VOX POPULI
by
S Kamat
as
Aam Admi
Issue: 177 Date: 21.11.2016
Contents:
1. Tipu
Sultan: The Man and his Jayanti
2. The Demonetization Mess Continues Unabated
3. India Reduced To A Banana Republic & Under Authoritarian
Rule By Demonetization
Tipu Sultan: The Man and his Jayanti
The legends of Hyder Ali and his son,
Tipu Sultan are etched in our minds through the history books that we read in
school. The fact that Tipu outshone his father is also common knowledge. That
Tipu Sultan was a thorn in the flesh of the English in their quest for
establishing the British Empire in India is acknowledged by his sworn enemies,
the English themselves. That Tipu was a master strategist and a brave warrior
is recorded in the annals of many a historical battle. His principal aim was to
consolidate and expand his kingdom in the South. For this his principal enemy were
the English in their aim to add India to the burgeoning British Empire. To
fight them Tipu Sultan reached out across the seas to ally with French,
traditional enemies of the English at that time. As an administrator he was
known for implementing an efficient and sympathetic revenue system. Tipu Sultan
also encouraged industry to be established in the Mysore kingdom and the
advances in rocketry that he achieved was used by the English in later years.
Those who criticize historical figures like Tipu Sultan should remember that
the times in which these people lived were different, the value systems were
also different. We cannot view these figures through the lenses of present and
modern times since it would be patently unfair to them. Another thing that
those who raise their voice against Tipu Sultan should remember that for
whatever reason people still remember him some three centuries after his death,
for good or for bad which may not be the case for these people since most of
them after their death will not be remembered for any equivalent span of time.
Men like Tipu Sultan stride on the canvas of history painting it with their
exploits and achievements which are relevant for that day and age which lesser
mortals should not try and undermine. Give the man his Jayanti since Tipu
Sultan fully deserves it.
The Demonetization Mess Continues Unabated
The senior ministers in the BJP like Rajnath Singh are toeing
the instructions of the PM to defend the demonetization measure but the way they
come across to the media, everyone seem very defensive about the whole thing.
They proffer lame-duck arguments which from their sheepish manner it is
apparent that they are not convinced about the benefits and the manner in which
the whole thing was done. While quoting the thousands of crores that went into
terrorism and counterfeiting that has been now saved by the demonetization measure, they are missing the point
that the country is losing at the rate of Rs. 25,000 crore a day in GDP and
this figure is increasing as the days pass by with more and more sectors of the
economy facing the cash crunch. A loss in GDP means people’s productive output
is coming down which translates into livelihood issues for the people. As we glance
across India the non-availability of cash is hurting all sectors and as time
goes by the impact will be more widespread and go deeper and deeper. By
conservative estimates it is indicated that the cash situation will take at
least 6 months to normalize given the production capacity of our currency
printing presses to print new notes. By that time one does not really know what
India’s economic position will be? It is going to be uncertain times.
On the back of
drought in two consecutive years the Indian economy was looking up a bit with
the better than normal monsoons across the country this year. The farmers with
better crops were looking at more money in their hands. But then on Nov 8th
the ‘manmade drought’ struck on the instructions of PM Narendra Modi and 87% of
the notes in circulation at one stroke became worthless pieces of paper. The
people were nonplussed with this development that was projected as benefiting
the poor by eliminating black money. But it is the poor and the weaker sections
and the villagers in rural India who have been the hardest hit. They actually do not know whom to turn to.
In all this exercise
there seems an ulterior motive to benefit certain lobbies. With the scarcity in
cash and the Rs. 2000 note a decorative piece in the hands of consumers, small
traders like grocers, fruit and vegetable vendors essentially small businesses
have been hard hit. Where perishables are involved the sellers are reducing
their stocks for fear of the stocks rotting. The same applies for grocers who
have reduced their stock holdings by 50% to match the number of customers
coming in with spendable money. Thus if the cash crunch continues for another 6
months, there will not be many of these small businessmen around having been
forced to shut shop. Where are the customers going that used to go to these
businesses? They are going to the big departmental stores and shopping malls
where they claim they are able to get change for the Rs. 2000 note or who
continue to accept the old Rs. 500/1000 notes. Thus the demonetization has
sounded the death knell of small traders and businesses who will find it
extremely difficult if ever things become normal again in the trade. Thus is
Narendra Modi cultivating the big stores and mall promoters lobby at the cost
of the small businessman?
