India: Demonetization Indian-Style and What It Says About All Our Futures

To get from the Bangalore Airport (Bangalore is the capital of India’s version of Silicon Valley) to the city center, you take a four-lane highway that is lightly traveled and well-maintained. It is flanked by signs as high as four-story buildings, lit up day and night, that proclaim, “Welcome to the Uber side of life.” After a few kilometers, the highway turns into a congested two-lane road and now you enter the normal India: the one of swarming crowds, constantly blaring horns—the one where the rules of the road get boiled down to right-of-way for the biggest and heaviest: trucks or buses at the expense of cars, large middle-class cars at the expense of rickshaws, and everyone trying to knock over cyclists and pedestrians. Sidewalks are filled with hawkers and street vendors, ambulatory or stationary, street food in its many bubbling varieties, plastic gadgets, and depressing, industrial snack treats. The great highway of digital modernity suddenly confronts the human and commercial chaos that it has failed to domesticate. This picture could serve as a metaphor for the social engineering initiative that the Modi government launched under the name “demonetization.”

With little warning, the Modi government announced on November 2016 that 500- and 1000-rupee bills—that is, eighty-six percent of the currency in circulation—were no longer legal tender, and that one had only to the end the year to exchange them at the bank for 100-rupee bills, which would remain viable. New 2000-rupee bills would be available “soon.” The official reason for this drastic measure was to combat “black money” (that is to say all the wealth created in more or less criminal ways, but in any case not declared to the tax authorities), corruption, and the financing of terrorism.

It is hard to assess the extent of the shock that this measure produced throughout Indian society. The Western press has been of little help here. Thus, in an article reminiscent of the writings of journalists or fellow travelers returning from the USSR in the 1950s, Julien Bouissou, a correspondent for Le Monde, tells us that while the peasants he encountered in Uttar Pradesh have difficulty purchasing necessities, they are ecstatic about the idea that, thanks to this policy, the government will make the rich disgorge their wealth and use that money to build roads; the local representative of the governing BJP (Bharatiya Janata Party) confirms this. The article’s title is a beautiful summary of official newspeak: “In India, the hunting down of old paper money awakens hope for social justice.” The 500-rupee notes (7.50 U.S. dollars) or the 1000-rupee notes (fifteen U.S. dollars) are not any older than the 100- or 10-rupee notes that remain in circulation; and it’s not about a “hunt,” but about a brutal decision taken from on high, effective immediately.

To understand something about India, it is better to read novelists than journalists; I highly recommended the magnificent White Tiger by Aravind Adiga. In his book about this country of 1.26 billion inhabitants (the second most populous country in the world behind China, and soon—in about ten years—predicted to rank first), Adiga distinguishes between two radically different worlds: the one of Light, the cities; and the one of Darkness, rural India where live, as Wikipedia tells us, “two-thirds of the working population (holding forty-nine percent of the jobs in 2012), with a particularly high suicide rate.” It is enough to travel a little outside of tourist circuits to realize the accuracy of Adiga’s distinction between village life—close both to the rice fields and to the conurbations of urban sprawl, where misery rubs against an invasive technology’s delusions of power—and an urbanism that seems to have taken Dubai as its role model. For those who live in the Light, politicians as well as critical intellectuals, it is certainly very difficult to comprehend the depth of the repercussions that demonetization’s blow has delivered. Let’s try to capture some data.

By mid-December, more than eighty deaths were registered as a direct result of demonetization; and this is certainly an underestimate. In the city, deaths cannot go unnoticed; they are often consequences of interminable queues in front of the precious few distributors where the new notes could be found, with their share of suicides, heart attacks, and strokes after days of futile queuing, brawling, squabbling. But in the countryside, where the peasants could not buy seeds for their next crops, an unrecorded number of them saw no choice but to kill themselves. When the banks quickly ceased converting the demonetized banknotes into valid ones, only the holders of bank accounts (into which they could still deposit the cursed paper money) could hope to recover their value. According to the official version, about seventy percent of Indians have bank accounts; thus, with a stroke of the pen thirty percent of the population became dispossessed of cash, the poorest of course. In fact, only half of this seventy percent has an active account; so only thirty-five percent of Indians can redeem their cash by depositing the banknotes. Another result: sixty percent of migrant workers in Delhi, who are responsible for the construction and operation of factories, have left the city because they can no longer be paid.

While the monetary coûp d’état of November 8, 2016 was a surprise for the vast majority of the population, it was certainly not for the big shots of the BJP party apparatus, Modi’s party, nor for their associates, or rather clients among the multi-billionaires of the hyper-bourgeoisie whose family trusts dominate the Indian economy. You could see a boss’s daughter show up on Facebook with a new banknote even before it was put into circulation. One of the significant benefits of the operation will have been, in the run-up to the elections, to hit rival parties in their indispensable black boxes, those enabling the purchase of votes, while the BJP apparatus has most certainly sheltered its own assets.

