No, sorry. This is a misleading headline.
This article, written by Raghav Bahl, the founder of Bloomberg-Quint, “India’s premier multi-platform business and financial news company”, cannot be called even faux-economics. It is just pure mumbo-jumbo. Yup, Bahl, who had been thoroughly “demonetised” here, is back for another spanking.
This time, Bahl tries an interesting format, where he gives us what he calls us the ‘Official Spin’, which according to him is the popular narrative, and then proceeds to give ‘The Reality’. Except that the ‘Official spin’ is mostly a figment of his own imagination, and ‘The Reality’ is worse than all of Shirish Kunder’s jokes put together.
Let us deconstruct each one:
1. The ‘Official Spin’, as per Bahl, here is that the demonetisation scheme has snatched a windfall from the bad-guys, and would give the Government a hefty sum to spend on development.
Bahl counters this by using the most asinine logic available on the face of this earth. First, he criticises the scheme because he feels it has aided the crooks in converting their black money into ‘white’. Of course, he coolly forgets the costs attached here: A minimum of 30% of Income Tax, the chances of a penalty ranging from 50% to 200% of the tax, reported amended taxes which could be in the range of 50-60% (funnily, reported on Bloomberg-Quint itself; maybe Raghav Bahl doesn’t read his own website?), Indirect taxes such as VAT or Service Tax catching up, and of course, the lack of any sort of immunity allowing the Income Tax Department to dig up all your past records.
Yup, in Bahl’s mind, this demonetisation is just one easy black-to-white window of opportunity with no consequences.
This blinkered viewpoint is not a mistake though, because in the 2nd part of his ‘The Reality’, he claims that the Government would not get any money for development schemes since all the money deposited, could easily be withdrawn from banks! It’s difficult to comprehend where to start regarding this:
A. Mr. Bahl, the Government was never supposed to use the money deposited in banks for development. Governments can’t do that! The money in the banks is that of the depositors, which the banks can ONLY lend to borrowers, not donate to the Government of the day. Imagine a private bank like HDFC Bank giving away public deposits to the Government. Mr. Bahl, do you have the faintest idea of how the banking system works all around the world? You put forward a stupendously stupid idea, imagine that it is government’s plan, and then go ahead and counter that.
B. The money, which the Government is touted to receive, is the tax component on the deposits of black money. Yes, the same tax which you conveniently forgot about in the first limb of your argument. Tax on income = Government’s money, and Income deposited in banks = Public money. Hope that’s clear!
Now let’s move to the 2nd point Mr. Bahl makes:
2. Here, Bahl says, the ‘Official Spin’ is that the public has given a thumbs up to the move via the positive results for BJP in the latest bye-elections.
Bahl’s ‘The Reality’ is that BJP’s margin in Shardol Lok Sabha shrunk, in Lakhimpur Congress gained 8% vote share (although BJP won), and in West Bengal assembly bye-elections BJP lost. This is enough to prove that the public did not support demonetisation.
Firstly, it was the media that made the bye-elections a referendum on the demonetisation, and then conveniently back-tracked post results:
TheWire- Will Demonetisation decide results?
— Ankur Singh (@iAnkurSingh) November 22, 2016
Secondly, Bahl has viewed the results from a myopic angle, so as to get data which suits his final argument. The BJP won in Shardol and Lakhimpur, it also increased its margin in Nepanagar (which Bahl skipped). In Arunachal, BJP wrested the Hayuliang seat from Congress (which Bahl skipped). BJP also won in Assam and in Tripura, its vote-share surged to 20% in the red bastion, relegating Congress to a distant third. In Bengal too, BJP’s vote share has increased. Overall, BJP has increased its tally from 3 to 5 while the Congress is down from 4 to 1.
Bye-elections are often influenced by local factors and incumbent governments, but if Bahl wants to make them into a referendum for demonetisation, then the verdict is clear.
Finally, the last point:
3. The ‘Official Spin’ here is the narrative that public are overwhelmingly in support of the scheme, based on various surveys and polls.
Here, Bahl’s spin is basically trashing Huffington Post-C Voter’s survey and also that on the PM’s app. And the trashing itself is juvenile:
Was it conducted on the phone? On the internet? In one-on-one field interviews? How large was the sample? On which dates was the poll conducted? Right after November 8, or on November 20? How was the question framed?
What Bahl wants to ignore is just the results, which show an overwhelming majority of people in support of the scheme. These results are not just shown in the C-Voter poll or the Narendra Modi App poll, but also on most polls conducted online.
And if Bahl wants to trash surveys, then why he didn’t trash this poll posted on Bloomberg-Quint which was only conducted online, that too among just 601 people? Or this poll on Bloomberg-Quint which had a sample size of just 1002 (lower than the C-Voter sample)?
The point is such flimsy, shallow remarks can be made about any opinion poll or survey, just because you don’t like them. Of course, if Bahl had spoken out about unscientific polls like this one on demonetisation on Times Of India, which allows multiple votes per person, thus leaving it vulnerable even to a code, then it would a fair criticism.
In the end, going by Bahl’s earlier lousy post, and this even lousier post, which claims to profess economics on a business news portal, is basically a joke on the concept of business journalism or rather any kind of journalism in India.
Nonetheless, we finally know from where Rajdeep Sardesai got his smarts (for the uninitiated, Raghav Bahl was also the founder of Network18, where Rajdeep worked for most of his TV journalism career).
Try harder next time Mr Bahl. Until then, Ciao.