Why is Modi not attending the Parliament after demonetization?

(My response to the question on Quora on November 28, 2016)

As a public policy professional, I am allured to penning down a proportionate piece on demonetisation. However, both time constraint and a true lack of opinion is keeping me away. So while I truly form a point of view I’ll share some observations about the question here itself:

1. Disruptive move: The step taken by Mr. Modi has been an innovative and radical one - something that has not been tried and tested elsewhere. When Apple came out with its first iPod - people could not believe in technology having such ramification for music listeners. While there were early adaptors, a number of critics questioned ‘buying music’ from iTunes, especially at a time when it could have been downloaded for free. The impact of anything disruptive has a cause and effect of polarising people. This is what is happening in case of demonetisation - its something so unique that political agents are using it to polarise public choice. In my opinion, such a policy move cannot be evaluated in the short term. It needs at least 3–4 months for monitoring - a reason why Mr. Modi is not yet willing to comment on the policy or the politics of it in the parliament.
2. Principal-Agent problem: From the elected representative point of view, the head of the government is the agent, acting for the best interest of the public. RBI on the other hand is the agent acting on behalf of the government for monetary matters. In the past both the government and RBI have taken steps to curb black money. Before Raghuram Rajan's exit from RBI, even he had some stern measures in mind. While the central bank and the government have agreed on many policy decisions in the past; there have also been many disagreements due to which several budget announcements have had to be rolled back. Setting of an independent debt management office is a case in point. In this case however, under the PM's bold leadership the accountability to both the public and the banking system lies with the government. The return on this risk cannot be anwerable in the short turn as there are so many variables affecting it! The parliament would need to support their debate by evidence and data to question this decision.
3. Experience over ‘Academia’: It is clear Mr. Modi has followed the advise of a practitioner over the vast pool of talented academia for taking this massive step. This has both pros and cons: Dr. Anil Bokil, the man who suggested this to the govt. works in the area of ‘artha’ which translates to wealth. As per news reports, Dr. Bokil suggested a transition plan for ‘banning high value notes’, which has not been adopted by the govt. Other practitioners who were consulted are not known. So while there is much ado about this policy, basic bottlenecks like preparedness of India’s banking system were not looked into. In every district, whether urban or rural out of an average 25 ATMs only 1 ATM dispenses cash after 4–5 hours of replenishment. Who is answerable for this? Govt., RBI or Banks? Clearly, there was a need for more consultation and consensus building with implementing agencies. By making this announcement, Mr. Modi usurped the role of RBI; at the time of crisis of banking sector Mr. Modi is not liable to speak on behalf of it.
4. Keeping out ‘Economists’: In a recent discussion on demonetisation at IIT Delhi, it was discussed that “Macroeconomists” had not learnt anything new in the last 30 years. Practically, be it any part of the world, not many major shifts have been observed save for liberalisation, market-lead policy shifts resulting in ‘policy diffusion’ in other parts of the world. As a public policy professional, I look upto only a few Economists from India like Prof. Kaushik Basu, Dr. Raghuram Rajan etc. as role models as they have been part of reforming institutions. But many economists, especially working closely with the government act like ‘intellectual designers’, who's jargons have less to do with the real world of implementation. I’d not take bad examples here. But Mr. Modi’s decision of keeping away many economists for demonetisation in a way confirms the thought shared at IIT Delhi. This is one of the reasons he has one major stakeholder less to answer.
5. Issues of ‘Secrecy’ and ‘Transparency’: Good public policies are not a result of closed-door discussion. They must be subjected to public consultations and stakeholder round table(s). To ward of disposal of black money, this was an exceptional and extreme policy step. If it were backed by perfect implementation, this would have only added to the credentials of our leader. Any future measure taken with discreetness would now be viewed with panic. Corrective measures shared by many interest groups in the past few weeks must be immediately put in place. We have much hope in the adverse step, but loopholes must be plugged with equal willpower and strength.