On 9th
& 10 th Nov full page ads were taken in national newspapers by PayTM and
others suggesting the alternative to no cash in people’s hands. These ads
carried the smiling visage of Narendra Modi indirectly asking people to support
PayTM and other cashless money providers and electronic wallets. On the back of
a similar ad by the Adani group a few months back this is the first time in
free India that the Prime minister is plugging for a private operator and obviously
seeking acceptance and contributing to his profits. This was clearly bad form
and Narendra Modi should have avoided these ads irrespective of how much he can
re-iterate that he cannot be bought but people will think otherwise. The cashless
operation will work in metro centres where the people are IT savvy and
comfortable in using PayTM or mobile wallets. In the rural sector where
literacy and education is deficient and street savviness is non-existent, these
mechanisms will not work. Moreover the network coverage is not reliable for
assured transactions that will go through. Moreover Indians prefer a paper
trail for any on-line transactions to avoid the deniability of the payment
receiver. If acceptance of cheques has not taken off for payments within cities
because essentially the trust factor is lacking between the buyer and the
seller, how wil higher orders of transactions work. From statistics of cheque
bouncing and comparing this with developed countries you can get an idea of why
cashless transactions of the simplest variety of cheque payments has not worked
in India.
The demonetization has not been able to curb the
black money since many of those who possessed whatever little they had of it in
cash have been able to transfer it to gold or have had it converted through
‘currency mules’ and or deposited it in the banks either their own or benami
accounts or Jan Dhan accounts. What demonetization did was to make
counterfeiting void and wiped out funding of terrorism , both cross-border and
local Maoist inspired. But both are temporary phenomena since these people will
find a way to duplicate the new notes though given the better technology used,
it may take them more time. The same applies to terror funding where again they
will find a way. Even black money will rear up its head again in an uglier
avatar since the present measure has not been able to dent it much.
But the major
unanticipated benefit which Narendra Modi and his financial advisors did not
expect is the bonanza of money flowing into the banks as deposits. This amount
at last count was Rs. 5 Lakh Crores give or take a few Lakh crores which would
have been taken by way of conversion of old notes. Even then this remaining
amount is a sum that is bringing a smile to every banker’s face. This amount
also shows how much cash cushion each Indian keeps with him for a rainy day not
wanting to trust the government or its banking system. There is a credulity gap
in the system somewhere. In any case with these funds available with the banks
they are looking at reducing the interest rates. Thus the benefits of the
demonetization has been to the banking system which were reeling under losses
because of NPA’s have suddenly turned profitable. The higher capitalization
requested by the banks to the government which the latter was hesitant to
provide has arrived now like manna from heaven. The banks can clean out their
books of the NPA’s now since the amounts of deposits received and the NPA’s are
equivalent. Thus like we saw lately that
the Rs. 8000 crores owed by Kingfisher Group to SBI was ‘written off’, we will
have other NPA’s being written off also. This will mean that industrialists
benefited from the demonetization and not so much the poor and the weaker
sections of society contradicting PM Narendra Modi’s position on the issue.
This therefore requires that the PM’s promise is restored and that is why these
rumours now floating around that Rs. 10,000 will be deposited in each
Zero-Balance Jan Dhan accounts. That is if Modi can find any Jan Dhan accounts
with zero-balance since a couple of months ago the bank personnel were putting
Rs. 10 into these accounts from their pockets to show that these were operative
accounts and the rest of the accounts would have been used by the black money
holders to launder their ill-gotten money. But this kind of a gesture will go
well in the run-up to the Assembly elections in UP & Punjab and should wipe
out the travails suffered by these people in going through the process of
exchanging the demonetised note. Again it fits in with the counter to the jibes
aimed against Modi by the likes of RJD’s, Lallu Prasad Yadav who has asked when
the PM is depositing Rs. 15 Lakhs in each Indian’s account that he was supposed
to bring back of black money stashed abroad. Modi can now say that the first
installment is paid to some of the most needy people and the rest will follow!
