Since 8 November 2016, when Prime Minister Narendra Modi made the unexpected announcement that the government was demonetising notes of Rs 500 and Rs 1,000, the country has been engulfed in chaos. The situation has been worse for those in rural or semi-urban areas: currency notes have taken longer to reach these regions since a sizeable majority of the bank branches and ATMs in India are located in urban areas. In rural areas, both the supply and demand for commodities have reduced, leading to a vicious cycle that perpetuates the absence of liquid cash in the market. The informal economy that is prevalent in these regions too has been disrupted.
On 16 November 2016, Sagar, a web reporter with The Caravan, spoke to Kancha Ilaiah Shepherd, a social scientist and political philosopher. During the conversation, Shepherd spoke about the impact of demonetisation on lower-caste communities and labourers of the unorganised sector, the inefficacy of this measure in dealing with black money and its consequence on the economy and the upcoming elections in Uttar Pradesh. Shepherd told Sagar that the most adverse effect of the Modi government’s decision would be on those who are already marginalised. He added that this policy was not as much a crack-down on black money as it was a strike on “black people”—those who spent the entirety of their day on physical labour in the sun. In the government’s move, Shepherd also sees at play a nexus between Brahmins and Baniyas.
Sagar: On 14 November 2016, a week after he had announced that notes of Rs 500 and Rs 1,000 would be demonetised, Prime Minister Narendra Modi said that the corrupt were upset while the poor were “enjoying a sound sleep.” Do you agree with this proposition?
Kancha Ilaiah Shepherd: No. After Prime Minister Narendra Modi made his so-called surgical strike against the so-called black money, the bullets first hit the mass labourers, the Dalits, the tribal people and other poor people in the deeper hill and forest regions. The poor are not enjoying a sound sleep as the prime minister would like to believe.
My feeling is that a white Modi has made the people black, not the money. See, by the midnight of 8 November, the masses in tribal areas, the Dalitwadas [Dalit settlements] and many houses far away, had just one note of Rs 500 or two, which they got because of labour, because of some sale in the market. The next day, they were supposed to buy salt, oil, some medicine, something. Suddenly, the note gets devalued. Now where should they go? They don’t know banks. They have never seen a bank in their lives. A majority of those in under-developed areas across India have never seen a bank in their lives. Many of them are located far away from banks, at least 20 or 30 kilometres. Most people in rural India would have heard about the news only by the evening of 9 November, if not later. So now, they had to start for the bank that evening. On 10 November, they must have had to run to whichever bank was the closest, but there was no money there. Money had not reached several banks. So what became black then?
See, the black-money hoarders would have to have at least Rs 20 lakh, Rs 30 lakh, Rs 1 crore. I don’t think such hoarders exist in tribal areas or Dalitwadas. These hoarders exist in areas with people from upper-castes, in urban areas, in the best world-class houses. So on 9 and 10 and 11 [November]—their days were going very well. So who was hit by this black money surgical strike?
People became almost black money the next morning. They had to run to banks that they did not know. It was not just the Dalits who were running to banks, it was black people who had worked all day in the sun—they had to run to banks. But most labourers in India are Dalits and also black in colour. It was black people who worked all through the day in the sun. They had to run to the bank. This was the greatest tragedy of this nation in its living history. So it is white Modi and white Mohan Bhagwat [of the RSS] versus black people.
You see, how white Modi looks on the screen. I don’t know whether he paints his face like that or whether he is actually that white. I’ve not seen a prime minister as white as him, but the masses who are standing in the long queues for changing a note of Rs 500, having worked all their life in the hot son, are black. Neither Jawaharlal Nehru nor Chandra Shekhar, neither Rajiv Gandhi nor Indira Gandhi were this white on screen. Modi is very white. And the BJP is a very white party. But they made the people black.
S: Contrary to Modi’s claims, you’re saying, these people are not “enjoying a sound sleep” while the rich are upset.
KIS: What sound sleep? Are they having a sound sleep as they are starving? Did they eat anything on the evening of 9 November? Several households were struggling that evening to procure rations for their children. The migrant labourers, the construction labourers—from Odisha, Bihar, Mahbubnagar [a district in Telangana]. The next day there was no work for them. The contractor did not call them for work because there was no money to pay them with in cash. Most of the contractors have to pay them in cash only. Their money has gotten blocked now.
Real-estate people have lots of black money, no doubt. So some real-estate people, I believe, will give the same old notes. But what would people do with those notes. They cannot buy anything.
So in the view of the BJP and Modi, is it the money that is black or the people who are black? Then who are the tribal people and the Dalits? In my view, they became black people. Their very life got dirty-fied, as if everything that is black is bad.
