Why The Ban On 500, 1000 Rupee Notes Is A Master Stroke By The PM – Strategy With RS
PM Modi, encouraged by the success of the surgical strike on terror camps, today launched an even bigger surgical strike, nay a war, against black money.
From where is he deriving inspiration? From military history! The Art of War by Sun Tzu gives a fairly accurate blueprint for the PM’s actions.
Let us see how PM Modi has intelligently adapted some of this distilled military wisdom to politics and economics.
- In the midst of chaos, there is opportunity.
The world is going through an economic slowdown, which is also impacting India. In the midst of this economic chaos, PM Modi seized an opportunity to strike at black money and delivered a swift knockout punch!
- Let your plan be dark and impenetrable as night, and when you move, fall like a thunderbolt!
That’s what PM Modi did. Almost everybody was kept in the dark about his plan. Unscheduled, he went on national TV and dropped the ‘bomb’ on black money hoarders and that effectively rendered them stunned and gasping – effective midnight, Rs. 500 and Rs. 1000 notes would cease to be legal tender. Though the idea isn’t new but the speed of implementation is almost unprecedented.
- He who knows when to fight and when to retreat, wins the war
Staying loyal to this axiom, he picked the right day and time to fight – after the Diwali season had ended and picked an emotive issue on which to peg his strike – black money; a credible and worthy cause.
- Ponder and deliberate before you make a move
It took PM Modi almost two and a half years before he made this decisive move. Is this a big enough problem for the PM to lead this assault from the front? Black money has given birth to a shadow economy, which is estimated to be upwards of 30 % of the actual Indian economy which is estimated to be over $2 trillion! With this move, the Indian economy will get a boost as more money will surface and flow into the economy.
- Know the enemy and know yourself; in a hundred battles you will never be in peril
PM Modi knows himself as well the enemy i.e. black money hoarders. He subdued them without giving them a chance! Take a look:
1. The announcement was made after the banking hours and that too towards late evening that the higher denomination notes will be invalid from midnight giving very little time to exchange money.
2. The bank will remain closed so that lockers stuffed with black money cannot be operated.
3. There is a quarantine placed on withdrawal amount from bank & ATM for the next few days and weeks.
4. The higher denomination notes have to be deposited in banks / Post offices which will maintain a record and will share this information with Income Tax officials – if required!
5. Cameras are installed in Banks where deposit / withdrawal will take place and more!
- Capture the territory without destroying it. Generally, in war the best policy is to take a state intact.
PM Modi has captured the territory – Indian economy – without, in any way, destroying it. If anything the decisive assault will strengthen it.
- Avoid competitor’s strengths & attack their weaknesses
PM Modi knew the strength of his enemies – given time they would have come up with a plan to thaw this aggressive move – so he gave them no time to either think or act.
- In war let the objective be victory and not a lengthy campaign
Paying heed to this axiom, PM Modi has made the move swiftly and also shared his intent transparently with the entire country and concomitantly listed out the next moves – clearly simply and lucidly leaving no room for a lengthy debate, thereby ensuring that there is no prolonged ‘warfare’.
- Be ready to modify plans if required
The steps announced on restrictions on withdrawal from banks/ATMs and other such steps will be reviewed on 24th November and the next course of action will be decided based on actual reality.
- Rapidity is the essence of the war. Take advantage of the enemy’s unpreparedness and make your way by unexpected routes and attack unguarded spots
PM Modi did act rapidly and caught his enemies unprepared by taking a totally unexpected route to attack them – rendering them impotent and helpless!
About The Author:
In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here