VOX POPULI
by
S Kamat
as
Aam Admi
Issue: 176 Date: 14.11.2016
Contents:
1. The Demonetization Measure Getting All The More Hilarious
2. Narendra Modi Had Better Get Down To Brass Tacks
3. Demonetization Exercise: A Trust Deficit Emerging
4. The Fiasco Unleashed On The Aam Admi By Demonetisation
The Demonetization Measure Getting All The More Hilarious
Narendra Modi has correctly said that there is no pulling back of the demonetization measure. That time has passed and now there is no alternative but to go forward. Repealing the measure will only complicate the exercise making a bigger mess than existing.
But Narendra Modi should cut out the hype and the fear factor from his speeches. He should objectively go about resolving the issue of cash availability to the public so that the demonetization exercise works. Talking about counterfeit notes flooding the country from Pakistan or the drug syndicates using black money to undermine our society and that those who are in the possession of black money being out to kill him and maybe ‘burn him alive’ is completely avoidable rhetoric. In the first two instances are we as a country so weak so as to succumb to these threats? In the last where no verifiable threats exist, it is irresponsible on Modi’s part to raise these issues to sway people’s minds. Moreover such statements are not Prime Ministerial and Modi should cultivate some decorum to project the correct image. The problem with Modi is that he is always in election mode and governance is the least of his concerns. That is exactly why the country is in the mess that it is today. Any act of governance by Modi’s government has been marred with avoidable controversy which raises questions on his ability to govern. Even with the demonetization exercise, if Modi and his team had applied their minds properly to the issue then it would not have turned into a fiasco that it is progressing into.
As for the demonetization exercise being done for the poor, that is not exactly the whole truth. Modi is taking the advantage that the poor are ill-informed and also innocent and is essentially acting like the Pied Piper of Hamelin leading his rats over the cliff. If you notice in the BJP it is only Modi who talks about the poor while everyone is oriented towards benefiting the urban middle class and the wealthy. So is this a strategy to use their strongest draw in the form of Modi to eliminate the poor. That would be a very sad day indeed!
Consider the Indian economy just prior to Nov 8th. The performance was indifferent and people’s expectations for it to improve were high. Moreover inflation was rampant and rising continuously. So effectively what did the demonetization exercise achieve in this last one week. Trade and business was hit severely with the sudden withdrawal of currency from people’s hands. People have been making a beeline to banks to withdraw their money leaving their jobs and work. Does this not affect the functioning of establishments, both government and in the private sector? Does it not impact the productivity in the economy? By any yardstick, one is not very wrong, if one says the India has been brought to a shuddering halt because of the ill-conceived manner of this demonetization. The economy has clearly been hit and will take some time to get over this setback. The TMC has put the loss of GDP in this last week to Rs. 1.5 Lakh Crores. And mind you we are not seeing the last of it. The show will continue until Dec 30th, when Modi has promised a second act of the drama. So be prepared for turbulent times to get at your own hard earned money.
The fact that the demonetization measure was not properly planned is evident from the latest advice that people will be marked with indelible ink at the banks when they exchange the old notes to stop them from coming around a second or multiple times to exchange notes. One wonders whether we are a developing country aspiring to become a developed one since marking your people to identify them one way or another is harking back to medieval times or negating the principle of democracy since such measures are used for convicts or concentration camp inmates. This is being stated because this is your own money and which when you go to exchange you are marked as would a common criminal. The Portuguese used to do this in Goa during their early rule when the locals were asked to wear a particular type of headgear so that they could be easily identified. Assuming the marking with indelible ink is done then what about places where elections are likely? Will the government use different colour inks – one for election purposes and another for currency note conversion! We are surely progressing and pretty fast to the regime of Cho Ramaswamy’s Mohammed bin Tughlaq!
All in all the ability of Narendra Modi and the BJP to govern is suspect and the more they attempt it, the more hilarious the situation is becoming as represented by the demonetization measure. There are many who have great ideas but there are few who have the ability and competence to translate those ideas to action. This is one department which people like Modi are not the members of.
Narendra Modi Had Better Get Down To Brass Tacks
One thinks that Narendra Modi should cut out the drama and get down to brass tacks to solve the problem created by the demonetization exercise on 8th Nov 2016 launched by him. By his own admission there are only a few lakh persons involved in accumulating black money and if so, why is the whole population being punished. Could he or his brilliant advisors not have come out with specific measures to target only those involved with black money? Again as per statistics put out by his own government during raids on persons possessing black money only 5-6% is the amount that is recovered in cash. If so why all this tamasha of demonetization since effectively only 0.5 – 0.6% of the black money is what is being targeted. There should therefore have been some other method in this madness which has been unleashed on the whole country since 8th Nov.
