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Last Updated Thursday August 17 2017 03:01 AM IST

Fiddling with the rupee

Sachidananda Murthy
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Modi had made arrangements to deal with the aftermath of demonetization Prime minister Narendra Modi holds meeting with senior ministers past midnight on Sunday. PIB

Prime Minister Narendra Modi's decision to leave for Japan, just a day after announcing the demonetization of high value currency notes was a calculated risk. He has come under strong criticism from opposition parties for not being in the country when crores of Indians were put to crisis due to the sudden and near complete shortage of money in every household and business.

The BJP ministers were busy hailing the crackdown on black money and fake currency, rather than going to the streets to ensure that ordinary people were least affected. The only proactive one in the ministry was minister of transport Nitin Gadkari, who announced that the collection of toll, which requires small currency, would be suspended for four days. All other ministers were waiting for a command from the prime minister.

But the party has defended Modi's foreign trip saying he had made all arrangements to deal with the aftermath of demonetization, and had told banks to work on weekends.

Modi focused on concluding the civil nuclear deal with Japan, which had been stuck for several years. Modi was apparently confident that after the initial trouble, even the angry supporters would come back to him. That is why he told the income tax departments to conduct big raids on those who were collecting large hordes of demonetized currency notes, to show people that he was after the big bad fish.

Fiddling with the Indian rupee has never been easy for rulers before and after independence. Emperor Muhammed bin Tughlak suddenly abolished coins made of gold, silver and copper, and introduced leather coins. There was a huge revolt as his subjects were afraid the new coins were made from the skin of sacred animals.

Indira Gandhi went for denationalization of the rupee in 1966, and scrapped back to power in the next general election, which was held a year later. In 1978, then prime minister Morarji Desai suddenly withdrew bank notes of Rs 500 to Rs 10,000, and the next year, he was without a job.

Modi campaigned hard in 2013 and 2014 that the rupee had lost its value under the Manmohan Singh government and succeeded in dislodging the former economist.

But Modi thinks he has made a different kind of history by the current move. He is sure he has broken the back of Pakistan's ISI, which pumped fake notes into India and that he has cleansed a rotten system, making sure everyone will own and spend white money. The assembly elections of Punjab, Uttar Pradesh, Uttarakhand, Goa and Manipur, which is to be held in March, can be a mini referendum on Modi's instinct to play with the rupee. 

The opinions expressed here do not reflect the views of Malayala Manorama. The responsibility of opinions expressed here lies solely with the author. According to the IT Act, derogatory statements towards an individual, community, religion and country as well as the use of obscene words are punishable offenses. Legal action will be taken against such practices.
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