

The accompanying table documents RBI data on all non-cash transactions (by volume) since 2014. For each year, the data reported is an average for the months January-April. Card usage is only for POS transactions (as emphasised by the RBI in its weekly releases). You be the judge. Total non-cash transactions increased by 53 per cent over last year, January-April. And non-cash transactions “induced” by demonetisation — debit and credit cards (POS), prepaid and mobile — are up 173 per cent. Your sixth-grade daughter will tell you this is doubling every eight months. And you maintain that demonetisation has failed to move India rapidly towards less cash (less black money) transactions?

The writer is contributing editor, ‘The Indian Express’, and senior India analyst at Observatory Group, a New York-based macro policy advisory group. Views are personal

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  1. A
    Jul 19, 2017 at 10:06 pm
    Mr. Bhalla , we want high quality, sustained exposure of the biased narrative of the old elite who are loath to let go of their privileges.Mr. Kaushik Basu in a mediocre article derided demonetization , made the amazing claim that the govt had effectively derailed a 8.5 rate of growth in 2018-19 by demonetization. The article was anti-government with little empirical data. There is no evidence that Dr.Basu ever said in the previous 18 months that India was anywhere near 8.5 target. GOI is very tardy in disseminating structured , credible and regular updates on key initiatives like Infrastructure, DBT , E-Nam, the India Stack , digitization , Rail, Power, PSU reforms , interventions in prices of medical implants and revamp of the MCI etc. No exhaustive updates on people parti tion in smart city initiatives. NDA spokespersons are incompetent . Can senior please journalists convey to the GOI that responsible citizens wish GOI well, are very keen for proper updates ?
    1. k
      Jun 19, 2017 at 12:59 pm
      Good analysis about impact of demonetization
      1. M
        Jun 19, 2017 at 12:32 am
        What was your point MrBhalla? You seem to have submitted an incomplete article for publication!
        1. E
          Employ Ment
          Jun 18, 2017 at 8:47 pm
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          1. d
            Jun 18, 2017 at 3:41 pm
            It is a dirty game being pla by the Italians, Indians should realize it
            1. U
              Udainarayn Dvibedy
              Jun 18, 2017 at 1:00 pm
              Excellent article. Add that while BJP do have lot of corrupts, the top leaders are dead honest because of their life style from generations. Who can corrupt Yogi Adityanath etc etc. Their aim is to serve those part of society who require assistance and not haves who demand it. These haves donot see when whole world is in turmoil, India is most peaceful. Nexus between politicians /beurocrats /bankers is under threat. Mr Bhalla, I commented on your thought provoking analysis and request you to add above factors in your write up.
              1. P
                Jun 18, 2017 at 12:21 pm
                Mr. Bhalla if Demonetisation was to reduce cash transactions - what was inroduction of 2000 note for. Encourage ding of black money?
                1. P
                  Jun 18, 2017 at 12:28 pm
                2. R
                  Jun 18, 2017 at 3:31 am
                  We have a new "Rishi" as a poster. Great. So now I will name myself as "Rishi1" to convey that I am the original poster also named Rishi. Mr. Bhalla has discussed significant topics -- old elites vs. new elites, demonetization effects, farmer protests, RBI and monetary policy, cow meat and Hindu heritage, and others. I have said this before, and I say again: Mr. Bhalla is unique among Indian columnists in that he is an intellectual analyst as opposed to a whip-lashing sermonizer that appears in the IE each Sunday (and I do mean to imply Chidambaram, who is equally worse also). The problem with the old elite was that they were obsessed with building a narrative of "secularism" by rejecting anything out of hand that appeared to look at any issue from the lens of "Hindu ethos." I have not found a single liberal elite in American discourse who has such an at ude of contempt toward Christianity. So, old school Indian elites were shallow at best, wanting to appear "modern". Very sad!
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