Ten years ago, on one fateful November night he had appeared suddenly on the television to make that disastrous announcement. We were told demonetisation was the dramatic shock therapy that India needed to get rid of the black money problem once and for all. To use Gyanesh Kumar's terminology retrospectively, it was India's first SIR in the world of cash.
We all know what has happened since then. Black money continues to thrive. The common people and the MSME sector bore the brunt of the shock, suffering varying degrees of loss. But on the face of it, that was India's first big step towards becoming a more digital and less cash economy. Cash had a serious competition and UPI virtually became India's default mode of payment. Perhaps this would have happened anyway over a period of time, but demonetisation coerced India into the UPI mode.
A decade has passed since then. We are approaching the decadal anniversary of the demo disaster. Perhaps it was time for a new shock and we now have one in the form of the #UPITax, delivered however rather surreptitiously without any of Modi's televised or Instagrammed drama. Strangely it did not occur to anyone to giftwrap it as the PM's birthday gift to the nation.
The UPI tax has of course been camouflaged as a 'discount rate' and that too for 'merchants'. The 'discount' however refers to the threshold of payments below ₹2,000 which will still not attract any fee. And 'merchant' is only a codeword for consumers who make the payment because no merchant is going to bear the burden without transferring it to the purchaser. In fact, the UPI fee will become yet another alibi, or 'incentive', for raising prices!
The announcement came soon after the much hyped BRICS summit in Delhi. India's UPI system getting accepted in BRICS countries could have been considered a real diplomatic breakthrough for India. But nothing happened on that count. Instead, we had the UPI fee announced just after the BRICS summit. The non-extension of UPI to BRICS countries and fees imposed on UPI payments within India both are aimed at appeasing the Trump Administration and probably meant to be a precondition for the forthcoming Indo-US trade deal! So much for the Modi jumla of 'Atmanirbhar Bharat'! Demonetisation was the Modi government's first application of 'shock therapy'.
Delivered just before the UP Assembly elections of 2017, demonetisation had played a significant role in facilitating the BJP's return to power in the state after a gap of fifteen years. From demonetisation, GST and lockdown to the SIR and now UPI tax, India has suffered too many serial shocks in the Modi era. Can the small shopkeepers, MSME sector and ordinary people who will have to bear the brunt of the UPI shock in their everyday existence force the Modi government to roll the UPI tax back and make the BJP pay its political price in the coming elections?
