China’s official Global Times newspaper has hailed Indian Prime Minister Narendra Modi’s demonetization as a “very bold move” that would create a precedent irrespective of whether it succeeds or fails.
China will draw lessons from its impact on corruption, the paper said in on Saturday.
“Modi’s move is very bold. We cannot imagine what would happen in China if the country bans its 50 and 100 yuan notes,” the Global Times said in an editorial titled ‘Modi takes a gamble with money reform.’ The 100 yuan is China’s highest currency note.
Modi’s reform aims to render ‘black money’ useless but the process goes against the governance principle of winning support of the public before initiating a new policy, the editorial said.
It noted that more than 90% of transactions in India are made with cash and that demonetization has taken away 85% of the notes in circulation which has brought a lot of trouble to people’s daily lives.
“Demonetization can crack down on corruption and the shadow economy but it is obviously unable to solve the deeper social and political issues that help breed the aforementioned problems,” it said.
However, it stated that as far as the root causes of corruption exist, the problems will always resurface. “In other words, the Modi government wishes to turn a long and arduous reform into a one-off deal.”
“Demonetization is a gamble for Modi. He bet on both the execution ability of the government and the tolerance level of the Indian society, hoping that the benefits of this reform can outrun the negative social impacts and low morale,” the editorial said, adding that the “Western-style” democratic system of India allows little room for such bold moves.
“However, he is really carrying it out, and will create a precedent no matter if he succeeds or fails,” it said. “Reform is always difficult and requires more than just courage. Modi’s demonetization came with good intention but whether it can succeed depends on the efficiency of the system and the cooperation of the entire society.
“More and more people are growing pessimistic about the ability of Modi’s government to control the process,” it concluded.