Demonetisation: Pakistan, Venezuela unwilling to go the whole way like Modi on note ban

Prime Minister Narendra Modi's demonetisation move appears to be popular, at least politically. It has been echoed in at least two other developing countries, where Venezuela and Pakistan have taken a similar route.

Written by Radhika Iyengar | Updated: December 20, 2016 7:31 pm
A customer holds a stack of 100-bolivar notes at a bakery in downtown Caracas, Venezuela, Monday, Dec. 12, 2016. Venezuelans are rushing to spend their 100-bolivar notes after a surprise announcement that they will be taken out of circulation this week. President Nicolas Maduro said on Sunday that his government would be pulling the bills to stop the "mafias" who smuggle contraband on the Colombian border. (AP/Photo/Fernando Llano) A customer holds a stack of 100-bolivar notes at a bakery in downtown Caracas, Venezuela. President Nicolas Maduro said on Sunday that his government would be pulling the bills to stop the “mafias” who smuggle contraband on the Colombian border. Source: AP/Photo/Fernando Llano

Despite the immense hardships faced by people across India, Prime Minister Narendra Modi’s demonetisation move appears to be popular, at least politically. It has been echoed in at least two other developing countries, where Venezuela and Pakistan have taken a similar route.

Last weekend, Venezuela’s President Nicolas Maduro took the decision of scrapping 48 per cent of the country’s currency by withdrawing the 100 bolivar bill. Like Modi, who informed India that the step was taken not only to weed out black money, but to also falter the functioning of terrorists, Maduro told his citizens that the drastic measure was taken to circumvent Venezuela’s inflation (IMF made a forecast of it hitting 475 per cent this year), while also battling the transnational mafias breeding in the country.

However, in contrast to the four hours India was given to spend its old notes, the Venezuelan government gave its people a period of three days to use the 100 bolivar notes. In addition, the people were given merely 10-day window to transfer their money into their bank accounts, while the Indian government had given its people 50 days.

Like India, the result was inevitable: Venezuela plunged into chaos. Unlike India however, the people’s response to the move was different. Maduro is no Modi. Almost immediately, protesters in Venezuela blitzkrieged the streets, destroying shops, blocking roads, breaking down ATM machines and wrecking havoc. The mood of the crowd was angry, intense, and unified.

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Remarkably in India, despite the move that has slowed down our economy and broken the backbone of the agricultural sector in particular, no one is protesting. Indians are known to protest. It’s in our blood. If something doesn’t sit well with us, we raise an alarm. Of course, there have been pockets of disruption: there was the nation-wide protest under the banner of ‘Jan Aakrosh Diwas’ for instance, which unfortunately failed to make an impact. The reason for that protest to fizzle out, however, was that the politically-led protests in different parts of the subcontinent weren’t unified in voice and spirit. They had their own agendas in place. Not many wanted to join hands and fight for a united cause.

The mild murmur of protests could possibly be linked to people’s inhibition to display any form of disagreement with the government. Demonetisation has been intelligently paired with the anti-national narrative: if anyone questions or challenges the move, he/she is unpatriotic and possibly in possession of black money. There are many who, therefore, refuse to speak out because of the overwhelming fear of being attacked for voicing dissent.

Today, Pakistan announced that it would cull Rs 5000 notes from circulation. Out of the 3.4 trillion notes in circulation, 1.02 trillion –about a third — are in this high value. It’s therefore, not as drastic a step as the one taken by Modi who withdrew over 86 per cent of the currency. Modi did not take the issue to Parliament to maintain secrecy. Pakistan in comparison, approached the Senate before announcing the decision. In November, Pakistan had also publicly declared that these notes will be devalued. This makes the whole move less severe, less messy, and strategically, better planned. Unlike India, Pakistan’s move seems to be taken cautiously, possibly wary of the crippling consequences India is experiencing right now. It has decided to spread out demonetisation over a period of three to five years, slowly pulling out the notes “in a phased manner”.

Interestingly, Venezuela’s President has temporarily stalled the decision to demonetise the economy, particularly after the protests and the death that was reported. There are a few who commend him, saying that unlike Modi who refuses to acknowledge the issues and retract demonetisation, at least Maduro is paying attention to the mood of the people. However, there are others who’ve argued that President Maduro is an unpopular leader, and the fear of being ousted through a military coup was probably what prompted him to pull back the note ban.

Historically,Venezuela has been marred by series of coups where political leaders have been uninhibitedly overthrown. For instance in 2002, Venezuelan President Huga Chavez was removed from power by a military coup, leading to the annulment of the country’s constitution. Pedro Carmona, a business leader replaced him. Prior to that, Venezuela has witnessed several military coups – 1945, 1948, 958 – that have seen Presidents being overthrown.

In comparison to Maduro, Modi enjoys immense popularity. Over the years, he has been able to build a strong image of himself, where a majority of the country believes he heads a “transparent” government and has great decision-making skills. So even though demonetisation has led to numerous deaths; even though economists predict the National GDP will plummet by two percent (which they call an under-estimation), the idea to publicly overthrow him, replace him or denounce him, seems unthinkable.

Therefore, while Maduro may have withdrawn demonetisation because of political threats, Modi will be unwilling to do so. It will be a political suicide if he even considers it, some argue. When Modi announced the note ban on November 8, he asked the citizens to invest faith in him. If he appears to falter in his decision now, it will collapse the awe-inspiring image he has skillfully built over the years. What’s more disconcerting is government calling the numerous deaths in the country and other inconveniences caused by demonetisation as “temporary pain for larger gain”. Of course all of us have been told what the so-called ‘larger gain’ is, but there is no certainty whether it will be achieved.

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