The Winter Session of Parliament had already been announced and preparation was on in full swing. In the office of a Member of Parliament (MP), the few weeks immediately before a session are spent filing questions, preparing briefs on Bills likely to be discussed, collecting and researching on issues to be raised. In the midst of all of this, demonetization struck.
It led to the washout of the session, but if there is one accountability instrument that didn’t get affected, that never gets affected by disruptions in Parliament, that is a Parliamentary Question. Every MP has a right as well as a duty to ask questions to various Ministers on matters of policies. And the answers to these questions are laid despite commotion in the House. These answers are a reservoir of information on different policies. As powerful as an RTI is in the hand of a common citizen, as potent is a question in the hand of an MP.
Consider this for instance, in the Winter Session of Parliament, a total of 5500 questions got asked in Lok Sabha and 3850 questions got asked in Rajya Sabha. That is a grand total of 9350 opportunities of making the government answerable, if utilized. This analysis, however, will show the government’s tactics to evade answers and reduce this exercise to a formality.
A small percentage of this grand total related to questions on demonetization. Because the phenomenon was very new and the immediate response was to attack and not to elicit information, not many questions got filed on Demonetization. What is presented below is an analysis of close to 40 questions that sought answers directly or indirectly related to demonetization.
There is no consistency in justifying demonetization and why demonetization was the only way to achieve these objectives:
- ‘Sector experts have opined’ that real estate sector will be purged leading to price correction and transparency.
- Rs.1000 note discontinued because its Purchasing Power Parity had eroded due to persistent moderate inflation. Rs.2000 has been introduced because disposable income and GDP are on the rise. Fact Check – On November 8th, 2016, 17165 million pieces of Rs.500 note and only 6858 million pieces of Rs.1000 note were in circulation. And the denomination most in circulation is the humble Rs.10 note (38066 million pieces).
- Cash transactions cast a ‘long shadow of parallel economy on our real economy’.
- When asked whether the government printed new currency in anticipation of withdrawal of old currency, it responded saying that - it is a ‘prevalent practice’ to change design of notes from time to time and introduce/withdraw banknotes.
Denial all the way
When asked about the impact of demonetization on a particular sector of the economy, the government frequently adopted two instruments of denial – too early to infer the impact or no impact at all:-
- For a response given on 14th December, the government stated that it is too early to infer impact of demonetization on exports through tangible data.
- Government agencies procure produce from farmers through Central Agencies and payment is made strictly through RTGS/NEFT or cheque. Therefore no impact on such procurement through demonetization. The question was whether farmers were finding it hard to sell their produce generally as government doesn’t procure the entire produce. The impact on sale in open market and on prices has been left out completely.
- Demonetization has not affected the winter crops sowing as the total area sown under five major crops categories till December 9th, 2016 was 472.43 lakh hectares, 7.64% higher than the 438.90 lakh hectares in the same period last year. The government maintained this narrative in subsequent press releases as well.
- No effect on Tourism and on the contrary, in the period 9th-30th November, 2016, the number of Foreign Tourist Arrivals increased by 4.6% over same period last year. No consideration of the fact that these bookings would have been made much in advance.
- No information on impact on truck traffic though representation was received from Transport’s Associations.
- Overall economic growth of a country dependent on many factors, difficult to ‘pin-point’ impact of demonetization on economy through these factors. One of the factors listed – money supply!
- No reliable macro-economic information on impact on Industry. Representatives from industry supported demonetization but raised concerns about small traders and mandi traders.
- Trade Fair registered a decline in foot fall but it can be due to various factors.
The government conveniently evaded answering the following questions:
- What is the data on unemployment/distress for unorganized sector workers caused due to demonetization? Instead replied that employment generation has increased between 2008 and 2016.
- What is the impact on Tea, Jute and Textile workers? Same response – government has initiated steps to transfer cashless payment of salaries and wages and promote digital payments in a ‘mission mode’. Impact in terms of whether they could withdraw this money was not considered.
- What are the steps taken to ensure adequate printing and circulation of Rs. 100 notes? Replied that circulation has been increased and ‘sufficient’ cash is available with RBI and Banks.
- What are the steps taken to strengthen mobile network infrastructure and cyber security infrastructure? Same response – it's sufficient already.
Mitigation and Losses
For all the questions on distress caused, the most oft-cited mitigation measure was to open bank accounts, encourage digital transactions and going cashless. Another mitigation mechanism was to have different withdrawal limits in some case like in the case of farmers. In this regard, RBI had directed that Rs.35,000 crore be made available to District Central Co-operative Banks. What needs to be seen now is how much of this money was made available, how much distributed to how many farmers and over what period of time.
The government waived toll tax on National Highways from 9th November to 2nd December, 2016 foregoing almost Rs.52 crores of average toll collection per day and will additionally be compensating the toll operators for the losses.
Questions for the upcoming Budget Session
It is no longer ‘too early’ to infer the impact of demonetization. Many ‘sector experts’ have given their judgments. The government has accumulated ample of experience and wisdom from making and unmaking its mind on its own decisions. It must be prepared to answer some questions now.
Would you like to ask a question to the government?
Either submit it as a comment to this article or drop a mail to firstname.lastname@example.org. You can also leave your comments on Maadhyam’s Facebook page.
Maadhyam has collaborated with a number of MPs to collect all the questions, frame them according to the required format and submit them in the hope of making the government answerable. Your contribution is needed in this exercise.