New Economies of Inclusion and the Old Politics of Deception: How Demonetization Was Made Socially Acceptable

No formal government program or agenda has been so socially malignant for India as the 2016 demonetization, both in the intent and manner in which the policy was deployed and in its impact on the working poor. While the forced sterilizations (nas bandi) of the mid-1970s were met with widespread subversion and eventually led to the fall of the Indira Gandhi government, the recent round of notebandi (literally, note ban) or demonetization was met by mass acquiescence. Instead of widespread resistance or an uprising, Indian people largely accepted and endorsed the government’s rationale that demonetization was a so-called surgical strike against black money, hoarding, corruption, and terrorism. Why, despite conditions of intense distress, have people accepted the government’s rationale for deploying demonetization? I argue that it was the articulation of a distorted economics of inclusion with an old politics of deception—a rare combination—that made mass social acquiescence possible.

Private investors, technology czars, speculators, and business owners close to the government are all key voices in discussions about making India a global economic superpower; they tend to focus on getting what they see as an untidy mass of humanity into the formal structures of capital. Previous efforts to induce people into the banking sector through a so-called “people’s wealth” (Jan Dhan) account failed to take off, as attempts to integrate and capture India’s large informal economy into the increasingly global capitalist economy. Such programs overlooked the structured inequality of access to resources, caste-based forms of exclusion, and the fact that a significant proportion of the country’s population exists outside of the supporting scaffolds of formal social institutions such as health care, education, and social security. This economics of neglect, which political powers have deployed over decades against the economically disadvantaged, has long been matched by a lack of regulatory action against the very sources of black money and hoarding.

Despite the long history of this economics of neglect—in which successive governments failed to address the sharply skewed distribution of land and resources, overlooked the fact that a majority of agriculturists and rural residents are marginal cultivators, and disregarded the reality that functioning and accessible welfare schemes are few and far between—demonetization was camouflaged as an agenda for economic cleanliness, good governance, and inclusion. The prime minister and others disseminated a discourse in which demonetization would hold the rich and corrupt accountable, while building a new economy in which the poor and disadvantaged would benefit. Within weeks, the economic rationale included the promotion of technology-enabled financial transactions, and prizes and discounts were offered for undertaking such electronic transactions. The ease and benefits of electronic finance were advanced as the new mana that would resolve poverty and deprivation. Even the humble street vendor, the illiterate person, and the otherwise disregarded landless cultivator could be a participant and beneficiary in this new transparent and inclusive economy. 

Yet alongside this discourse of a new economics of inclusion was a politics of deception. Cleverly worded and intensively deployed through multiple media, the prime minister’s frequent messages referenced the small and temporary sacrifices that people must make, as well as the agenda to punish hoarders and black marketeers. Television broadcasts repeatedly showed images of discarded money (by those unable to legally account for it) and surprise raids at government officials’ homes where illicit sums of money were stashed. Popular discussion shifted to understanding demonetization as an attempt to punish, for once, the rich and moneyed. Dismissing their own trials, many of the poor repeated what the prime minister and his supporters declared: the larger goal of cleaning up the economy outweighed the temporary pain that they had to bear, as a sacrifice for the greater good of the nation. Most significant was the rumor that the poor would soon be receiving a sum of ₹10,000 in their accounts—a strategy of deception that silenced any possible dissent or resistance.

As demonetization unfolded in rural areas and in the informal economy, it fell most heavily on the working poor: millions stood in lines to convert large notes, many losing a day’s wages to do so. Reports of unusual migrations back to villages trickled in, children whose parents could not afford school and tuition fees saw the end of their education, and large piles of cotton and food crops amassed as informal economies of credit were considerably disrupted. As many lost wage work, they faced humiliation in their inability to pay for health and other services. In a poignant event in one village, the wedding feast organized by a small farmer was largely unattended as the guests, who had no money to give as muye (monetary gifts offered on ritual occasions), stayed home. Despite these humiliating experiences, demonetization produced no real discourse of discontent or programs of countermobilization, and by the end of three months it had become another program whose logic and intent were obfuscated. Social acquiescence made the troubles of demonetization bearable and overrode any possibility of critique or mass resistance.

A politics of deception legitimized demonetization still further in the populist budget advanced in early 2017. Assuring new investment in infrastructure and employment guarantees for the rural masses, this budget sought to assuage the wounds of demonetization. Yet after three months, demonetization had become a fait accompli. The Bharatiya Janata Party (BJP) distributed letters from Prime Minister Modi to the electorate of Uttar Pradesh, which explained the benefits that would accrue to them in recognizing the worth of demonetization. Is it any wonder that in many state assembly elections, the BJP saw resounding success? Demonetization has faded from the scene as an issue, and acquiescence has become the mood of the people.