“Cashless” economics shot in arm for bank-corporate nexus

Prime Minister Modi has emerged as the shrewdest ever Indian Prime Minister in terms of support to an economy increasingly driven by corporate-banks nexus at the cost of the masses. He is now openly talking of online shopping and cashless economy. In simplest terms, it means that now more and more money will remain in the banks, which will be increasingly more and more available to the corporate world. Online shopping means that now banks will even become partners in the business of retailers. Despite the fact that it gives them smaller margins, retailers will have no option but to accept it because if they don’t, their competitors in the market will capture the sales. They will pressurise manufacturers into giving them larger shares, which means that consumers will have to ultimately bear the whole cost. Consumers are already charged much higher for the items they purchase. A product, which should ideally be available to consumers for not more than Rs 10 is sold to them at a price ranging from Rs 30 to 100. And the irony is that while a lot of hullabaloo is created at the rising prices of agricultural products, there is not even a mention of the high price the companies are charging for their products. This is despite the fact that market products form nearly three-fourth of the basket of goods which the common people use every month.

There is no succour in sight for the masses as almost every single political party and political leader has willingly or unwillingly bowed to the corporate. As I have been arguing for years, democracy is no longer “a government of the people, for the people, by the people”, but has effectively become “corporatocracy” - a government of the corporate, run by the agents of the corporate and for the corporate.

The banking system-- private or nationalised-has hardly helped to bring about the economic betterment of the poor. It has done just the contrary. The little money that labourers, artisans, peasants, clerks, lower middle class people and upper middle class servicemen are able to save by curbing their desires and curtailing even some essential expenses, is mostly deposited in the banks. The businessmen get hold of this huge amount of money, (which becomes huge because it is deposited by millions of people) in the form of loans to establish mills, factories, agencies, departmental stores and companies. With this money, they earn huge profits, ranging sometimes from 50 to 300%. A very small portion, usually between 8- 15%, of what they amass is given back as interest to the banks, and a smaller portion, 4- 12%, of that interest is distributed among the real owners of that money. This small interest is used as a decoy to trap naive commoners. Common people have no other option as their money is not big enough to be turned into an asset (gold, property) or to set up any business, and security problems compel them to put their hard-earned money in  banks. If ordinary people even contemplate to start their own business with bank loans, they either fail to get it on account of their ability to submit sureties or, if at all, they succeed in getting some loan, they have to run the great risk of getting entangled into a debt-trap, for their incomes, usually, are not high enough to simultaneously fulfil their routine requirements, and to pay regularly instalments to banks. In case their business fails, the probabilities of which are considerably high in the face of hard competition with big businessmen, they do not have sufficient financial backing to make up for the losses. They often have to clear their loans by selling whatever little assets they have. Private banks, wherever they exist, accentuate this upward mobility; for, while the incomes from the nationalised banks is utilised, at least, partially, for welfare activities, entire profits of private banks are credited to owners. Industrialists do not believe in keeping a large part of their money in banks; they either invest in profitable ventures or convert it into movable or immovable assets, the cost of which keeps on rising. These assets prove to be of great utility in procuring further loans. Their business continues to expand with the help of people’s money, and the value of their assets continues to show an upward trend. Inflation, which is the outcome of the conspiracy by industrialists and their cronies in government ensures that whatever they pay as interest on loans (and taxes) is compensated and whatever the public gets as interest on their money is more or less recruited; inflation recycles the money back to industrialists. Poor account holders thus get virtually nothing, while with their money the big businessmen build palaces and companies. '

In short, the banks have become mere vehicles for transferring wealth from the less-moneyed to the more-moneyed. Businessmen also run big financial companies where again the depositors’ money is used to give loans at much higher rates of interest to those seeking it. Finance companies do not only earn themselves but also help the industries with increase in sales of consumer items of all kinds, including vehicles, air conditioners, TVs and refrigerators. Insurance companies are also booming. These companies are able to compete with banks, because they cash in on the personal fears of people. Common men are always wary of accidents and sudden death, and to ensure financial safety for their survivors, they oblige the insurance company despite the fact that these companies often pay interest even less than what banks do.  

Jan Dhan Yojna, demonetisation and an open drive in favour of a cashless economy are all aimed at helping the richest monopolise more and more wealth. Economic disparity, which was already huge, has got a big leap in the short tenure of Prime Minister Modi. There is almost a ban on the term “economic disparity” in the corporate-driven media and political circles, including Parliament. Not a single political party vows to reduce disparity. This can be done easily by taxing wealth rather than income, controlling the pricing mechanism and reducing sales tax. But who has the guts to even think in that direction. None. Only a revolutionary can do this. But, as Iqbal had said, “Hazaron saal nargis apni benoori pe roti hai; badi mushkil se hota hai chaman mein deedawar paida”. Revolutionaries are born in thousands of years.  

The author is a Delhi-based thinker and writer with over a dozen books including his latest, “Muslim Vision of Secular India: Destination & Road-map”. He may be contacted at 

This article appeared in The Milli Gazette print issue of 16-31 December 2016 on page no. 6

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