I’ve not seen any rich people standing in bank queues. Now, the issue is a white Modi versus the black masses.
S: Referring in part, to queues such as these, the government has said that while the move is resulting in a “minor inconvenience” it will be beneficial in the long-term.
KIS: Is starving and dying a small inconvenience? If so, death is a small inconvenience, people not getting admitted to the hospital and dying is a small inconvenience. Turning away labourers without giving them work, for days, and making them stand in queue to exchange a note of Rs 500 is a small inconvenience.
At a bank in Hyderabad, I met a person who went inside the bank with four notes of Rs 500, and came out with one note of Rs 2000. He was even more distressed then. “Ye kaun lega saab, ye kya karunga abhi. Laake bhi waste ho gaya abhi. Mujhe thoda salt aur oil khareedna hai” [Who is going to take this sir, what am I going to do now. My effort is futile now. I just wanted to buy a little salt and oil.]
What kind of minor inconvenience is this? It looks like Modi is not a person from the backward-class. A backward-class person would know this is a far more difficult life than that of a black-money hoarder’s. The rich who hoard black money, they ate on 9, 10, 11 and 12 November, but the masses did not. What a small inconvenience this is?
S: Modi’s government has sought to justify its enthusiasm for the policy by saying that demonetisation would be effective in cracking down on black money and also affect the flow of funds to terror-related activities.
KIS: I don’t know. If terrorism had a link with black money, America would have used a similar policy in recent times too. As would have countries such as France, Britain and Germany. How did Modi economists discover it? And all, these economists have come from America only. America would have demonetised their currency otherwise.
Modi has also put forward another argument that there are fake-note printing machines in the country and on the borders of Pakistan and that this step will dismantle the fake-note machinery. I am sure these machines do not exist in the tribal areas and Dalitwadas. Is there no other way to dismantle the circulation of fake notes? Our institutions have already introduced machines that detect fake notes. Why have they not made even our cellphones fake-note detectors? What do these masses have to do with this crime? This is nothing but hyper-nationalism, being used as tool to destroy the life of the poor.
S: What do you think then, is the real purpose of demonetisation?
KIS: Demonetising money, in my view, has been done for a simple reason: the BJP’s arrogance of majority. Perhaps it does not want the poor to get educated and join the middle-class in the future. Its intentions are not very clear. What is clear is that the BJP has never been a pro-poor party.
S: Do you mean the Brahmanical hegemony?
KIS: Yes, the BJP’s hegemony and Brahmanical hegemony. One way to look at it is also that this is a Bania strategy. They [Banias] have been under-powered, actually. So this has been done to get them on top all over again. One could notice the Bania-Brahmin competition after Modi came to power. His government is known as a government that is more pro-Bania than it is pro-Brahmin. We will have to wait and see how it plays out.
A few industrialists must have been in the know of things, the Ambanis and Adanis. But I don’t know how is this going to help them, because once the purchasing market collapses, how do shops sell—I don’t know. Once the nation crumbles, I don’t know how they will benefit from it.
At the same time, because Brahmins do not have a majority of the industrial control now, they are not in favour of the policy either. There is Brahmin industry in software. But the real reign is in the hands of the Banias—manufacturing and distribution. So it is that group that Modi is working with. It is a known fact that Modi has been closer to the Adanis and Ambanis. Maybe that had played a role in his decision. Piyush Goyal [the minister for power] is now speaking more and more. Amit Shah [the president of the BJP] is on roaring course. Goyal is more vocal than [the finance minister] Arun Jaitley is. He has opened up about everything. He is a Bania. So the contradiction has come out clearly. We will have to wait and see.
S: How do you see the contradiction that the prime minister, himself from the Other Backward Classes (OBC), is representing a Brahmin party?
KIS: He seems to have emerged as a part of the trading Bania-caste over a period of time. So he is a Bania OBC, it looks like that. His roots need to be debated now. Why is he saying that he is an OBC? And then, he is favouring all initiatives that favour the Bania economy. An impression is being created that those from the Shudra upper-castes hoard more black money than the Baniyas and Brahmins. This may open up new contradictions among the Indian rich. Those from the Shudra upper-castes are already asking for reservations and now they will have to think about their corrupt contractor, rich-peasant stigma, even though their wealth is nothing compared to the wealth of the Brahmins and Banias.
S: Do you doubt Modi’s identity?
KIS: I was happy that he declared himself an OBC and about having an OBC prime minister. But, within two and a half years, I have seen this desperation of economy, this is kind of Bania hunger. [The former prime minister] VP Singh was not hungry for money. Charan Singh was not. Gujral was not. Why is Modi doing this?
