Prime Minister Narendra Modi announced on 8 November that high value currency notes were being withdrawn from circulation. Today marks 100 days since the controversial measure was implemented. While many of the restrictions on using cash have been withdrawn, the outcomes of demonetisation remain fiercely debated.
Here is a curated list of what Mint editors, columnists and contributors have written on this controversial move.
On 8 November 2016, Prime Minister Narendra Modi announced the scrapping of Rs500 and Rs1,000 notes, which constituted 86% of the currency in circulation. Exactly three months later, where does the Indian economy stand today?
In an interview to Mint after the Union budget, economic affairs secretary Shaktikanta Das claimed that remonetisation process is nearly complete.
Latest data from the Reserve Bank of India, or RBI (for week ending 20 January, 2017) shows that cash with public is still 40% less than what it was a year ago.
While demonetisation’s negative impact on the Indian economy is a widely accepted fact, there is not much clarity on how this has affected different sectors of the economy.
If first advanced estimates for Gross Value Added (GVA) at basic prices are to be believed, industry is going to suffer the biggest setback in terms of growth, while agriculture is likely to come out with flying colours. In fact, agriculture is the only sector, which is expected to improve its performance in the second half of the ongoing fiscal year over the first half.
On 8 November, Prime Minister Narendra Modi surprised investors and consumers by declaring that 86% of the nation’s money stock would no longer be a medium of exchange or store of value. In meetings in Mumbai and New Delhi recently, I learned that the move was intended to ferret out illegally garnered funds, and that the prime minister’s action took aim at the national pastime of avoiding income taxes. Large bills of Rs1,000 and Rs500 could only be exchanged at banks by providing documentation of how the wealth had been acquired.
The move to freeze or annul a large part of the money stock had been expected to cripple the consumer-oriented economy—household consumption accounts for 60%of gross domestic product in India, compared with 37% in China. With less usable cash on hand, equity markets had also been expected to take a hit—he opposite of what the Federal Reserve’s quantitative easing has done for US stock prices since 2009. Such expectations are consistent with economic theory.
Perhaps the most important part of Prime Minister Narendra Modi’s speech on New Year’s Eve was not the niggardly sops announced, not the lack of a report card on demonetisation, although that was significant, but rather his framing of demonetisation as a campaign to purify India. “Our nation has been witness to a historic rite of purification,” was what he said. He said it was an unparalleled fight against “internal evils”, a fight in which the poor did not hesitate to make sacrifices for the greater good of the nation. Demonetisation, it now turns out, was not so much economic policy as a sacred duty, but a holy war of good against evil.
This is not the first time Modi has talked about purifying the nation. In an interview to India Today a few days earlier, he said he wanted to see an India “swachh (cleansed) from all forms of filth”. He has also said demonetisation was a ‘yagna’—worship or sacrifice—to purge the Indian economy and society. Nor is this lurid imagery of purification and redemption confined to demonetisation. Last September, at the BJP national council meeting, which also marked the centenary celebrations of the party’s ideologue Deen Dayal Upadhyaya, The Telegraph quoted Modi as saying, “Pandit Upadhyaya said do not reward Muslims, do not shun them, but purify them.”
Does the stock market think that demonetization will have a temporary impact and investors need to look beyond it? This is what the Reserve Bank of India (RBI) believes and it is no doubt what the government would have us believe.
So how has the Indian stock market reacted since 8 November? Sure, the BSE Sensex is a bit lower now since that date, but then there are many other factors besides demonetisation that have affected the markets, not the least of which has been Donald Trump’s election as president of the US and the subsequent rise in US bond yields and the strengthening of the dollar. That has led to funds flowing out from emerging markets and India too has been affected.
The government’s war on black money now seems to have morphed into a campaign for a cashless economy. The media focus has understandably been on the pain inflicted on people due to the shortage of cash. But what will be its long-term effects?
It is now abundantly clear that, among businesses, it is the informal sector that has been the worst affected by demonetisation. Firms in the informal sector operate in a cash economy—they buy their raw materials, pay their workers and sell their products in cash. It’s no wonder that when access to cash is a problem these businesses will suffer.
But the cash shortage will ease sooner or later. Does that mean it’s just a matter of short-term pain before it’s business as usual? Not really, not if the government is serious about pushing through its ‘less cash’ pro-digital payments agenda and ensuring that every transaction has an audit trail.
