Demonetization : the topline and the bottomline

On Day 1 when I heard about demonetization, I pointed out that Modi did not need to take this risk as far as 2019 is concerned. He was coasting to victory. Why suddenly put everything on the line? But Modi refuses to play for just 2019. He wants BJP to win all future elections, not just 2019. As he used to say, BJP aspires to own India’s 21st century. And after seeing the courage with which Modi makes decisions, the smartest thing to do is to take every single world from Modi seriously. Remember people, he used to talk about Mission 272….it is only on May 16, 2014 that we found out that Mission 272 really means Mission 272.

He spoke about Congress mukt Bharat. Look at the map of India and see how far that project has progressed. Every time we think he is only saying something for effect, we find out he wasn’t joking at all.

He told us that there would be tough decisions on black money. He wasn’t joking at all.

Well, he told us he wanted BJP to dominate this century. And he is playing exactly for that. He refuses to play for less.

If Modi wins this round, BJP will basically become unstoppable. So, keep in mind that harping on obvious public irritation over long lines at banks and ATMs is basically the only card the Opposition can play. Everything is at stake right now…if the lines at the ATMs dry up over the next 10 days, the entire nation is in BJP’s pocket for a generation. If there is a PR disaster, Modi is finished. This would explain the intense warlike situation in TV studios instigating the public against the immediate woes at the bank teller.

It’s time to take stock of the situation. The way I look at this is in terms of the topline and the bottomline. The topline is the total revenue…i.e., the sum total of all sales. You subtract your expenses and you get the bottomline … i.e., money left at the end of the day. That’s the profit margin.

So let us take a look at the “topline” of votes here. This is the entire group of people who approved of the decision at 8 pm on Nov 8.  

Now I am no psephologist and I don’t have data, but my guesstimate is that almost everyone was in favor of the decision initially…opposition was in extreme panic. My guess for the topline therefore would be around 95%. The only people left out are 5% consisting of maniacal Modi haters. These are the people who will reflexively suffocate themselves to death if Modi says tomorrow that breathing is good. Forget them. The topline is 95%…these are the people who approve of the decision in principle.

We now have to look at the “expenses”. These are the people who like the decision but will be put off by the failure of the banking system to meet the extreme level of demand.

These are the people for whom the next 2-3 weeks would bring such extreme hardship that they will never forgive Modi.  I find it hard to believe that the number of people who will become implacably angry by these 3 weeks can possibly cross 50% of the population (I am quite sure the real number is much less…probably around 10-15%). But lets go with as much as 50%! For the BJP, the good news is that their topline is massive, giving them a LOT of cushion. What does this leave? This leaves behind 45% of people who are appreciating the move AND are convinced that Modi has struck a significant blow against black money.

The bad news for the media is that 45% is HUGE! If 45% of the population is now enthralled by the leader who destroyed black money, Modi’s victory is beyond certain. Especially considering that the Opposition is united against demonetization. It means that the anti-demonetization voter has many choices. The pro-demonetization voter has only one.

So, I am predicting for the BJP a bottomline of at least 45%.

This doesn’t mean that 45% of people will vote for BJP. Of course not. For example, the topline of 95% contains M voters, who will never go for Modi. This only means that close to half of the population in this country is convinced that Modi is the man who can destroy black money. This is tremendous, because the choices on the other side are divided among many candidates. If this gambit is successful, Modi’s battle today will become part of folklore of the free world. Remember how Maggie Thatcher decimated the unions and how Reagan destroyed the air traffic controllers.

Lastly, I would like to point out something the media is missing. Even the Jaggi, writing in Firstpost today, said that Modi is making the mistake of preaching scriptures to the hungry. Point taken. But Mr. Jaggi, you are forgetting something else Modi is harping on. He is not just preaching scriptures. He is harping on jealousy. He is pitting the poor against the rich. As someone who believes in free markets, I absolutely abhor this portrayal of the “rich” as inherently evil…but Modi is a politician. He has to do what he has to do. Hunger might be a huge motivation, but jealousy can be just as strong an emotion. Perhaps even stronger. Listen to Modi’s ecstatic crowds roaring in Goa, Belgaum and Ghazipur. People don’t like to be hungry. But tell them that going hungry will turn the rich into beggars and you will get a different reaction. That is how leftists have been winning elections : poor people in India were asked to go hungry for 70 years just to make sure no one else got rich. Jealousy works. The class war works. Don’t underestimate it.


19 thoughts on “Demonetization : the topline and the bottomline

  1. Very good article and analysis.
    The line of people at banks in smaller cities is slowly thinning.
    It will take couple of more weeks at least in bigger cities.
    All depends on how fast RBI is able to move hard cash around the country to respective banks.
    The staff of all the banks, as far as my personal experience goes, are doing a great job.
    But astonishingly I am yet to hear anybody complaining about drop in business OR hardship because of less money in hand.
    Looks like Modi has nailed this one.
    But as you have mentioned, next 10 days will be crucial.