India Reduced To A Banana Republic & Under Authoritarian
Rule By Demonetization
Politicians and administrators should understand that public
inconvenience should be minimised while implementing any measure. This is what
Narendra Modi and his team should have realised in the context of the present
war against black money and the demonetisation of the high denomination notes. The BJP has to comprehend
clearly that no one is or very few are against the demonetization measure. It
is in the manner of implementation which everyone is unhappy about. Could the
process not have been better managed is what is on everyone’s lips? Re-emphasising
secrecy to explain away the problems is not going to work since on such matters
secrecy is vital but it does not mean that you implement and then ham-handedly
go about solving whatever problems emerge or come forth. That essentially has
been the government’s response - very much reactive rather than be top-down and
driven by the government. Thus you will see that the limits for exchange were
raised by a mere Rs. 500, the weekly bank withdrawal limits were raised by Rs.
4000 and the one time withdrawal limit of Rs. 10,000 was withdrawn. These are
just very cosmetic changes. Then again the exchange limits for the old notes
was reduced to Rs. 2000 for Sat, 19th. There are rumours like the
ATM withdrawal limits going up to Rs. 4000 from the existing Rs. 2000 from 19th
Nov is not going to happen. That one will be marked with indelible ink at the
time of exchange of the demonetized notes, that one can draw Rs. 2.5 Lakh one
time for a wedding by a family member. Little do the authorities know that the
marriage funding will again be misused. What is
the proof that is required to be shown to avail this facility? If it is printed
wedding invitations, it is quite cheap to print cards so that one can obtain
Rs. 2.5 Lakhs in cash. Thus you will have a spate of weddings that will not be
performed but created to just avail the cash facility.
That farmers considering this is the sowing period will be allowed to draw Rs. 50000. against a sanctioned loan. If you see all these latter measures are absolutely reactive confirming that the policy makers at the time of the announcement of the demonetization did not take all this into account. That is the general story that for not doing their homework properly the government has to run around haphazardly like a chicken with its head cut.
Gujaratis are
known to be street smart and resourceful persons thoroughly familiar with
business But Narendra Patel, Amit Shah and Urjit Patel do not seem to be of
that ilk since otherwise we would not be in this unholy mess. One needs to say
here that if Raghuram Rajan had continued as RBI Governor maybe nothing like
this would have happened and/or this process would have been managed better. It
does not need a mathematician to tell Narendra Modi that the exchange of
demonetized notes set at Rs. 4000 initially should have been given with
1xRs2000 + 4xRs. 500 which would have ensured that people had spendable money
in their hands and this cash crisis would never have emerged or it would have
been there to a lesser extent. But where was the new Rs. 500 note? It was not there then and even after more
than a week having passed 8th Nov, it has not been seen to
sufficient volume. In the answer to that question is the solution to the chaos
that has been spread across the country.
Consider how the
exchange of the demonetized notes was implemented. People were asked to go to
the banks with an id and allowed to exchange up to Rs. 4000. Though it was
clarified that the exchange facility was being given only once until Dec 31,
the loopholes of multiple ids specified that the same person could go to
different banks using one id card at a time and exchange a total of Rs. 20,000
or more. The banks were also helpless since they had no clue if the person
exchanging notes had availed of the facility earlier. This lacunae was exploited
by common citizens as well as the black money holders.
The latter employed currency mules to convert as much of the old notes as they
could. The government had in fact made it easier for the black money holders
since with the Rs. 2000 notes their storage space had been more than halved! Also the fact that
a huge number of Jan Dhan accounts were available whose holders were ‘willing
and purchasable’, black money was pumped into these accounts with the
philosophy that – Do it for now, we will look at the consequences later! (Ab
ke liye karo, baad me dekha jayega!) Thus where these accounts should have
been used as an advantage to implement the measure, they facilitated the black
money holders to exploit them.
Consider the chaos
that was witnessed during the first few days and which to a degree is still
continuing. If people had been asked to report to the branch of the bank where
they have their accounts where the exchange of the notes would be done then the
rush at the banks would have been less. The exchange of the demonetized notes
could have been done on the basis of the account holders id, his passbook and a
declaration that in case of his possessing another account with another bank he
would not avail of the facility to exchange the notes at the other bank. The
demonetized notes could have been deposited in the account holder’s account and
he could draw the new notes from it. The account holder’s passbook could be
stamped with date by the bank to identify of his having availed the exchange
facility. Those having accounts at the post offices would be allowed to
exchange their notes similarly. Again all those who are not in the banking
system and who do not have a account at any bank or post office could have been
directed to a number of centralized places operated by the bank handling the
treasury chest in that region. It could be an off-line place of the bank like a
regional or administrative office which is located close to the treasury chest
to facilitate easy money transactions. The person coming in for exchange apart
from the id proof and filling up the requisite forms could be photographed at
entry and marked with indelible ink at the completion of the transaction making
him conscious that he has been identified as well as marked, negating or minimizing
the possibility of his coming again. This method would have isolated those who
are maybe in cohorts with those having black money and using others to exchange
money multiple times. Was this something
beyond the knowledge of our banking personnel, RBI and Finance Ministry
officials? It is not that. The situation seems to be that Narendra Modi
consulted very few competent and knowledgeable people and decided to wing it on
his own. The result is for all of us to see and that is that Narendra Modi fell
flat on his face on the ground.