It is exactly one month since Prime Minister Narendra Modi announced the decision that Rs500 and Rs1,000 notes would cease to be legal tender acceptable for payments in settlement of transactions. There was some provision for exchange or deposit of old notes at banks, but with specified limits on sums and time.
The past century has witnessed several demonetisations, when governments have decided that existing national currencies, guaranteed by the sovereign, are no longer legal tender. It has happened in: (a) countries that have experienced hyperinflation—where inflation rates are measured per week or per month rather than per annum—such as Germany in 1923 or Argentina thrice in the 20th century; (b) countries on the verge of economic collapse, such as Zimbabwe in 2015; and (c) countries in deep economic or political crises, such as Ghana in 1982, Nigeria in 1984, Myanmar in 1987, Zaire in 1993 and the USSR in 1991. In most, outcomes were failures, if not disasters
In the aftermath of demonetisation, digital infrastructure is being hailed by multiple parties for its ability to mitigate the effects of the government’s drastic measure, especially for the unbanked poor who conduct most of their transactions in cash. The Aadhaar system, centred on biometric data captured to improve access to social services, is at the heart of this infrastructure.
At present the multiple, resource-constraining effects of demonetisation on the unbanked poor are sadly visible. But so far, there has been limited data-based discussion of the potential of digital technologies to reduce the backlash of demonetisation for the poor and marginalized.
There is a popular high school arithmetic problem of a shopkeeper’s son who drops a 40kg weight, only to find that he can use the resulting pieces to measure every integer weight between 1kg and 40kg. The problem is to determine what weights the 40kg weight broke into so that this kind of measurement is enabled.
The answer is to split it into powers of three—every integer weight between 1 and 40 can be measured using weights of 1,3,9 and 27 (allowing for “negatives”). This problem is relevant in the context of some research papers that came out in the 1990s which argued that optimal denominations of currencies should proceed in powers of three, if the ease of providing exact change needs to be maximized.
In recent weeks, the debate has inevitably turned to the optimal policy response to demonetisation, and whether the forthcoming budget should deliver a large consumption stimulus, even if it comes at the cost of a significant relaxation of the current fiscal consolidation path. This essay analyses the different criteria that should determine the policy response, to suggest that the economic case for a large consumption-driven fiscal response—if it comes at the cost of fiscal prudence—appears very tenuous.
When formulating a policy-response to a shock, the first question that must be asked—apart from the estimated size of the shock—is whether it is expected to be temporary (one-two quarters) or more enduring (six-eight quarters). The day after demonetisation, the economic concern was that a substantial fraction of the old tender (say, 30%) would not return to the banking system. This would have constituted a large, permanent negative wealth shock, which could have depressed consumption for some length of time. That fear has not materialized. Reports indicate that more than 95% of the old tender has been deposited. Instead, to the extent that some of the deposited “wealth” is taxed and spent as “income” in the budget, aggregate demand will actually rise as long as the marginal propensity to consume out of this deposited “wealth” was previously less than one. Consequently, not only will there not be a negative wealth shock, but aggregate demand could actually rise!.
A question on the minds of commentators has been how India coped with the withdrawal of Rs1,000 and Rs500 notes in November, which reduced the stock of currency in circulation by a third. By the end of December, going by data released by the Reserve Bank of India (RBI), the stock of currency in circulation had fallen to nearly half of what it was before the currency withdrawal .
Last week, RBI finally released November data for “payment systems indicators” (a data set available on its website which is updated monthly), which can help throw light on how the way India transacted changed following the withdrawal of the high-value currency notes.
Although the underlying motive may be non-economic, from the economic perspective, the recent demonetisation in India can be viewed as part of ongoing experimentation with monetary policy around the world. An eminently powerful and successful policy tool, it has become the victim of its own success—with attempts to expand its scope, objectives and toolkit to a point that is undermining its efficacy, tarnishing the halo deservedly acquired by central bankers and hobbling their putative independence. We have moved from a point where Alan Greenspan, the chairman of the US Federal Reserve, was acknowledged as the master of the universe, to calls for the abolition of the Federal Reserve. How has this come about?