    Liked by 1 person

  2. Good post!…CW you are like a successful entrepreneur who can convert every idea into money spinning enterprise…and then check in percentage the gain/loss at each stage!!

    Your this post has beautifully explained how this one major risky decision will be BJP’s success in terms of percentage gains!

    I feel Most of PM Modi’s decisions,the deals with various countries, now this
    demonetization etc. are basically for the good of the country….Modi thinks country first….The political gain comes automatically!

    Liked by 1 person

  3. I do believe that the social media needs to highlight the true narrative about the supposed hardships as opposed to the exaggerated version of the MSM. Speaking to my relatives in India it certainly does not seem like that the “nation is revolting against demonetization” which the MSM would like us to believe. Infant all of them report that people are carrying on in their lives “business as usual”!


  4. There is no doubt that the opposition is crying because all their stock of 500 & 1000 vote buying notes are now as good as tissue paper. Modi had hit poor people like Mulayam, Maya and Rahul.

    Liked by 1 person

  5. The opposition is now looking like a bunch of jokers. They have not understood that the common man who has time and again been at receiving end is extremely supportive of demonetization and now understands that it is Modi who is really fighting corruption.

    The citizen also understands that joker party that had anti-corruption as its agenda is actually anti anti-corruption. The dishonest AAP has lost its anti-corruption halo and is now standing totally exposed.

    Liked by 1 person

  6. The timing is impeccable. People going through hassle right now will forget in next few months while all benefits such as preventing corrupt pols from buying election by distributing 500 Rupees etc. will be enjoyed by Mr. Modi and BJP. Naxals/Maoists and the militants in Kashmir got neutralized, literally without firing a bullet. More over in the future the black money hoarders will never be confident that in the future Mr. Modi will not abolish larger notes again. Real estate and the housing market will come down to reasonable level. More importantly Modi has thrown opposition helter skelter. One day Kejriwal makes statement that Modi gave enough time to his friends to get rid of black money and the next day he says Modi friends are also angry with him !!

    Liked by 1 person

  7. Modi, the original synthesizer of silent majority of 70 years and converter of them into lethal force for meaningful advancement of democracy is right on target to dismantle the corrupt and inefficient aspects of Indian economy. By now the enemy in the battle against poverty status quo should be digging holes to hide


  8. I hope that ur Modi Bhakti will not make u chant Teresa with him.
    But BJP should cross 250 in UP. Its something more than jealousy. Its hatred. Also, I am hoping some Muslim women will silently make a mistake on the vote button. Even 10% doing that would deliver the blow.
    But I still hope eventually there is a revolt by the honest Hindus. Singing Teresa should be punished. Fake Hindus need to be taken to task.

    Liked by 1 person

  9. Dear Chaiwallah,

    I think you lost the plot completely in the last paragraph, by stating that the poor support demonetization because they are motivated by jealousy of the rich. I would say that most poor people feel vindicated for having followed the rules, while others did not and got stinking rich in the process. The comparison with the communists also does not seem to have been well thought-out.

    I have been seeing a series of articles in The Mint sharply criticizing the move. None of those articles convinces me. One author says that because 80% of Indians work in the informal sector, this move would kill that sector. If this is the kind of muddle-headed thinking shown by “economists” then you or I would make better economists. To me the more intriguing question is WHY all these columnists at Mint are so dead against the move. Any guesses?


    1. I am with Prof Vidyasagar on his comments about the last para. The actual common citizenry of India just has no way to make an honest living (want a license, bribe RTO official, want to buy home/car, pay in black etc. etc.). The people they should be looking up to (police, judiciary, MLAs) have themselves created this system and are corrupt to the core. The fundamental reason the common man is behind Modi on demonitization is because they finally have a leader they can rally around – someone who doesn’t just make empty promises of a corruption-free India but actually digs his heels in to bring about these changes.

      The rest of the blog is spot on about the top line and bottom line and my respect for NaMo (and coming from Gujarat, I had lots in the first place before he even became PM) has gone up immensely for making a move that benefits the country even though it directly hits his core voter base. Been years since we have had a leader like that.

      About Mint, I haven’t read the articles so will peruse them today. Is money too simplistic an explanation? There is a whole united front against black money (from politicos, media, etc.).


  10. today i went to HDFC Branch at 845am near my house in South Delhi. there were 2 Qs, A long one and a short one, Long one was for exchange only , consisting of mainly bangladeshi immigrants, who had come there as contracted money changers probably getting 500 for every 4500 exchanged. 2nd Q was for a/c holders of HDFC and i cud do the transaction(deposit, withdrawl and exchange) in 15 minutes flat and was out of bank by 10.15am


    1. Very true. This is by and large the situation for most of the long Qs. With introduction of inking fingers situation should improve considerably. MSM is desperately portraying as per their agenda. But in every sound bite people end up supporting the decision.


