“ Kehthe the Kaala Dhan par surgical strike ho raha hain. Par yeh tho aam janta ke uper surgical strike ban gaya. Samajh nahi aa raha hain ki yeh surgical strike kab tak jaari rahega” ( It was said that black money was being targeted in a surgical strike. But, it has turned out to be a surgical strike on the common people. Have no clue how long this surgical strike is going to continue.) This was what someone said aloud in a serpentine queue outside a bank at Mehrauli in south Delhi. A chorus of responses dominated by curses on the leaders of the government and the bank staff followed. This was on November 17, eight days after Prime Minister Narendra Modi’s late-evening announcement demonetising currency notes of 1,000 and 500 denominations.

Modi’s dramatic announcement was accompanied by assurances from his government that banking would get regularised in a matter of three days; some of them were from Finance Minister Arun Jaitley and senior officials such as Economic Affairs Secretary Shaktikanta Das. Not only did that not happen, the government itself repeatedly complicated reinstatement of normalcy by coming up with different and contradictory directives during the week following the announcement. As many as 10 modifications were made to the scheme’s procedures in a matter of seven days. These changes were brought, professedly, to ease the difficulties faced by people in depositing and withdrawing cash and to curb manipulation of the scheme by dishonest people. The comment heard at the queue in Mehrauli was of a piece with the hundreds of thousands of popular responses that came up in relation to the move and its stated objectives. A sizable number of these responses highlighted the most tangible result of the move—the palpable inconvenience and suffering faced by common people. They also reflected the widespread disenchantment triggered by the government machinery’s obvious unpreparedness in dealing with the situation.

The widespread distress and the government’s ineffectual strategies to mitigate the suffering raised questions about the intent and rationale of the measure. These questions were not unexpectedly reflected in the mainstream political space and the judiciary. Seeking a report from the Union government, the Calcutta High Court said that the government had gone ahead with the scheme without doing its homework. The Supreme Court also criticised the government for not fulfilling its promise of bringing relief to the people. It pointed out that the hardships caused by the move could even lead to riots. The responses in the mainstream political space not only highlighted the scheme’s flawed implementation and the sufferings it caused but also raised questions about its legality and the challenges it posed to the principles of Indian federalism. The issue rocked Parliament’s winter session and shook up businesses, including wholesale markets and big commercial establishments.

The question of timing was central to the debates on the move. Why did the Union government choose the moment that it did to make the move? Why this hurried plunge without having built up the required infrastructural support? Was the unseemly haste dictated by political considerations such as the Assembly elections due in early 2017 in Uttar Pradesh and Punjab? Or was it a piece of realpolitik to cover up for the Modi regime’s governance failures, especially the recent worsening of the security situation on the India-Pakistan border that forced people in the region to flee to other areas? Were there other motivations of a personal nature, including apprehensions about the presentation of a corruption case in the Supreme Court involving Modi among others? Was some kind of advance indication of the scheme given to some big corporate and political entities so that they could legitimise their huge cash compilations before the launch?

These questions have been raised in different public forums and evoked varying answers, some of them from the ruling National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP). The NDA has not spoken with one voice on the issue, and some of its partners have contradicted the BJP’s position. An analysis of the circumstances leading to the announcement of the scheme as well as its implementation lends credence to the questions that have been raised. Ironically, the stated objective of unearthing massive amounts of black money has emerged as the weakest argument in its favour. The flip-flops in deciding the procedures to be adopted and the confusions they created only exposed the weakness of the government’s claims. By all indications, these flip-flops represent the lack of cohesion within the governance system on the path and direction to be adopted on the move. Significant segments of the bureaucracy are apprehensive that the net impact of all this will be so debilitating that it may set the economy back by a couple of years. Amid the growing panic, Modi seems to have fallen back on his individualistic political practice: raising rhetorical positions before the people, while refusing to address constitutional institutions, including Parliament. The BJP’s official position is that the timing was dictated by the confidential schedule of the action plan drawn up by the Prime Minister to combat black money in the economy. Combating black money was in fact one of the main propaganda planks of Modi’s hugely successful campaign in the general elections of 2014.

The BJP leadership asserts that he has been consistently working on it after becoming Prime Minister. Frontline spoke to BJP leaders, including party spokesperson Mukthar Abbas Naqvi, on the issue. This was what they said: A decision to constitute a special investigation team (SIT) headed by a retired Supreme Court judge to unearth black money was taken at Modi’s first Cabinet meeting. The task before the SIT was primarily to unearth Indian black money stored abroad. This was followed by the income disclosure scheme (IDS) this year, which was open for four months, from June 1 to September 30. After it was over, Jaitley claimed Rs.65,000 crore had been declared as unaccounted income and assets.