According to some well-informed observers, Prime Minister Narendra Modi is apparently quite frustrated at the pace (or, the lack thereof) of change that he is able to effect in India. That is understandable. First, a combined opposition put paid to the hopes of reforming the land acquisition laws that the previous government had put in place. Then, changes to the appointment of judges passed by both houses of Parliament and approved by states was rejected by the Supreme Court. In recent years, the court has interjected itself in matters ranging from cricket to jallikattu to the use of Aadhaar for direct benefit transfer, to the national anthem. Naively, we used to think that power, its arbitrary application and lack of accountability, were usually associated with the political class. Then, on 8 November he came up with an unprecedented announcement. He felt that he had outsmarted fellow politicians and bureaucrats.
On the face of it, the task government has set out to achieve looks very simple. While completing any economic transaction, instead of taking a wad of currency notes, get every Indian to take his debit card from his wallet or pull out his mobile phone instead to complete the transaction. The big question is, how easy is it to achieve this “simple” behaviour change?
While studying the behaviour of the unbanked segment in India, we found that the majority among them do not use a bank for financial transactions not because of the physical distance from a bank branch but because of a psychological distance. The drive towards cashless India could further increase the “class divide” among the banked and unbanked in India. As Ajay Banga, chief executive officer of MasterCard, said, “We risk creating islands, where the unbanked transact with each other.” This divide could seriously affect the government’s financial inclusion initiatives.
Amid the cacophony of arguments as the debate over the government’s decision to swap old for new high-denomination currency notes (HDNs) continues, it is imperative to distil and differentiate both ex ante rationales and ex post facto analyses.
Thus, according to news reports, the Union government suggested to the Reserve Bank of India (RBI), on 7 November 2016, that it ought to consider demonetising HDNs, citing as a rationale that this would work against the “triple problems of counterfeiting, terrorist financing and black money”.
The flow of tax evasion every year is what should be the focus of any drive targeting black money, rather than the caches accumulated from past tax evasion. Those stocks certainly existed, but the really large holders of these assets had long ago moved on from physical forms (like cash or gold or real estate) to financial assets. These typically took the form of loans to large commercial construction companies, which simply would not have been able to access the financial capital they needed without borrowing in cash on the informal market. Cash came in particularly handy to pay the wages of construction workers.
The problem is that we did not develop bond markets in the country as we should have, to the point where large construction projects could easily access formal financing. Historically, infrastructure construction worldwide has been bond-financed, including the rail network in colonial India. It was because the bond market today remains so poorly developed that there was such buoyant demand for loans in cash, and therefore for accumulation of black wealth in liquid loanable form. The treasurers of political parties will bear this out.
‘Why doesn’t the informal sector, supposedly badly hit by demonetisation, protest or scream in pain?’. Defenders of demonetisation often pose this question. The question assumes that the suffering poor people face because of government policies always finds political expression. If you want an answer to the question, please listen to Sachin Jadhav. His story takes us through the long chain of economic loss and suffering of the rural population.
Jadhav, in his twenties, used to work in a small factory in Yeola, a town in Maharashtra. The factory manufactures plastic sheets used to stop water percolation from farm ponds. The water level in the wells starts declining as the feeder streams begin to dry up after the monsoon. Farmers then pump out the water and store it in the ponds. This water is used for rabi (winter) crops such as onions. Usually, during this period of the year there is a high demand for these plastic sheets.
A surgical strike is supposed to minimize collateral damage. But the recent “demonetisation” is a Himalayan blunder that imposes enormous punishment on the economy and society, especially the poor, not only in India, but also in nearby Nepal and Sri Lanka, and would still not achieve its objective of rooting out black economy.
Money demand arises out of circulation requirements and portfolio requirements. Black wealth is held in a variety of forms: physical assets, including real estate and gold, and financial assets, including stocks, bonds and mutual funds, deposits, and foreign accounts. Only a part of the latter is cash black money.
In their recent defence of the Narendra Modi government’s demonetisation and subsequent remonetisation programme, Jagdish Bhagwati, Vivek Dehejia, and Pravin Krishna (hereafter BDK) rebut many of the smaller criticisms levelled against the programme. We agree with BDK that demonetisation by itself cannot be expected to remedy counterfeiting, corruption, and future flows of black money. Other reforms will be needed. Disappointingly, however, BDK disregard the short-term and long-terms costs of the programme. A more balanced evaluation is called for.
