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India: The next Pakistan?

by Jayant Bhandari, Acting Man:

India’s Rapid Degradation

This is Part XI of a series of articles (the most recent of which is linked here) in which I have provided regular updates on what started as the demonetization of 86% of India’s currency. The story of demonetization and the ensuing developments were merely a vehicle for me to explore Indian institutions, culture and society.

Tribal cultures face an inherent contradiction. They create poison from within to grow more collectivist, controlling and tyrannical — members of the populace looks for nannies, and they readily find sociopaths to exploit that need. Their lack of organizational skills, their inability to engage in economic calculation and their irrationality lead to massive internal stresses and the ultimate devolution of such an unnatural society.

India finds itself in a situation where it is grasping for more totalitarianism to solve the problems that totalitarianism created. The demonetization exercise was an assertion of India’s underlying tribal and collectivist culture.

Demonetization Pain Continues

Cashless ATMs continue to be the new normal in India. In a recent conversation, economist Professor Madhusudan Raj mentioned that as many as 70% of the ATMs in his city are still not operational. The situation in villages and small towns is much worse. Banks are often clogged with people.

Eventually most people who must have cash will get it, but businesses need easy access to large amounts of their own cash without incurring transaction costs. They continue to face horrendous problems, which are translating into closures, retrenchment of staff, and bankruptcies. The tax authorities are getting increasingly rapacious. According to Professor Madhusudan Raj:

“The tax department is busy conducting raids on old widowers, small traders and merchants like chicken-shops, shoe-shops, small restaurants, gas stations etc.; pretty much anyone who deposited more than half a million rupee in banks during the demonetization process. The department is forcing small traders to declare income under Modi’s PMGKY (Prime Minister poverty alleviation) scheme, but leaves big corrupt business tycoons untouched.”

Draconian regulations on the use of cash are increasing. Businesses are in fear of the State. Freedom of speech is rapidly receding, not only because of fear of the government, but also because Indians are becoming increasingly fanatic.

Any new cash continues to find its way to the financially powerful, leaving small businessmen and the informal sector reeling in economic trauma. The normal rhythm of the economy has been destroyed. People continue to delay discretionary purchases. The market continues to be slow.

Businesses are failing and the poorest are finding employment very difficult to come by. Food prices are still much cheaper than normal, as a result of the economic struggles of poor people. Farmers are facing huge financial pressure in turn.

It is a vicious cycle in which people who at first lacked access to their own money because of the demonetization now face a situation in which they simply don’t have any work and hence no cash.

rom the Hindu newspaper: Only three out of forty-five ATMs in the IT-hub city of Hyderabad were functioning on 13 March 2017. Businesses are starving for cash.

As is the case with an irrational tribal society, many members of India’s middle class are utterly lacking in empathy for those who are suffering. Slowly but surely, universal principles assert themselves though, and economic harm is flowing toward them. Alas, they still fail to recognize the chain of causality.

The slow poison of demonetization and populist scams schemes at work: US-listed IT-major Cognizant is expected to slash more than 10,000 jobs. It has around 260,000 employees and around 75 percent of its workforce is based in India. The situation of other IT companies in India is similar. A huge wave of young, mostly unskilled, untrained and uneducated people – about 12 million – join India’s workforce every year, but have little prospects of finding a job.

Without Reason, the Only Stable Institution is a Tribe

It has been 70 years since the British left India. In these years, Indians have systemically destroyed what the British left behind by asserting their tribal, superstitious and irrational culture.

It was believed that the separation of legislature, judiciary and executive which the British had created would stay. What was forgotten was that such institutions had evolved in Europe because of the tool of reason. Indians imported all the fruits of western civilization — technology, music, movies, Kim Kardashian, etc. — but completely failed to adopt the European concept of reason.

Without reason, India had to drift back to its tribalism. Today, Indian institutions are hollow shells of what was bequeathed by Britain. The executive, the judiciary and the legislature are indistinguishable from each other. One would find it almost impossible to come across even an educated Indian able to properly explain the difference between these three branches of government.

As Professor Madhusudan Raj notes:

“There is a big cold war going on between the Supreme Court and the Modi government, which is trying to take full control of the courts. Modi’s parliament can now dismiss the appointment of Supreme Court judges in the name of ‘national security’.”

When the British left India, virtually all leaders had been selected and nudged into their positions by them. India was a democracy only in name. Children of these leaders and later on their children had political power.

Jawaharlal Nehru was India’s first Prime Minister. Then it was his daughter’s turn, Indira Gandhi. And then it was the turn of her son Rajiv Gandhi. And then Rajiv’s wife, Sonia Gandhi took over (she ruled using a puppet, Manmohan Singh).

The last vestiges of whatever class Indian politics might have had ended along with the end of Sonia Gandhi’s rule three years ago, and the subsequent inauguration of Narendra Modi. Now raw tribalism is in full force in India.

It is not only India that is affected. European institutions have failed and mutated into entities catering to underlying tribalism in nearly every country in Africa, the Middle East, South Asia and most of Latin America. The nation state, a European institution, is too unnatural for these societies.

India seemed like an exception to the international media. This is because the smartest people of India moved to the US and Indian lobbies leveraged this fact to make India look good – despite the fact that India’s per capita GDP of $1,718 is worse than that of most well-recognized banana republics.

There has indeed been one good thing about India though: freedom of speech survived among a minority. This happened not because of any inherent goodness, but because India is an extremely diverse place, perhaps the most unnatural country.

The infighting and stresses it generated have failed to given Indians a collective identity. This cirfcumstance allowed a minority to speak its mind. Alas, even that is now coming to an end. Hindu nationalism, a.k.a. Hindutava, is rapidly weaving Indians into a tribal collective.

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