A number of BJP leaders who spoke informally to Frontline said that the Prime Minister was not fully satisfied with the achievements of the IDS, though his Finance Ministry rated it as a success. Also, the SIT’s work in unearthing offshore black money was not producing the kind of results he had expected. He wanted to do more to dig out black money, and hence the demonetisation scheme, which was planned for over six months. These leaders, however, were not able to explain why the implementation of the scheme turned out to be so messy when it had been planned for over six months. According to the BJP spokesperson G.V.L. Narsimha Rao, there could have been some glitches since the scheme had to be planned retaining its secrecy. Both Rao and Naqvi claimed that this element of secrecy was crucial and that it had effectively struck at cash-driven terrorist operations of the Islamist jehad variety in Jammu and Kashmir and other areas and the activities of Maoists in eastern and central India.

Shiv Sena opposes move



Shiv Sena, the NDA’s ally, however, contested these claims. It asserted that this was just a political gambit in view of the forthcoming Assembly elections. Shiv Sena leader Harshul told Frontline: “Narendra Modi had made a poll promise about bringing back black money stashed abroad and depositing Rs.15 lakh in the bank accounts of Indians. At that time, he had stated on record that the Indian black money was predominantly stashed abroad. People are asking about that promise now. Modi knew he needed to do something to stop these questions. His answer, in his own style, is to turn around to India from abroad and demonetise Rs.500 and Rs.1,000 notes. We do not know how this will ultimately play out in the Indian economy, but the one clear fact is that the distress of the people is mounting day by day. An abject exhibition as to how political games are causing hardships to society at large.” The Sena has joined hands with the Trinamool Congress (TMC) and the Aam Aadmi Party (AAP) to demand a rollback.

Even some senior BJP leaders such as Defence Minister Manohar Parrikar have said on record that it might impact the forthcoming Assembly elections. According to Parrikar, it will bring such benefits to the people in general that they will rally behind the BJP in large numbers. Informally, a number of BJP leaders admit that the move is likely to create a cash crunch for all parties in the forthcoming elections. They foresaw the most severe impact in Uttar Pradesh and believed that the Bahujan Samaj Party (BSP), a major political adversary in the State, would be hit the hardest. A senior Rashtriya Swayamsewak Sangh (RSS) activist based in Lucknow told Frontline: “All political organisations have a huge quantum of cash-intensive operations, but the BSP is traditionally known to be a party more dependent on cash-based operations. Given this background, demonetisation should hamper the party’s preparations for the Assembly elections in a big way. Already, there are whispers in Uttar Pradesh political circles that the core leadership of the party, including its topmost leader Mayawati, are goading district and regional workers of the BSP to take urgent measures to tackle the organisational and operational problems inflicted by Modi’s political master stroke.”

The BSP leadership’s answer to these suggestions is that Modi and his party have played a sleight of hand with the people and with their political adversaries. The BSP leader Naseem Uddin Siddiqui alleged that the BJP outdid all other parties in its use of black money in all periods of political activity, including in elections, and that demonetisation was a mere camouflage for devious political games. “There are indications from places as disparate as West Bengal and Rajasthan that the BJP had taken care to boost its own cash reserves before the announcement of the scheme. If it is the exposure of bank transactions that has put the BJP in a spot in West Bengal, Bhavani Singh, a BJP MLA, has stated that the Ambanis and Adanis were given prior information of the scheme,” he said. Siddiqui added that the BSP would not be cowed down by these stratagems and would expose Modi and the BJP conclusively before the people.

Several incidents preceding the move have indeed fuelled suspicions that certain people and entities got advance notice of the move. And it is not just about the deposit of large amounts of cash by the BJP in West Bengal and Bhavani Singh’s allegations. The sudden rise in cash deposits in all major banks over the last quarter, which bucked existing trends in the sector, has been seen as dubious.

Needles of suspicion



These intriguing transactions have again drawn attention to personal factors vis-a-vis Modi. These factors came up before various constitutional bodies, including the Central Bureau of Investigation (CBI), the Central Board of Direct Taxes ( CBDT), the Central Vigilance Commission and the SIT on black money, barely a fortnight before Modi’s dramatic announcement. This was through a representation made by the social activist lawyer Prashant Bhushan, president of Swaraj Abhiyan, on October 25, 2016. Bhushan drew attention to certain diaries seized by the Income Tax authorities during a raid at the offices of the Sahara group in November 2014. The entries in the Sahara diaries listed payments made to several politicians between October 30, 2013, and February 21, 2014. The list contained several names, including that of “Modi Ji”, Chief Minister of Gujarat. The Income Tax Department’s appraisal report on the diary mentioned that at least eight payments were made to “Modi ji” in Ahmedabad through one “Jaiswal ji” during the period under consideration. These payments totalled Rs.40.10 crore. Incidentally, this was the period in which Modi cemented his claim as the BJP’s prime ministerial candidate for the 2014 general elections. Bhushan’s representation also showed that there were other entries regarding payments made to “CM MP”, “CM Chhattisgarh” and “CM Delhi”.