BDK regard demonetisation as “a policy designed, in effect, as a one-time tax on black money” and propose that its “success has to be measured by the sum of tax revenue generated and black money destroyed”. They arrive at a back-of-the-envelope calculation of “the net gain” to the government as “Rs1 trillion of black money destroyed”. which will generate government revenue to the extent that the Reserve Bank of India (RBI) issues replacement currency, plus “Rs1 trillion in tax revenue” from the 50% tax on black-money deposits. They add: “The government could reasonably claim this (Rs2 trillion in revenue) as a successful outcome.”
If there is one outstanding theme which is common to the campaign rhetoric of Narendra Modi in the run-up to the historic 16th general election and the language of governance of two-and-a-half years of Prime Minister Modi’s regime, it is indeed the fight against corruption.
This campaign has been ratcheted up in the past few months, first with the amnesty scheme for black money (wealth on which the due tax has not been paid), the big-bang demonetization of Rs1,000 and Rs500 denomination currency notes and the ongoing crackdown on those who so successfully abused the banking system in the past 50 days to launder their stash of black money.
Ill-informed, misguided or (ideologically or politically) motivated criticisms of the swap of old for new currency notes initiated by Prime Minister Narendra Modi on 8 November are akin to the Lernaean Hydra of Greek mythology: As soon as one chops off one of the heads, another replaces it. It might take a demigod of the stature of Heracles to slay the baleful beast of bogus arguments and fact-free opinions.
Economists Jagdish Bhagwati, Pravin Krishna and I made an attempt to chop off at least a few of the hydra’s heads in a long essay in these pages last week (see “Demonetization Fallacies And Demonetization Math”, 27 December). In light of developments since then, it might be worthwhile to revisit and refine a few of our ideas.
Since last month, the government has been relentlessly pushing for transition towards a less-cash and more-digital economy. It has adopted a carrot-and-stick approach to nudge user behaviour. The currency in circulation has been taken away with a warning that the entire physical form will not be replaced. At the same time, charges on digital transactions have been reduced and digital payments are being incentivized.
Such collective efforts have forced a massive increase in digital transactions. Mobile wallet players have experienced a substantial increase in the number of users, and mechanisms like unified payments interface have recorded a more than 1,000% increase in usage.
More than a month has passed since the 8 November announcement by Prime Minister Narendra Modi that high-denomination currency notes would be scrapped and remonetisation would occur through replacement of new notes and deposits of old notes in bank accounts. Often termed “demonetisation”, this policy has created considerable confusion among commentators, some ill-informed, some politically motivated. A number of fallacies continue to persist—concerning the value of “unreturned” versus “returned” money, the existing “stocks” versus future “flows” of black and counterfeit money, the short- versus the long-term impact on black money, and the expansionary versus contractionary effects of the policy reform—allowing opponents of the policy to claim, prematurely, and without evidence, that it is a failure. We clarify in what follows.
First, it is frequently asserted that the return into the formal monetary and banking system of a large percentage, perhaps 80% or more, of the old notes represents a failure of the policy. This is a fallacy which results from the misunderstanding that unaccounted money that is deposited into bank accounts has been converted successfully without penalty from black into white—which, actually, is not the case. The current rules dictate that deposits of unaccounted money will be taxed at 50%—with a further 25% taken by the government (into the Pradhan Mantri Garib Kalyan Yojana) as an interest-free loan for a period of four years.
As the disruption caused by the demonetisation effect continues unabated, government spokespersons have been pointing out that such a massive exercise is bound to cause some disruption. They are absolutely right. For what Prime Minister Narendra Modi is trying to do, through the demonetisation exercise, through the Benami Property law and by pushing through the Goods and Services Tax (GST), is nothing short of a revolution. And, as Mao said long ago, “A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous.” What he meant was you can’t make an omelette without breaking eggs.
The Indian commentary scene, whatever else may be right or wrong with it, is replete with unselfconscious irony. For two and a half years, a chorus of well-known observers in the domestic and foreign media has cried hoarse that Prime Minister Narendra Modi and the Bharatiya Janata Party- (BJP-) led government have failed to seize the nettle of politically difficult economic reforms. They have been timid gradualists, tinkering incrementalists at best, and not bold, visionary reformers, of the likes of Margaret Thatcher or Ronald Reagan: so went the refrain.