S: Mayawati, the Bahujan Samaj Party’s (BSP) leader, has said this measure is akin to an “undeclared economic emergency” that targets the poor. Do you agree?
KIS: First of all, the masses who are standing in queues to exchange their notes are Dalits OBCs, minorities and tribal people. If the government wished for Dalits and tribal people to not be affected by this, then the Reserve Bank of India should have sent them notes of Rs 100 six months prior to this announcement—a huge amount of notes of Rs 100 in wage distribution, in small salaries or pensions would have taken care of their needs. They should have put notes of Rs 100 in their hands earlier only, even if this would have brought alertness among some black-money hoarders. But they did not do that.
Just to justify demonetisation, they deliberately put notes of Rs 500 in people’s hands. This kills all the Dalits tomorrow, the day after tomorrow, and the day after that. How do the Dalits and tribal people survive, how do they buy food or oil for cooking?
Mayawati is absolutely right. That’s what I’m saying: Dalits, tribal people, those from the lower-middle class, and even some upper-caste poor have become black now. They have become the black money.
S: What kind of impact do you think this policy will have on Dalit women in particular?
KIS: You know, women from the lower-middle class are far more distressed than Dalit women in the queues at banks. This is because women from the lower-middle class keep whatever small cash they can, in their own kitty. They may put their money in the folds of their sari—hiding it from their husbands who are drunkards, who misbehave, who do not take care of their family. Now, all these notes have to be changed. This means that their husbands will know about the existence of this money, which will, in turn, create a huge family conflict. Even upper-caste women are saying: “No, I kept Rs 3,000-6,000 hidden from my husband.” This is the big problem.
Most Dalit women have problems of feeding their children, attending to their fever and sickness. This is the nature of the tragedy that Dalits and tribal people frequently have to face. Among them, the hiding is not so much from husbands, as their resources are much less than that of any lower-middle class woman. However, there could be such cases among Dalits also.
S: In your book Post-Hindu India, you talk of the contributions that Adivasis have made to the culture of food, Dalits to the leather industry, those from OBCs to engineering and shepherds to the meat and milk industry, calling them the productive communities of India. What kind of impact do you think demonetisation will have on these communities?
KIS: The immediate impact has been that all work has gotten paralysed. Farmers in villages cannot sell anything in the market now. They cannot get cash, there is no cash in the market. Now, how would money flow into occupations such as these in villages? So, there is a complete collapse of the financial set-up. In the name of bringing black money to banks, the entire financial system has collapsed.
This will have an immediate impact on the hard-working working-class across different communities and castes. The loss of a month will now be carried over to the next month again. The farmers are suffering and lorries are not taking grains from the market. Markets have collapsed. How will they work?
It is a chain. This chain has been pulled down by the government in one go. For the first time, this crisis did not lead to dysfunction in the lives of those who are in university, colleges and so on. But it has led to complete dysfunction in the markets, from state capitals to rural villages—the vegetable market and the small sahukar market. There are no transactions.
S: In an interview in 2010, you had also said that the nexus between the Kshatriyas and the Brahmins has resulted in “anti-production and anti-science.” Do you think a similar nexus is visible in an economic policy that may lead to the market collapse you are referring to?
KIS: That nexus has worked quite systematically for long. That is what shapes this economy, creating a huge gap between the rich and the poor, between the Dalits and Brahmins, between the Dalits and the Banias, between those from Other Backward Classes and Banias.
During the period of globalisation, that gap has increased multi-fold. The wages and standards of living of the Dalits, tribal people and those from Other Backward Classes have increased a little. But those who travel by air, or in cars and air-conditioned railway coaches—their economic levels are different. The gap between the rich and the poor has increased quite significantly.
Those who are pedestrians are still Dalits and tribal people. That is the gap that has come about. This step may further increase that gap in the phase of de-globalisation that is just beginning. Let us see what happens.
But the Brahmins and the Banias also have their own contradictions now. There is a view that demonetisation, for example, is a Bania-pushed policy. This view propagates that the Brahmins are not very happy with it and that is why the banking system is not co-operating with Modi and this government. The banking sector is basically run by Brahmins, although there are other reserved categories in it. My view is that the Brahmin-Bania conflict is historical. In a situation like this, it plays its nuanced role but not a brazen role. Only when the total effect of the policy of demonetisation has been examined, would we be able to come to a definitive conclusion.
S: The Samajwadi Party and the BSP have alleged that the government took this decision with an eye on the elections in Uttar Pradesh. Do you see any links between demonetisation and the polls in UP?