If the objective of the measure was to attack “black money,” it has spectacularly failed. Approximately ninety percent of the demonetized notes were returned to the banks, far more than the government expected. This means, as the Guardian explained, with its sense of British understatement, that “either the Indians concealed less wealth from taxation than was thought, or that money has been preserved in the form of goods or gold rather than cash.” In fact, according to reasonably serious economists, very probably less than two percent of “black money” is held in currency. Almost all of it is either converted into gold (by tradition, though it has no gold mines, India has by far the largest private gold reserves in the world), or put into purchases of jewelry, real estate, or land, when it isn’t put into financial investments. Together, all these investments are working for one part of the country, and especially abroad. As for preventing corruption, the new 2000-rupee notes will more likely facilitate it, by making bundles of paper money thinner. Behind the pretext of the struggle against “black money,” and according to statements by Modi and his subordinates, the measure seems rather to have had a dual objective: to cause an earthquake in the informal economy by forcing a good part of it into a controllable form; and to advance a forced march towards a cashless economy, perceived as the height of modernity.

As for the creation of a demonetized economy, it is clear that some companies have grown tremendously, like Uber, or its Indian version, Ola, or PayTM, an application that allows payments by smartphone, which even some rickshaw owners in Delhi now possess. The last two companies are at least part of the galaxy of interests in symbiosis with the BJP. In general, the world of start-ups and the digital economy are close to Modi et al., whose Hindu-identity authoritarianism works well with fantasies of modernity in projects such as the “smart-cities”—cities that actually exist and are expected to become, by Modi magic, as ecological as hyper-connected. But in the end, these projects and their projected results concern only a small fraction of the population, namely the upper stratum of the middle class. A quarter of the Indian population does not have a mobile phone and only ten percent has access to the Internet.

On the other hand, the informal economy accounts for seventy-five percent of the gross domestic product. As long as the growth of the formal economy, one of the strongest in the world, does not lead to any job growth whatsoever, the majority of the population will continue to work in the informal economy, which largely escapes the watchful eye of the state. The collateral damage of this surgical strike supposedly aimed at “black money” is therefore difficult to evaluate. One thing is certain: economists have reduced their forecasts of Indian economic growth from 7.8 to 6.5 percent. The closure of millions of commercial activities and small businesses operating on a cash basis surely counts for something here.

But the sufferings of the poor and the economy are of little importance to Prime Minister Modi and his cronies. We have already seen that in 2002 when he was head of Gujarat and let 2,000 Muslims be massacred by fanatical crowds. These political leaders, big shots from the great industrial families, are the heirs of the tradition of oriental despotism, which in India, as in China, has always considered the loss of a few thousand lives of the poor of no importance when it comes to applying policy. It does not matter to Modi to what extent he will succeed in his engineering enterprise aimed at reshaping Indian society on a Westernized, digitized model. First and foremost, demonetization is a demonstration of power, a way of affirming his hold over society.

In this regard, it can be said that he has for the moment succeeded. Since November, the BJP has won several local elections, and the unrest has been contained. There are two orders of reasons why the Indians put up so little resistance to such an aberrant measure. First, Modi is an excellent communicator. In his speeches, he succeeded, like Trump or Putin, in presenting himself as the representative of the people attacking the elites. Not even shying away from using an explicit quote from Bob Dylan (“the times they are a-changin”), Modi’s speech, with religious connotations on the theme “we will all suffer together but in the end we will come out better,” found a profound resonance in populations inclined to accept as their representative—as in the United States or France, a billionaire who is hostile to all social progress. But there is also another reason, which Western journalists have hardly pointed out: it is the BJP’s terrorizing grip on society. From its henchmen watching over the queues at the money distributors, charged with beating up those who protest too loudly, to exerting pressure on a press more and more inclined to self-censorship, the BJP and its Hindu-identity fascist allies—such as the RSS (Rashtriya Swayamsevak Sangh) with its thugs and death squads—do not hesitate to practice physical intimidation, up to murder.

The political consolidation of a reactionary social bloc with modernist pretensions around charismatic authoritarian figures well-enmeshed into the structures of capitalist democracies is a global phenomenon. There are striking analogies between Trump (United States), Erdoğan (Turkey), Orbán (Hungary), Kaczyński (Poland), Abe (Japan), Xi (China), Putin (Russia), and Modi; and others of the same ilk are already beginning to pop up in Italy, France, and several Latin American countries. One can foresee that these types will not hesitate to resort to shock measures, without warning—surgical strikes aimed at both particular and general goals. We have only to recall, for example, the terrorist attacks mounted by Putin’s operatives that enabled Putin to start the Second Chechen War. While some particular goal (to obtain such and such transformation of society, to annihilate such and such fraction of the population) may not be totally attained, that matters less than the general aim: to reaffirm the hold of a charismatic power whose strength conceals a fragile underpinning: its mostly imaginary foundation. Let groups manage to impose other images—and other narratives—than those held by power, and another transformation is possible.