Indian Prime Minister Narendra Modi has accused his critics of his demonetization decision of “brazenly standing in support of the corrupt and the dishonest” and equated their criticism with the “firing at the borders by Pakistan in a bid to provide cover to infiltrators”,  according to the Indian media reports.

Diverting Attention:

Modi's attempt to use Pakistan to divert his people's attention from India's internal problems is not new. In fact, it's part of a pattern that seems to work in India. But why is it? What makes so many Indians so gullible? To answer this question, let us look at the following quote from Indian writer Yoginder Sikand's book "Beyond the Border":

"When I was only four years old and we were living in Calcutta (in 1971)...it was clear that "Pakistan" was something that I was meant to hate and fear, though I had not the faintest idea where and what that dreaded monster (Pakistan) was. What I heard and read about the two countries (India and Pakistan)--at school, on television and over radio, in the newspapers and from relatives and friends--only served to reinforce negative images of Pakistan, a country inhabited by people I necessarily had dread and even to define myself against. Pakistan and Muslim were equated as one while India and the Hindus were treated as synonymous. The two countries, as well as the two communities were said to be absolutely irreconcilable. To be Indian necessarily meant, it seemed to be uncompromisingly anti-Pakistani. To question this assumption, to entertain any thought other than the standard line about Pakistan and its people, was tantamount to treason."

Having been brought up with the misguided notion that Pakistan is evil incarnate, it seems that a large plurality of Indians viscerally hate Pakistan, and also hate anything that is likened to their western neighbor.

Such tactics may serve the politicians well but they do not solve India's long-standing problems that have put Indians among the most deprived people with the world's largest population of poor, hungry and illiterates.

Modi's hasty demonetization decision is also indicative of the rash decision-making by India's Hindu Nationalist leader. It's dangerous for stability in South Asia.

Demonetization Debacle:

Mr. Modi's blunder in hasty demonetization of large Indian currency notes has brought untold suffering to the people of India. The instant removal of 85% of cash from circulation in a cash-based economy has been harshly criticized almost universally by experts around the world.

Morgan Stanley’s Ruchir Sharma has said it's Mr. Modi’s “clumsy exercise of state power” and it won’t achieve its ostensible aim—cracking down on so-called “black money” salted away by tax dodgers, according to Sadanad Dhume's op ed in Wall Street Journal.

Kaushik Basu, a former chief economic advisor to the government of India and former chief economist at the World Bank, has called it “poorly designed, with scant attention paid to the laws of the market.”

Forbes magazine's Steve Forbes has called Modi's demonetization decision "sickening and immoral". Wall Street Journal's editorial page has described it as "India's bizarre war on cash".

Here's an excerpt of how the Economist magazine describes the effects of Modi's "botched" demonetization decision on life and economy of the nation:

"Cash is used for 98% by volume of all consumer transactions in India. With factories idle, small shops struggling and a shortage of cash to pay farmers for their produce, the economy is stuttering. There are reports that sales of farm staples have fallen by half and those of consumer durables by 70%. Guesses at the effect on national output vary wildly, but the rupee withdrawal could shave two percentage points off annual GDP growth (running at 7.1% in the three months to September)".

Summary:

Prime Minister Narendra Modi's hasty demonetization decision has exposed his rash decision-making style. It has already caused untold suffering for ordinary Indians. Mr. Modi's decision processes have also raised serious questions about the formulation of Hindu Nationalists' Pakistan policy.  Fears of miscalculation by Mr. Modi's inner circle about Pakistan's response to any major provocation could result in serious consequences for the entire region.

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