KIS: There could be. Because, two parties definitely knew in advance. One is the BJP—their own prime minister has decided on the policy. If only it were to be done by the Reserve Bank of India on its own—without involving political functionaries—secrecy could perhaps have been assured. When such a step is taken just before the elections in UP, it is difficult to believe that a political agenda was not being considered. The truth about such political leaks will come out only over a period of time.
The other party is the Telugu Desam Party, which knew in advance, because Chandrababu Naidu has been asking for the scrapping of higher denomination notes. He was among the few chief ministers who congratulated the prime minister on the night that the policy was announced. Nearly a month before the prime minister’s address on 8 November, Naidu had reportedly written a letter to Modi, in which he had demanded that notes of high denomination be withdrawn. The BJP and the TDP definitely knew in advance.
There could be a large amount of money that has been exchanged between different leaders from various parties. Changing those notes will be now be a difficult thing. These parties [the BJP and the TDP] would definitely have made changed notes ready in advance: for election expenditure, distribution and so on.
I’m sure if tomorrow, new notes of Rs 2,000 are being circulated widely, they will only go from the BJP in those states. That we can see when the elections start.
S: Do you think this exercise will affect black money hoarding at all?
KIS: The problem I didn’t understand is that the Reserve Bank of India is saying that the total currency money in circulation is nearly Rs 18 lakh crore. Now, if that’s the circulation money. If you see the central government budget, it’s about Rs 20 lakh crore. And, all state governments put together also propose a budget of at least Rs 24 lakh crore easily. So, if the entire money is black, how can they propose a budget of this proportion—Rs 20 lakh crore central, Rs 24 lakh crore state government. Close to Rs 45 lakh crore is already in the budget proposal, which is more than Reserve Bank of India’s estimate of total cash in circulation.
S: Around Rs 25 lakh crore more than the RBI’s estimate.
KIS: Yes. So how do they say there is lot of black money. This logic—maybe I don’t know financial dynamics—but this is common sense. If so much black money was there, how come tax returns were coming. How much black money will be there within India? Maybe there is more outside India.
The best rural economy, in my lifetime, was during the regime of the United Progressive Alliance, particularly when UPA II was in power. During that period, the rural economy actually boomed. I mean circulation money was more in the rural areas. Even after so many scams, the circulation of money was good during that period: new hospitals came up then, railways improved, airports were built during that time. So where has the corruption money gone? Out vast informal sector is not an easy fish that could be caught by the Harvard-educated economists. This is where even Modi’s economists went wrong.
Now, I think, a lot of money from the central government is going to the RSS, BJP and VHP and their other networks. That’s why they don’t find money for central institutions even.
Central universities are starving now. During the UPA’s regime, there was no war-like situation. The prime minister was sitting like a bureaucrat. There was no fight with Pakistan. Kashmir was in place. During the regime of the Congress [from 1984 to 1989] too, when Rajiv Gandhi was there, the Sri Lanka problem was created.
But in the last ten years of the UPA, I don’t know why, the rural economy in India flourished. Now, with so much GDP show and all, why the rural economy is suffering, I don’t know. Only foreign-educated economists must tell. My economics is only that of the shepherd.
There are now slogans of spending money on the army. The slogan is that the army is more important than agriculture. The government would rather spend more money on a standing army that is not at war with anyone. Pakistan is not going to attack us. China is not going to wage a war. So, they have created a war-like crisis.
S: Do you think they are using the army to further their own political agenda?
KIS: The BJP government may like a military dictatorship in India too, like Pakistan. See, Modi has come through election, but inside, the BJP’s monkey warriors seem to be considering the idea of handing India over to the army. It looks like that, I don’t know. They are putting the army on all fronts. They might just be using them too. Maybe the RSS wants the army to rule India. They do not like that those from the scheduled castes, scheduled tribes and other backward classes becoming more and more empowered. That is a Kautilyan strategy.
S: What you think the government should be doing if it wants to curb black money?
KIS: There has to be a different policy that doesn’t torture common people like this. For that, all the economists of the country should be called in for a conference and they should be asked to suggest an alternative model. Let the communists and liberal economists give us an alternate model. The Hindutva economists, so far, have not come up with a serious model. The present model is, as a Telugu proverb says, “burning a house to flush out rats.” When you burn a house, the rats may run out, but the livelihood of the family will get burnt too. That is what is happening now.
As a man of common sense, I can say that the Indian economy will never be the same again. On the fateful night of 8 November, Modi said that India was being seen as a bright spot by the world. With his most unfortunate strike, it will become the darkest spot in the world. The productive masses have been forcefully brought to the banks even though they do not have accounts, as if they themselves were black-money notes. On 9 November 2016, a bigger bomb than Bin Laden’s aeroplane hit the Indian economy and people. God alone can save India now.