Currency Ban: After 600-years will PM Modi fail like Tughlaq?

At present, India is in the middle of a huge transition where almost everyone is cashless and uncertain about what will happen next due to demonetisation of ₹500 and ₹1000 notes. 

 

From endless queues outside ATMs to multiple deaths, the country has seen it all since PM Narendra Modi announced the demonetisation of the high-value currencies. 

 

Though the decision has been welcomed on the grounds that it will help recover black money and counterfeit currency which is in circulation through high-value notes. But the unpreparedness of the government machinery to implement the move has led to chaos and inconvenience. 

 

In many debates and discussions, this financial move has been termed as unprecedented and that it is a bold move by the government. 

 

Bold move yes, but unprecedented? Not really!

 

If we look into the history of India, the 14th century Sultan of Delhi, Muhammad bin Tughlaq, is known for making bold decisions which unfortunately turned out to be disastrous later. 

 

The decision that makes Muhammad bin Tughlaq still relevant is his change in currency very similar to what we are experiencing currently. 

 

This decision is still quoted for its disastrous impact. 

 

What Tughlaq changed and why he failed:

 

What Tughlaq did with the currency was a radical move that could have had a long-term impact on India's economy. He was the first one in the Indian subcontinent to introduce representative or token money.  

 

In simple words, he introduced copper and brass coins that could be exchanged for fixed amounts of gold and silver. This representative money was called Tanka. 

 

This was a new idea and a drastic change that led to chaos. The token money that Tughlaq introduced was easy to forge as copper and brass had very little value and available easily, but could be exchanged for gold and silver which had a higher value. 

 

Therefore, it led huge forgery - more fake coins than real ones - and chaos. The Sultan had to withdraw the new currency within eight days. He was assassinated soon after. 

Though the idea of representative money was a good one, ineffective implementation forced the sovereign to roll it back and cost him his life and also his kingdom.

 

The current scenario:

 

The current government, with just an announcement, made the country realise that money is nothing more than paper whose value depends on the sovereign. 

 

One of the reasons emphasised by the government for taking this decision is to replace old currency with new ones having better security features to stop the forgery of high-value notes. 

 

However, since the state machinery was not ready for this sudden change, the new currency had to be issued without the planned enhanced security features - making it easy to replicate once again.  

 

In fact, news of new fake ₹2000 currency notes has already appeared in the media at a time when many of us are yet to see what the new note looks like. 

 

This is what exactly what happened when Tughlaq launched the tankas, which also lacked security features. 

 

In view of this important chapter in history, whether Modi government's move to ban old currency and introduce new ones will it lead to a fall of our economy or a renewal - only time will tell.