Demonetization: How Modi got away with it? Read the Arthashastra.

Hindol Sengupta explores how demonetization benefited from a prolonged rhetoric of the austere leader, which has its roots in Kautilya’s Arthashastra.

This is the second essay in a five-part series examining demonetization from the perspective of policy, economics, and political agenda. Next up: Shikha Dalmia reviews the efficacy of demonetization and its uneven effects.

The most intriguing aspect of India’s currency demonetization has been the lack of public uproar.

Without doubt the pulling out of 500 and 1,000 rupees currency notes caused shock waves across India’s informal sector, which since 1991, when the country opened its markets to the world, has provided most of the jobs.

Why, then, have there been no furious march pasts outside Parliament? Why no stampede on the streets? No blockades, hartals or city-wide bandhs? Why aren’t the people up in arms against their government? How, runs the question, has Prime Minister Narendra Modi got away with it?

There is a simple answer, and it has to do with re-imagining liberty. One of the fundamental premises of the free market thinking is freedom from government tyranny. That you want less and less of the government in your face seems like a neat first step to doing what you want (or what we call freedom).

But, as PhD guides often tell their underlings, let’s complicate this a bit more.

What do modern Indian citizens expect from their government? Freedom to do what they want, of course. But also another vital freedom that we never seem to talk about — freedom to not worry about their lives, freedom to have a sense that someone is thinking about the big things that will impact our small lives.

This is not a new idea. Kautilya (Chanakya), who wrote the Arthashastra, in between plotting how to bring down the rotten Nanda king, and propel up Chandragupta Maurya, knew that those to govern must go the extra mile to give their citizens a sense of security through rigorous display of discipline. Citizens follow a leader who is seen to be self-sacrificing. Kautilya, therefore, recommended only four and a half hours of sleep for a king every day. “The life of a king was not a life of pleasure and ease. It was a life of hard work and a kind of asceticism amid unparalleled wealth,” writes Thomas Trautmann, professor emeritus of history and anthropology at the University of Michigan, in his book on the Arthashastra.

Modi’s constant reminders to his fellow Indians about his austere and punishing lifestyle schedule (not least that he has never taken a day off since becoming prime minister in mid-2014) has earned him the kind of sociological brownie points that are being encashed during the demonetization fallout.

The most vital kind of liberty is the freedom to not keep looking over your shoulder (you only have to ask the average Indian woman on the road to know that that is true). This role of the state on ensure justice, fairness and an equitable system is one of the cornerstones of the Arthashastra and its understanding of what a king is and what is the role of a king.

It must be remembered that unlike say, in Persia, where the ‘Oriental despot’ owned all that his royal gaze fell upon — including his human subjects, in India, the king is entitled only to one-sixth of the produce of the land only if he fulfills his kingly duties — primary among these is the delivery of justice. This role can only be fulfilled with the help of an intricate warren of informers who grease the wheels of justice. This is why Kautilya advised kings to maintain a large network of spies who could come in the guise of “student, wandering monk or nun, farmer, trader, religious hermit, poisoner or fighter”, says Trautmann, “spies did not merely gather information, they also initiated activities… to do the king’s dirty work in the form of ‘silent punishment’”. It is no secret that the unprecedented hauls of hidden cash — and fake currency — that are being unearthed almost every day comes from effective spying, which also brought about the arrest of a Calcutta-based alleged kingpin of the money laundering just when he was about to flee the country.

It is because of this Kautilyan coming together of attributes — and forces — that has helped Modi weather the demonetization storm. He understands, as the wily Chankaya did, that a leader who appears diligent, and is seen to be going about with a broom in hand, often gives citizens that rare thing: the freedom to sleep in peace in the hope that someone is cleaning up after them.