Note ban: will it make India, or break Modi?

Mahatma Gandhi had a simple solution for moments of indecision. “I will give you a talisman. Whenever you are in doubt…Recall the face of the poorest and the weakest man whom you may have seen and ask yourself if the step you contemplate is going to be of any use to him,” famously wrote the “father of the nation”, whose face is printed on every Indian banknote.

If Narendra Modi had to remember the faces of all the poor and the weak he has encountered in the course of 45 years of public life in a country with 224 million people under the international poverty line, he would have little time to run India. But if he had ever met Madhukar Lahnu Devle, he might not have rushed into his decision to ban high-denomination banknotes.

On November 8, Prime Minister Modi announced the withdrawal of 500 and 1,000 rupee banknotes as he declared war on “black money”, as unaccounted wealth is called in India. These high-value notes, he said, needed to be flushed out of the system to end the country’s endemic corruption and widespread counterfeiting. But while these notes had constituted 86 per cent of the cash in circulation, the new notes they were replaced with amounted to just a fraction of this value (the 1,000 rupee note has been discontinued altogether).

The disruption has been painful, made worse by poor implementation that saw repeated changes in cash exchange and withdrawal limits, causing over 100 deaths, widespread inconvenience, and paralysing large segments of India’s mostly cash-driven economy.

Reality check

A casual labourer in the nondescript village of Hirve, 150km from Mumbai, Devle’s world – shaky at the best of times – has crashed around him since Modi’s call to arms. With little agricultural work available locally, Devle used to travel 50km every day to the bustling city of Nashik to seek work as a construction labourer, earning about 200 rupees (HK$25) a day.