It is three weeks since the Union government undertook the dramatic step to partially demonetise currency notes of the valuation of Rs500 and Rs1,000. In this period we have been witness to some of the most acerbic public debates—in social media, Parliament, drawing rooms and even public spaces. In the ensuing binary discourse, historians and commentators have pontificated as economists and some of the latter (like former Prime Minister Manmohan Singh) have morphed into polemicists to make their arguments. In the process, a key collateral gain is being overlooked: behaviour change.
The popular quip being circulated in social media is on the money: India has seen an exponential increase in the number of economists ever since Prime Minister Narendra Modi announced his decision to withdraw banknotes of high value. There has been a gush of commentary on the impact this will have on the economy. Some of the best economists have jumped into the fray. Meanwhile, the hardship borne by ordinary citizens is undeniable.
It is an understatement to write that the last month has been busy for Indians, overseas investors in India and economic commentators. The globally unprecedented scale of the experiment to transfuse 86% of the bank notes that will no longer be legal is being keenly watched. There is immense interest in its uncertain but negative impact on economic growth in the near term, and its potentially favourable—but still uncertain—impact in the long-term.
An interesting side issue in the controversy over demonetisation is how this will have an impact on the Reserve Bank of India (RBI) and the fisc. To the extent of extinguishment of currency, will it constitute a profit for RBI and will the government have access to it? The RBI Act 1934 itself does not specify how this should be treated. It is left to best accounting principles.
Of the two denominations demonetised on 8 November at midnight, Rs500 was the preferred storage denomination among labourers and itinerant people, and the modal transactional denomination in wholesale markets and mandis. The replacement trickle is said to have started supplying the new Rs500 note (although I have yet to see it), well after the Rs2,000 denomination made its appearance. Without enough Rs500 notes in circulation, the Rs2,000 note is rejected everywhere. It has simply not taken root as accepted tender.
The withdrawal of Rs500 and Rs1,000 notes on 8 November has changed the composition of money supply in the economy. A large part of what was currency in circulation is now coming to banks as deposits. The sudden inflow of deposits has given rise to speculation about how these will be utilized by the banks. There are reports that banks will increase lending. Some have suggested that banks’ non-performing asset (NPA) problems will get alleviated. This is not correct. Our analysis suggests that: (1) banks are not in a position to significantly increase lending, (2) their net interest income (NII) may fall over the next few quarters, worsening their capital position, and (3) their NPA situation may get worse, further adding to their capital woes.
Even as ordinary citizens queue up for cash and economists are busy estimating the extent to which economic growth will be hit because of the ongoing drive to replace high-value banknotes, there has been a lot of discussion on whether the government can use the current situation to push India towards a cashless future. In his radio address on Sunday, Prime Minister Narendra Modi once again pitched for creating a cashless society.
Eliminating 86% of the value of the currency with the public was bound to be a shock. The government has called this “short-term pain for long-term gain” and many citizens on TV have said they are willing to endure short-term pain. But what gain and by when?
The long-term objective must be to cleanse the system of corruption, tax evasion and the generation of black income. demonetisation only targets that part of existing black wealth which is held in cash. It does not affect the continuous flow of black income and the corruption/tax evasion which generates it, which in many ways is the core of the corruption problem.
“Many commentators have pointed out that the attack on cash transactions is a strategic blunder by the Bharatiya Janata Party, whose core base from the Jan Sangh days has been the trader community. This view discounts the possibility that the rapid transformation of the Indian economy has changed the political dynamics. Is the ruling party now reflecting the interests of the national middle class and the rising neo-middle class that is harried by widespread corruption?”
“Scaling back large bills will not end crime, but it will force the underground economy to employ riskier and less liquid payment methods. There is reason, therefore, to believe that this move will reduce corruption and several forms of criminal transactions in the economy.”
“Eventually, the bulk of the cash finds its way into the informal sector, where it provides a part of the essential liquidity for virtually all transactions within the informal sector and between the informal and formal sectors. Considering the fact that the informal sector in India accounts for about 45% of gross domestic product (GDP) and nearly 80% of employment, disruption of this liquidity can be very costly indeed, both in terms of growth and equity.”
“Targeting unaccounted cash on one particular day is only a small part of the story. There is a game of musical chairs being played. One day, the music stopped playing and the persons who were holding the cash were penalized by 25-50%. Can we set our sights higher and disrupt the entire game?”
