Deconstructing DeMon for the Inglorious liberal

The expression “Inglorious” is trending now amongst the battle fatigued caucus of Indian liberals ever since their flag bearer Shashi Tharoor, M.P. titled his book “Inglorious Empire” - that successfully made a cottage industry out of Indian bitching about the British Raj. Pratap Bhanu Mehta is a hard trier among liberals. Perhaps the popularity of Tharoor’s title success has tempted him to absorb some shine off it as he partakes the expression as a title to his op-ed piece today. But all it could do was to expose his frustration more than his version of economic reality that he struggles to outline in it. 

In fact, most critics of India’s massive Demonetization (DeMon) program initiated by Prime Minister Narendra Modi fall flat on their nose like Mehta does – the liberal camp in particular. Let’s take Mehta’s piece today, flesh it out and you’ll know why.

Mehta begins his piece by confessing his inability to figure the “technical reasons” cited by Amit Shah for the current GDP growth pegged at 5.7% from the 7.5% as it prevailed an year ago. But he as well guessed it right that the overriding preoccupation with the cockle warming debates on social polarization – the great liberal appetizer  – has distracted him from observing the economic realities on the ground like rising crude prices, the gradual but unstoppable Chinese slowdown, Trump in Capitol Hill, Brexit and EU recession all which dented global commerce in a significant way. Mehta comes out way too naïve in pretending not to have noticed it.

As Mehta concedes, barring a few experts no one is seriously questioning the Government on falling growth numbers.  We know how 2007-08 mortgage crisis exposed the experts as a breed. He doesn’t seem to get that average, un-elitist and the few sensible among the elites don’t link economic slowdown to DeMon or don't confront the obvious because they know it would only present them in a shade of poor “orange” - the color  distinguishing the ignoramus truant holed up in Washington – that nobody wants. Mehta perhaps has sufficient rewards more than gumption to risk it. So he perhaps does. Further politics has increasingly a negative correlation with economics

In the midst of flagging all his grave concerns, Mehta has somehow deigned to notice the macro-economic stability that prevails and overrides the gloom he struggles to figure. The unruffled Indian majority should owe him a lot on that count even though they have digested the slide down in other indices like IIP, Private Sector Investment by tallying it with geopolitical tensions in the neighborhood and have benchmarked global comparisons to boot. Only that India’s indices have been faring better than most of the other developing nations – a fact Mehta has overlooked once again attributing his preoccupation with the glorious anti-polarization liberal crusade.

Now to Mehta’s greatest of findings that this Government gets what he calls as a “Free Pass” because of the severe economic maladies it had inherited from UPA. In his hurry to underplay the role of UPA in screwing up India’s economy by its sustained insolence that PM Modi has boldly begun to address, he forgot that the “past” doesn’t just refer to a decade under UPA, it has to be multiplied by a factor of five - to include the years from Indira Gandhi era when Bank Nationalization swept so many economic ills then prevailing under the carpet – to get a complete picture. Perhaps Mehta does implicitly convey his unabashed adoration for Modi in expecting him to reverse the ills of the last five decades in under three years. Noted, Thanks.

The biggest gaffe that one could notice is when Mehta airs his pet grief - by managing low inflation the Modi Government has neatly masked its non-performance in areas of job creation and employment. Mehta is seen as a complete dud here. He pretends not to notice how his claim of job losses militates against the fact that despite losing jobs by the millions, people still buy stuff, crowd malls or even buy Jewellery. It takes a scornful liberal or a complete idiot (means the same) not to figure how people get by if DeMon has killed all jobs or what alternative means of livelihood people have adapted to for themselves.  Wonder what these jokers might ask at a time not so far ahead in future when Robots, AI and other industry automation eliminates conventional manual labour. I wouldn’t be surprised if they foretell death due to starvation for 40% of working population engaged in industrial labour, just like the liberals did as Modi marched forward triumphantly, winning one election after another. Poor suckers..!

The diminishing faith amongst the Private Sector that Mehta alludes is called "risk perception" which is an extreme variable. What is a manageable risk for a young Bill Gates or a Mark Zuckerberg could be a dubious abyss for a wizard like Warren Buffet. Again what Mehta doesn’t notice is that PE/VC investment in India has topped $ 22 billion in 2015 itself, a peak by itself. What the capitalists don’t invest in industrial ventures, they invest in financial assets. Just look at the record Sensex / Nifty performance of the last 3 years. It is called an investment cycle. Smart money moves in and out of asset classes and working capital in alternation. Grow up, Mr.Mehta.

Now Mehta saves his ammo for his final pitch – Demonetisation. Like the thousands of insidious liberal critiques that preceded his, this one too heads straight to the trash can. Mehta’s sweeping criticism on DeMon – high cost, low outcomes, other means to achieve the same goals – all have been rejected outright by the people since it is short on specifics. The liberals are always ready with their objection to a public policy, before they are ready with the alternatives. If they say DeMon could have been implemented "better" which is a comparative, what is its "good" forerunner or a previous example they are benchmarking it to…? It is the first of the kind in terms of sheer scale and therefore an experiment well worth trying in an economy where the unrecorded cash floating in the system has far exceeded that in the recorded universe, fueling asset price inflation, hawala and its nefarious destination – terrorism, both social and economic. To those who speculate whether DeMon has ended all terrorism or have all unaccounted cash been sucked in, the answer is it will.  To those who quiz why have the government and RBI kept shifting the goal posts during DeMon, the simple answer is even they were learning on the run. Only that the liberal idiots have been too naïve not to recognize DeMon as an experiment as did most average Indians on the street. Hence they didn’t complain then and still don’t. 

The fact remains as Lord Meghnad Desai puts it "Demonetisation did not cause the economic damage people had predicted (even wished), and yielded political benefits. India is being digitised. GST has been passed after 15 years of dithering."

The liberals are too presumptuous to think the average man doesn’t speak up because he is way less intellectually endowed. In fact, he doesn’t because he is unassuming yet shrewd enough to pick up on weak signals, sees too much too early and knows way more than the liberals do.