We have been hearing this a lot since Nov 8. The entire process of “demonetization” was done without proper planning and could have been better executed. This has been the relentless drumbeat of the media, political parties and certain intellectuals over the last three weeks. Suffice to say that a significant fraction (more than just a fraction I’d say) are using this as an excuse to hide their *real pain*.
But then, it would be equally dishonest to insist that every single person who has complained about “poor execution” must have some axe to grind. So, today for argument’s sake, I would like to consider the question:
“Could demonetization have been better planned?”
Well, to start with, we have to realize that this is one of those blank questions with a blank answer. Roughly along the lines of questions such as “Could you have achieved a better life?”. Most people would like to think that the answer is “yes”. Could we all be nicer kinder people? I guess. Could the weather have been better today? I guess so too.
If you pick up almost anything in the world and ask whether it could be made better, the answer would typically be yes. In fact, that’s what humanity has been trying to achieve for thousands of years : making things better and better.
Could we invent faster, better and safer modes of travel?
I am pretty sure the answer is yes. But my “yes” is totally useless unless I have a real idea to offer you about how to find a faster, better and safer mode of travel.
It is in this light that I want to examine today the question that we hear people asking so often today: could demonetization have been better planned?
In response, I have to ask : define “Better”. What are your benchmarks?
Well, first of all, let us look at the size of the operation. India’s demonetization exercise is likely to be the largest fiscal operation in the history of humanity. In fact, the exercise is so big that no fiscal operation in history can even come close. Simply put, no benchmarks exist for something like this. There is no road map. Every single thing has to be done ad-hoc.
The demonetization exercise will require almost every single one of India’s 900 million adults to participate, possibly multiple times. Has anything ever been planned in history that has involved ordering around 900 million people? It is easy to point fingers at “mistakes” and “problems”. I would like to know how 900 million people can be made to go through something flawlessly.
And now let us take a look at the crew that Modi had at his disposal to plan this operation. Including Modi, the Finance Minister, the RBI governor and some top bureaucrats, the total number of people who were available to plan this operation before Nov 8 was around 10 people. Let’s see : you have 10 people to figure out the world’s largest operation involving 900 million…
The best example came from Modi himself. India’s General Elections are the only operation that can even come close in scale to demonetization. The Election Commission of India has decades of experience in planning and conducting elections. It can enlist staff and security personnel by the thousands…even hundreds of thousands to get its work done. All so that around 70% of adults will have to stand in one line for one day. There is no burden of secrecy. And yet, look at the holes.
That’s what happens when an exercise involves hundreds of millions of people. If you can’t vote, you would pissed off. But there are no immediate adverse consequences. On the other hand, everyone needs money. Otherwise, there could be disastrous consequences almost immediately. Frankly, I am surprised there haven’t been riots. Forget riots, I don’t think there has been so much as a major protest. And it seems to me that remarks from certain highly respected institutions can be interpreted essentially as frustration against the fact that there haven’t been any riots. I will not name these respected institutions because they are legally immune to criticism.
Simply put, the cash distribution system is currently handling a workload about 100 times what it was built for. And let’s keep in mind that you can’t just add people to the cash distribution system : everyone enlisted for this work needs to pass a rigorous background check.
As for the daily changes in policy being held up as proof of “poor planning”… well that’s what happens when you are doing something from scratch for the first time. And you have no roadmap whatsoever. You adapt and respond to situations as they arise. Because India is not following a well traveled path here. In fact, we are pioneering something. When you step out into the unknown, that’s what happens.
So, all those who want “better execution”, I would like you to offer even one concrete suggestion if you can. The columns of newspapers and internet portals have been filled with “experts” blankly asking for “better execution”. But I am yet to see even one person who made an actual suggestion. If we assume that there could have been “better planning”, one has to assume that such experts today are either unwilling or incompetent. Which one is it?