Price of secrecy

| Updated on January 15, 2018 Published on November 14, 2016

In prioritising confidentiality, the Centre seems to have skipped some essential steps that could have smoothened the currency transition

His supporters have termed it a ‘surgical strike’. But six days into the Modi government’s game-changing move to demonetise high-value currency notes, even its backers have begun to question if the move was really planned with military precision. Reports of bank staff being besieged by irate customers, retail stores being raided, and agricultural mandis at a standstill — amid persisting shortage of low-denomination notes and large numbers of non-operational ATMs — suggest that the hardships for law-abiding citizens are nowhere near an end. That withdrawing and replacing 86 per cent of all the paper currency circulating in the Indian economy in short order would prove a logistical challenge, goes without saying. But the question is whether, in making confidentiality their top priority, Modi and his advisors failed to think through the numerous execution challenges that this mega move entailed.

For instance, three specific measures taken before the announcement could have greatly alleviated problems for ordinary citizens. One, it would certainly have helped if the RBI had printed and despatched the new notes of ₹500 denomination ahead of the ₹2,000 to banks’ currency chests. This, combined with printing an additional buffer stock of ₹100-denomination notes could have helped many small businesses, tradespeople and daily wage-earners manage this transition with just a single bank visit. Now, with most banks dispensing only ₹2,000 notes until yesterday, they’ve have been forced to run from pillar to post to change this into 100s. Two, if the scramble at some bank branches seems to be winding down, that for working ATMs shows no signs of abating. By the finance minister’s own admission, this is due to the new note’s dimensions being different. All two lakh ATMs now require manual recalibration. Even if initiating this recalibration ahead would have given the game away, the new notes could have been designed to the same dimensions as the old ones to avoid this logistical nightmare. Three, a better communication strategy was needed to reassure the public after announcing a policy move of such import. In addition to the Prime Minister’s televised address and the ministry’s press conference, the RBI or the ministry could have circulated detailed FAQs on the transition and its intent, in regional languages, via district administrations. This may have gone a long way in warding off rumours and panic in this unprecedented situation.

Yes, it is certainly good to see the finance ministry acting now and establishing a war room to oversee implementation. The decisions announced on Monday — to despatch ₹500 notes, deploy more banking correspondents, revise the daily limits for exchange and withdrawal from banks — are all steps in the right direction. But overall, better planning before the announcement may have reduced the collateral damage — both to the aam aadmi and the Modi government’s own political capital — from this surgical strike.

Published on November 14, 2016

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.