  11. CW, thanks for finally taking up the subject of immense national import, that is going to decide the future of Indian polity and also perhaps bring about an attitudinal transformation in the way the society behaves and reacts to demands for falling into the demands of corrupt. Demonetisation has succeeded in bringing about a vertical split in the society into those who have hoarded black money, who have contrived to keep the system up and running, who have thrived on squeezing and fleecing the poor through corrupt means and those who have for past 67 years suffered at the hands of scamsters in cahoots with power and pelf hungry politicians.
    But I present one other, the mostly ignored aspect of corruption and black money. We have heard politicians, the businessmen, the common men all trumpeting their dissatisfaction, their denunciation of one section of society, the Employee class, for rising corruption in the society. We have been fed this narrative by our politicians who have targeted the poor employee class for the ills of corruption in society. We never took a minute to study the causes and beneficiaries of corruption. This Demonetisation has broken that myth, it has laid bare the nefarious designs of beneficiaries of corruption, who instead of blaming themselves for the corrupt practices, rejoiced in blaming the hapless employee. This Demonetisation has exposed the reality behind corruption. It is the business class mainly that is seen trying to contrive ways of wriggling out of the net. It is this class that was felicitated by all the political parties for their power of notes and votes that is now exposed to be the biggest beneficiary of corruption and holding huge amounts of unaccounted money. While even a small clerk in government departments pays the income tax, look around at your vendors selling your groceries and other family needs, do you ever find them paying any taxes, hardly any, yet they go around flaunting their wealth in costly limousines and business class travel, and the common man, the employees go around in public transport, and are still shamed and named and called corrupt. Think people, who are corrupt. Have you not seen in Delhi, the CM making high sounding speeches exhorting people to vote out corrupt, and install the honest in power, and that honest man never dared to question the business community, but targeted a poor clerk for being corrupt. Yes a clerk may be corrupt, but so is that businessman who corrupts that clerk into doing something out of turn or out of norms, and in so doing makes multiple time benefits of the corrupt practices.
    I do not exonerate the corrupt clerk, but only wish to say that yes, punish the clerk, and in umpteen cases he may already have been punished, but do not let that businessman escape unpunished, who slyly influenced, enticed or coerced that weak clerk into submitting to dishonest demands.
    Thankfully, this Demonetisation has exposed that Businessman and the nexus of the corrupt politician with that sly, conspiratorial businessman.


  12. Quote:”Well, he told us he wanted BJP to dominate this century. And he is playing exactly for that. He refuses to play for less”.End of quote.

    I am OBSESSED with the desire for Modi to be PM TILL 2029 at least.So much so that I think about it everyday.One of his quotes during an interview with Arnab was “when BJP is in the opposition,let us say 2040”.Wonder if he is thinking about BJP rule till 2039(5 consecutive terms)!


  13. Well…Though I fully support the demonetization move, I feel that the execution should have been planned better. Following are my points of constructive criticism.

    1. Why Rs 2000?. This will lead to more black money in future. Govt should have just exchanged current Rs 500 and Rs 1000. This would have also saved time on re-calibrating the ATMs.

    2. Timing: 1 week has passed. Till today, we have absolutely no Rs 500. Why did the govt hurry with the announcement. They should have waited till new Rs 500 notes are sufficiently printed. Though I have Rs 2000 notes with me, they are almost useless to me. I wanted to fuel my 2 wheeler for Rs 500. I have Rs 2000, but the petrol bunk has not Rs 500 or not enough Rs 100. This definitely angers even a staunch BJP supporter like me.

    3. Modi’s mother in Queue: This is certainly in bad taste. Kejri and RaGa should follow Modi. But, it looks like Modi is following their cheap drama. Just 2 days ago PM said that he left his house & parivar for the sake of country. But today, why he is making 97 year old lady suffer for his politics. This is the first time I hate Modi’s move.

    Again, I want to say that this is a most welcome move and I still support BJP.


    1. I broadly agree to your point number 1 and 2. Introduction of Rs.2000/- note is not going to help in anyway in future, further it is difficult to carry them for daily usage since getting the change is really difficult. This note would eventually land in lockers and concealed closets, and may give rise to hoarding tendencies thereby causing creation of black money. The usage of this denomination is highly restrictive.
      Regarding Modi’s mother in queue, I would beg to differ. This move should be seen symbolically and not politically. If an old woman of 97 can contribute in her humble way towards nation building, we all should respect her and emulate her rather than trying to make political innuendos.
      Thirdly I would like to state that the present move should not be seen within restrictive political binary of “for or against Modi”, but should be seen as a first sincere and honest effort to cleanse the system, to rid the nation of menace of black money. Though it would be foolhardy to expect 100% success, yet this act will go a long way in reducing the extent of black money in the system and its use. I can certainly say, that while talking to a layman on the streets, one common sentiment pervades : “One stroke of genius has brought equality, now all are equal, none too rich, none too poor”. This sentiment in some or other similar expression is the common sentiment of the ordinary people. And one must also remember that entire political fortune of Modi and BJP depends on the successful implementation of this scheme. This is probably the highest gamble any wise, seasoned politician would unilaterally take. The risk is too great, and time alone will tell who succeeds?


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