Reliance Industries Chairman Mukesh Ambani was all praise for Prime Minister Narendra Modi’s ‘demonetisation’ drive at the launch of his e-payment wallet Jio Money, yesterday. Ironically it was also the first pay day after ‘demonetisation’ that is for the salaried class which makes up about 20 % of India’s population. Still it was total mayhem. Long queues, no cash in banks, long waits, lathi charges, road blocks, bank employess running for life, …. many went home empty handed. Mind you, it was a big day for just the 20 % or less of India’s population. The government came a cropper in the first pay day after demonetisation. Still Mukesh Ambani was euologising Narendra Modi for his ‘bold move’. That’s understandable, that too at a function which will bring more business for his new business venture ‘Jio Money’.
In his speech Mukesh Ambani made two points that need deeper analysis.
1. “With one single step, he (Narendra Modi) has brought all the unproductive money into productive use. This will enhance credit flow in the economy and legitimate credit is the fuel that powers the engine of economic growth.”
2. “So far, credit in our country has mostly been high value and low volume Digital enablement has laid the groundwork for broad availability of low value, high volume credit. This will provide credit to our farmers, small shopkeepers, traders and daily wage earners. Again, the biggest benefit of this goes to the ordinary Indian.”
Point 1. Unproductive? Unproductive for whom? For the vast majority of Indians ,75 percent of rural India survives on Rs 33 per day , these currency notes were their life line. Now 86 % of it has been confiscated by combined effort of the banking cartel and the government of India. For them whatever little money they held on to was very productive. They could buy grocery, vegetable, pay hospital expenses, school fees, travel expenses and what not! Now that the money has been confiscated from them they have become ‘unproductive’. What do you do with these ‘unproductive’ commodities? The final solution? If not, if you succeed with the “Digital Revolution” you’ll confiscate a portion of their money with each Geo Money, PayTM transanction! How clever! We need such champions of industry and leaders to make “India Great Again”. Yes, our ‘unproductive’ money will become ‘productive’ for you.
Point 2. Credit. Ambani says, with demonetisation (confiscation) credit will become “low value, high volume”. In layman’s language high disbursal of loans at low interest rate. “What a wonderful !dea Sirji”. But who will really get it? Do you know that banks won’t lend without collateral? Do you know that India’s daily wage earners do not have enough collateral to catch attention of a banker? Do you know that how difficult for farmers to get a loan? Do you know that most of India’s farmers are neck deep in debt and committing suicide in their hordes? Then, who will get the confiscated money in “low value, high volume”? You, Mr. Ambani and your friend Adani and other cohorts. We know that your total debt is nearly 2 lakh crores. We also know that you can no longer borrow from foreign markets since the value of dollar is so high. Will you use our confiscated “low value, high volume” money to borrow more from us to service your debt? All the world knows that the global economy is contracting. Sirji, you can not swim against the tide forever, even if you take our ‘confiscated steroid’. Will you sink like a stone or will you play a Vijay Mallya act in the end?
Binu Mathew is the editor of www.countercurrents.org. He can be reached at email@example.com