Praveen Chakravarty has a nice article saying how government followed two different approaches for a similar cause. In pushing people to stop using open spaces for defecation and instead build toilets, it used the coax and nudge approach of Swachcha Bharat Abhiyaan. However, to push people to using digitial money, it followed the hammer approach of cutting the flow of cash:
Indulge in a small thought experiment. Prime Minister (PM) Narendra Modi addresses the nation on 2 October 2014. He announces that from the next day all open spaces in villages and towns will be sealed for public access from 5- 10am every day. The spaces will be guarded tightly by the Indian Army and will be impregnable. This jolts the 564 million people in rural India that are entirely dependent on such open spaces for their daily morning ablutions. There is tremendous suffering for these people, even leading to deaths. After many weeks of suffering, some people are forced to start using toilets. The PM claims this was a “shock and awe” treatment to induce a behavioural change in the 61% of rural India that defecates in the open and make India an “open defecation free” society. Would such a move have been lauded as a bold step to rid India of its perennial problem of open defecation? Or would it have been considered a harsh and cruel action in a liberal democracy albeit the honourable objective?
Rather than shut off all open spaces suddenly, on 2 October, the PM launched Swachh Bharat Abhiyan as a campaign to free India from open defecation. The scheme was given ample resources to build toilets as well as to educate Indians on the benefits of toilet use. He never missed an opportunity to speak about it and now the logo of Swachh Bharat Abhiyan even finds itself on the new currency note. Rather than trying to coerce behavioural change for faster results, the PM acted as a true head of a liberal state to goad and inspire his fellow citizens to alter their behaviour.
The above thought experiment is not very different from the currency ban exercise that was launched on 8 November. It was a “shock and awe” action that was originally described as a war against illicit wealth and black money. Over the last several weeks, the narrative has shifted and the demonetisation exercise is now being desperately positioned as a move for India to become a cashless society. In his initial speech of 8 November, the PM mentioned the phrase “black money” 18 times. He did not utter the phrase “cashless” or “digital”. Two weeks later, on 27 November, in two speeches on the demonetisation action, he used the phrase “black money” nine times but used “cashless/digital” 24 times. Apparently, it is now no longer a “war on black money” but a “war on all cash” with “short-term pain for long-term gains”. The PM now claims that invalidating nearly 90% of the country’s currency overnight and throwing millions of people in disarray was just to induce behavioural change in Indians’ fancy for cash. Embarrassingly, technology luminaries of Bengaluru and public commentators are cheering at this sudden prospect of a “cashless” India, never mind if Indians still defecate in the open or not.
Even in Bengaluru, the tech luminaries are almost disconnected from broad reality. They did not see the huge queues outside several branches.
One could have used better ways to push people into using digital cash:
Let’s be clear, 61% of rural India defecating in the open is a far more serious and significant problem than India’s 12% cash to gross domestic product ratio. Culture and habits are a significant reason for open defecation in India. So, if any, altering this behaviour of 564 million Indians is far more vital for the future of this nation. Yet, the PM rightly did not resort to force or coercion to induce this behavioural change but instead is motivating them to change.
But to our “results-oriented” and “action-seeking” commentariat, Indians’ love for paper currency is so much more detrimental to the future of this nation than malnutrition that it is perfectly legitimate to jeopardize people’s lives and force them out of their cash fetish. To be sure, going cashless is an entirely laudable objective. But removing 86% of a country’s currency overnight and throwing hundreds of millions of lives in disarray to seemingly change their cash usage behaviour sounds primordial and antediluvian, not befitting of a modern liberal society. Technology entrepreneurs and public commentators, in their unbridled enthusiasm for technology and its ability to change the world, seem blind to this blatant disregard for civility in administering this massive economic shock to make India “cashless”. Eminent commentators would do better to deride such extreme, rash policy decisions and call out this entire “cashless” narrative for what it is—a laughable afterthought—rather than encouraging it and creating a perverse incentive for other such extreme policy measures in the future. The peeve is not about the merits of the objective. It is about the manner of it. The means and ends matter equally in public policy in a liberal society, perhaps not in business.
One has been reading a lot of commentary since 8 Nov 2016. All the initial arguments in favor of the move (fight black money, terrorism, counterfeit notes) had atleast some sympathies. The new narrative to push cashless transactions is just so out of sync with reality not just in India but even worldwide. I mean how can we be so delusional?