Smoke Chokes Delhi as Modi Reforms the Currency

There are two pressing stories out of India, which have not gotten much attention, particularly with the world riveted by the final week – and final twist – of the U.S. presidential election campaign.

First, Delhi has been choking. If there is a battle between China and India, India has won the pollution stakes.

Delhi is a bowl sitting on the edge of a desert to its South and a lot of agricultural land (straw burning after harvests), too many cars many of them old Diesel ones, inefficient municipalities and rampant overcrowding.

Add to that the fact that besides being the national capital, it is a Union Territory which has limited powers relative to the Central government located in the same place. (Think of the status of Washington D.C.’s local government.) All of this makes air pollution a challenging problem with no quick fix.

Delhi’s pollution problem

Delhi elected a new government last year. The Aam Admi (Common Man) Party defeated Modi’s BJP to form the Delhi government.

Its leader Arvind Kejriwal is a perennial student agitator who would rather pick quarrels with Modi and everyone else – demonstrate rather than rule.

He has good intentions but no competence. This has added to the urgency of the pollution problem. Delhi has bad air most time but recently it has got much worse.

The governance of Delhi is fragmented between the various levels. This has made effective policy more difficult.

The Supreme Court has asked the Central a government to sort the problem. In the meantime, weak sunshine is breaking through and the worst passed.

Radical economic reform

At the other end of the town, in the national government, Modi has just taken the most radical decision to attack the menace of black money. The government has demonetized high value currency notes of ₹500 (~$10) and ₹1000 (~$20) which are 86% of the total currency.

This old currency is being replaced by a new set of ₹500 and ₹2000 which will be available within two days. Banks were told only after Modi addressed the nation on Tuesday night (while America was voting). They will open on Thursday and change the old money for new.

There will no doubt be depression in the luxury consumption sector. Politics, which is rampant with black money, is about to be convulsed in confusion.

So we have not taken much notice of either Theresa May who has been visiting or of the U.S. Presidential election.