This is pretty
much the opinion that Narendra Modi himself has, one would think since
otherwise after having implemented such a stupendous and earth-shaking measure
why has he gone into hiding? He should have appeared in Parliament and with his
56” chest proudly told his colleague legislators of what he had done.
Other than these
things there is something elusive about why the demonetization measure was done
suddenly on 8th Nov. Why the sudden urgency? Why as it has been stated
did not Narendra Modi not wait till the New Year of 2017 and launch it when all
new notes particularly the Rs. 500 denomination would have been available in
sufficient number? The scenarios in this are many. Let us consider the first
which is our PM Narendra Modi’s event management style. He always wants a dhamaka
irrespective of a few people getting hurt or dying, 40 or more at last count, in
that process. Thus the demonetization measure was an unprecedented move and
right before Parliament meeting on 15th Nov, allowing Narendra Modi
to take credit for the demonetization measure. Unfortunately that did not
happen and the BJP has been mouthing the same platitudes of the advantages of
demonetization with its back to the wall. As for the 40 or more people who died
because of the crisises, ranging in age from babies to elderly people, because
of the demonetization, Narendra Modi as PM should apart from paying their
families compensation, fast for one week to atone for the lives lost. This will
teach him that leaders should govern in such a way so that people suffer the
least. Sacrifices should be called for at the time of natural disasters, acts
of God and in times of war but not when leaders because of their incompetence
heap misery on the people that they rule.
The second scenario
is that information about the demonetization measure had been leaked out and
had reached the black money holders and even a single day’s delay would mean
that the measure would fizzle out. Thus Narendra Modi went ahead with it
without waiting for the crucial new Rs. 500 note which was required along with
the new Rs. 2000 note. So it was a limited gain scenario.
The third scenario
is that the BJP as a party and its members are not devoid of possessing black
money. Thus the slipshod and ham-handed operation for exchange of notes as
above was implemented giving the BJP people also time to convert their black
money. Evidence pointing to this being true is in the incident where the Bengal
BJP deposited Rs. 8 crores or more into the bank on the 8th Nov and
minutes before the PM went on air. Further proof is that a BJP Minister in
Maharasthra has admitted that the amount of close to Rs. 1 crore in the
demonetised notes seized does belong to him. No other political party or its
people have yet been caught with the demonetised notes. There have also been
rumours that Adani and Ambani had been given information on the demonetization well
in advance.
These are only
guesses and we will have to wait and see if ever the truth on this comes out.
Thus when dawn
broke on two successive days on 8th and 9th Nov 2016 in
India, the first day was when everything was normal and the 125 crores of
Indians went about their normal lives but as the day progressed and evening came,
a fury was unleashed on India in the form of the demonetization of the Rs. 500
and Rs. 1000 currency notes wiping out whatever little money the people had and
making them paupers. On 9th Nov 2016 with banks being closed the Indians did not know whether
they were a banana republic located in the Carribean or South America or one of
the countries in Africa once called the Dark Continent since they found that in
these times of high inflation and cost of living zooming skywards, a financial
Emergency had been imposed upon them. Since the 8th Nov 2016 and
until date every Indian has found that he is unable to withdraw his own money
from banks for legitimate expenses be it for medical expenses, family functions
or weddings and is being told that today you can get only this much and do not
ask any more during this week. This makes every Indian feel that we have become
an authoritarian Communist country behind the Iron Curtain where all resources
including money belongs to the government. Toad in India if one raises his
voice in protest he is branded as a black money holder and anti-national to
boot since morality and patriotism is the exclusive preserve of Narendra Modi
and the Bharatiya Janata Party members.
This, my friend, is the country you are living in and one may say that
things will only become better but one never knows with Narendra Modi promising
more ‘action’ after 31st Dec in the war against black money. How you
or I are going to be affected, God only knows!
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