Bhushan’s representation also highlighted records unearthed during a raid in October 2013 at Aditya Birla Group companies, again pointing to illegal pecuniary benefits to the tune of Rs.25 crore given to then “CM Gujarat”. In the months following these raids, the tax authorities investigated the details that had come up before them. The Birla group official who had made the noting on “CM Gujarat” said his reference was to a company called Gujarat Alkalies and Chemicals Ltd, though the authors of the Sahara entries came up with no such explanation. However, Bhushan says, it was evident that neither the IT Department nor the CBI initiated concrete action that could lead to judicial processes or punitive measures in these cases. Then, in June 2015, the man leading the tax probe, K.B. Chowdary, was made the head of the Chief Vigilance Commission. Bhushan challenged this appointment. The representation of October 25, 2016, was in continuation of the legal activism that the senior lawyer had undertaken. During the day on November 8, Bhushan wrote again to the Income-tax Settlement Commission underscoring the gravity of the revelations in the Sahara diaries and asserting that the commission should not grant any immunity in the matter. The demonetisation announcement came that night.

A cover-up attempt?



Bhushan is of the view that his October 25 representation and the follow-up that he made in November could have been tracked and notified at the highest levels of the Finance Ministry and other government institutions. This, he feels, may have triggered a high-level gambit that could overshadow all charges being raised against the Prime Minister. Ram Jethmalani, veteran lawyer and Rajya Sabha member, formerly associated with the BJP, also told Frontline that the demonetisation move had all the makings of a huge cover-up. Writing to the Finance Minister on November 15, a week after demonetisation drive was announced, Jethmalani stressed that the BJP and its government had failed in fulfilling the promise of unearthing black money and that he was planning to initiate legal proceedings against the party for civil and criminal breach of trust. Though the letter did not make any direct reference to the demonetisation drive and the claims being made on it, Jethmalani suggested the party’s track record on this front was marked by chicanery. He quoted from the BJP manifesto and stated that the promise was to initiate the process of tracking down and bringing back black money stashed in foreign banks and offshore accounts.

“The party had also promised not only to set up a Task Force for this purpose but also to recommend amendments to existing laws or enact new laws as also proactively engage with foreign governments to facilitate information sharing on black money. But the track record of the past two and a half years was one where the BJP was also merely following the path adopted by the Congress during the 2008-14 period. The German government as well as the Swiss Association of Banks were ready to pass on the names of Indians holding black money in their banks, but both the Congress and the BJP have manoeuvred in such a manner that the names do not come out and reach India. This only highlights what Amit Shah later stated: that the talk on bringing back black money was only a chunaavi jumla [election trick],” Jethmalani told Frontline.

By all indications, the demonetisation drive is turning out to be yet another jumla, but a more painful and harassing one for the common people. The 2014 jumla was essentially about failed expectations. But the 2016 demonetisation drive has led to the kind of harassment that has even caused deaths in tortuous queues across the country. As many as 50 deaths have been reported in the first 10 days of the demonetisation process.

The repeated changes in procedure and the intermittent stoppage of services, say senior officials in the Finance Ministry, are reflective of the manifold and conflicting approaches being advanced by different sections of the official machinery. The talk among senior officials also revolves around a strange “yoga” influence on the administrative flip-flops. While Shaktikanta Das is the one who appears before the media with announcements of changing decisions, most of them are apparently influenced and guided by Revenue Secretary Hasmukh Adhia, a confidant of the Prime Minister who has a PhD in yoga.

A sizable number of Finance Ministry officials admit that the drive is not contributing anything at all to unearthing black money. Reports reaching government agencies from across the country talk about various methods and machinations employed by the rich and the powerful to convert black money into white. Senior bankers and corporate players have joined hands to undertake this operation, says a senior official on condition of anonymity. The cumulative effect of all this, these officials apprehend, may break the backbone of the essentially cash-driven rural economy so seriously that recovery may take considerable time.

As these forebodings loom large, the politicking of the BJP leadership as well as its rank and file continues apace with two distinctive streaks. One is being advanced by Modi himself with rhetorical calls and theatrical, maudlin shows seeking to showcase his love for the country and its people. He asserts that demonetisation is not an end of his projects and that he has many more in mind to make India corruption-free. He invokes unspecified threats against him and asserts that he will face all that for the poor people of the country.

The narrative in this stream is clear: it is about Modi the saviour of the poor facing the rest of the political class, all of them apologists for the rich and the elite. The second stream, being advanced at the ground level by the BJP rank and file, is once again about the possible deposits to bank accounts of those registered as below the poverty line. Across Uttar Pradesh, the campaign goes on asking people to be prepared for the bonanza transfer that the Modi government will effect once it rounds up a fair sum of money. Expectations are growing on account of this campaign even as it prevents eruption of riots amid the harassed people. Indeed, it is politics at its cynical worst.