“Sometimes a shock to the system effects behaviour change far better than any other means. Sure, this may not work every time and not everyone may be able to pull it off but Modi is evidently gambling that he can.”
“Treating “currency” and “a checking account at the RBI” as qualitatively the same thing is a conceptual error. The cancellation of the former and replacement by the latter is not an exchange of like-for-like. The apparent bonanza from the cancellation of some portion of demonetized notes appears to be fictitious.”
“Amid the ongoing demonetization debates, a critical missing ingredient is that of state capacity. Would things have been much different if demonetization was planned out in detail and then executed? We would be inclined to argue to the contrary and claim that the Indian State currently does not have the capacity to execute such a project involving national mobilization on a sustained basis without serious deficiencies and failings.”
“Milton Friedman suggested a famous thought experiment of a helicopter dropping cash all over the economy. This would obviously lead to inflation in the short run. Helicopter money is currently in fashion in these times of quantitative easing, when the EU and Japan are struggling to inject some inflation. So is India’s demonetization the obverse of helicopter money, due to the sudden suction of 86% of cash? Not so, because, in theory, all those notes will be replaced with new notes instantly. In practice, this is facing considerable teething difficulty. During that interregnum, it does work as negative helicopter drop, and hence is deflationary in the short run.
“The currency reform is a great example of what economists call a natural experiment—albeit a risky one. It is a sudden exogenous shock that completely alters the way participants in an economy take decisions. Such natural experiments usually offer rare insights into the economic process. They are analysed using statistical techniques that are not used in more normal times. Hence, how this decision plays out over a longer period of time needs to be watched carefully rather than jumping to quick conclusions.”
“After preaching so successfully against corruption and elite capture of India in the general election, Modi has now begun walking the talk (no matter how clumsily). And in this, he has cleverly positioned himself as a vanguard of the bottom of the pyramid and the aspirational class (what he defines as the neo middle class).”
“The fear that the government can hit the refresh button at some point in the future will make the die-hard tax evaders move to gold, dollars or other stores of value, but it does put pressure to go legit on a large number of people who were simply playing the game—because this is the game that everybody who was smart played in India. A sudden shock was needed to alert everybody that the government is serious about its fight against corruption. The government will have to follow up with strict measures to come down on future generation of black money, else this entire exercise will be in vain.”
“The choice before the government was to announce it out of the blue and run the risk of the chaos on streets or have a smooth transition from the old currency notes to new notes but without getting much out of it in terms of unearthing unaccounted cash. It has chosen the first, and rightly so.”
“Modi’s new market is the middle and neo-middle class and the higher value that he is promising to deliver is the elimination of black money and a significant reduction of corruption. Modi has grabbed the space and message that could so-easily have been Kejriwal’s. The latter may not be possessing illegal cash and hence will not suffer monetarily but his political stocks are likely to go down.”
“In the political battle that has emerged out of the demonetization exercise, both proponents and opponents are ostensibly defending the interests of the poor. Some politicians are relying on anecdotal evidence to advocate the difficulties being faced by the common man. We instead use data from the National Sample Survey Organization’s (NSSO) survey to estimate such difficulties faced by the poor.”
“One has to be astonishingly callous or exceptionally removed from reality to think that the poor are sleeping peacefully and only the rich are frightened, needing sleeping pills in the wake of the great currency-exchange drama playing out in India. For that’s what it is; old notes are being replaced with new, and a new note of even higher value is being added.”
“The demonetisation exercise was planned and is being analysed as an economic activity. What people discount is that demonetisation is inherently a behavioural issue—an emotional issue! The process of removing 86% of the currency notes in circulation and expecting the economy to function with only 14% was bound to create a lot of hardships. Policymakers would have anticipated the monetary and the physical hardships to the common man. But, any overt preparation to minimize the hardship would have let the cat out of the bag and would have defeated the very purpose of this operation.”
“‘I am very clear on this…black money should not be generated. Economic experts say the magnitude of the global economic crisis at times is not felt in India because of strong (parallel) economy of black money,’ said Akhilesh Yadav, chief minister of Uttar Pradesh on 15 November. Given the lack of transparency in funding of political parties and myriad corruption and disproportionate asset cases which are going on against several politicians in India, it could be tempting to dismiss Yadav’s statement as an apology or even defence for those who have unaccounted income or black money, as it is popularly called in the country.