In any case, with the latest announcements that the new Rs. 500 note is likely to become more available and the easing of withdrawals from bank to Rs. 24,000 per week without the limit of Rs. 10,000 at one time as it was earlier, things should ease the crowd at the banks. Further the revised limit of Rs. 2,500 at one time for ATM withdrawals should also ensure that some spendable money is in the hands of the people even after the ATM is modified to accept the new Rs. 2000 note. Otherwise the worry was that you would get a single note of Rs. 2000 for the ATM withdrawal leaving you essentially in the same position vis a vis spendability but with the comfort that you at least have some legal money in your pockets.
The problem has been that those involved in policy making and advising Narendra Modi have no idea of what is happening at the street level and what impacts the common man. With Indians there is a certain degree of comfort that you get to have some cash at home. This is kept to take care of unforeseen needs and emergencies. The amount of this cash may vary from individual to individual. Also high denomination notes like how the black money hoarders prefer it are also preferred by common people who apart from the above reasons may have no access to the banking system. All this is not black money but hard earned money of the aam admi. The present crowing and exultation expressed by the banks that since 8th Nov they have in total received more that Rs. 300,000 crores in bank deposits may not all be black money. In the majority, the perception is that Narendra Modi’s government is like a bandit who on 8th Nov in one fell swoop stole all the money available in the hands of citizens and is continuing to still make it difficult for people to withdraw their own money.
Modi has also been saying that the aam admi is with him in the demonetization measure. It is suggested therefore that the government should conduct a survey over the next 7 days at the various banks where people have been collecting and let him see what the reality is. They will say that they are with him on the fight against black money but are very much against the way this demonetization has been done. No one is against the drive against black money but Narendra Modi and his colleagues in the BJP should not paint everyone who is coming out criticizing the government, that these people are mouthpieces for the Opposition parties or are possessing black money. This way they are refusing to see reality. This happened the earlier time, some 10 years ago, when the BJP had come out with its India Shining campaign just before the general elections and India was not shining. The result was that the BJP lost in the elections badly. Thus if Narendra Modi and his government continues to make a mess of simple things then they will have to say goodbye to winning any more elections in India.
The worst part is that whenever anyone is raising his voice against this demonetization or any other measure then the BJP and this government moves into a threatening mode. They should do this to those who are the perpetrators or offenders like against the 10% of the people who indulge in black money. They deserve it and in fact the government should not be a paper tiger but go after them with hammer and tongs. But please do not threaten the 90% of innocent people and put them into difficulty as done now, since it is this 90% which can make a difference come election time. As to Narendra Modi seeking 50 days time for the demonetization measure to resolve itself, that is too long a time and in fact confirms the fact that he did not know what he was getting into in the first place. Many of the people may not also be around given the number of deaths caused by the non-availability of cash. Since the 50 days synchronises with the first week of Jan 2017 which was what was the recommended time for the demonetization measure. The nation would like to know why this was preponed to 8th Nov.
Narendra Modi going emotional on this is also another sign that he was unable to gauge the problems that would emerge and is therefore now tugging at the hearts of women and the gullible poor. That is not going to work this time. This is clearly a failure of the government and he has to address the nation and come out with a clear-cut apology on this and rectify the situation as soon as possible. He claimed in his speech, he gave up his life, his home and his family for the nation! Putting it simply, the country would have been better off if he had not done that. Since any more gaffes at this scale are not going to be acceptable. He has said that after the 50 day period is over, there will be new measures to fight black money. These had better be thought out with more reason and implemented with more sensitivity if the aam admi is to be affected.
Demonetization Exercise: A Trust Deficit Emerging
Since 8th Nov, 7 persons have died: 3 in Kerala, 1 in Andhra, 1 in Bengal and 2 in Maharasthra., which are related to the demonetisation, either while standing in queue to exchange old notes or for not understanding the issue properly and in frustration resorted to taking their lives. These are the martyrs to black money. Will Narendra Modi and his government pay their families compensation for the sacrifice? One would presume that Modi had not anticipated this kind of outcome from his resolve to wage war on black money.
There has been absolute chaos all across India since 10th Nov. No spendable cash in the hands of the people has become acute which is affecting people’s daily lives because of their inability to purchase necessities. The poor are the hardest hit since their lack of literacy confuses their understanding of the procedure to go through the process of understanding this demonetization. Trade and commerce has been hit because with no cash, customers are not coming in. This has affected perishable food items like fruits, vegetables, meat and fish which are rotting in some parts of the country. With the supply of new currency notes of Rs. 500 and Rs. 2000 denomination not improving there is no end in sight of the chaos for at least another week.
In all this uncertainty, there is also black humour with PM Narendra Modi addressing an Indian audience there which must be Indians settled there, journalists whom he flew out on his plane and Indian Embassy staff who applauded when Modi said that the aam admi is with him on his adventure to eradicate black money! Unfortunately Modi and his Finance Minister, Jaitley are not on the same page since the latter has been trying to talk down the chaos of the aam admi at banks around the country by saying that there is no need to rush and people have time till Dec 31st to exchange the demonetized notes. He was also trying to reassure that the people’s money is safe with the banks. Here again Jaitley is partially missing the point since people are not worried about losing their money but they are rushing to the bank for valid cash to be used to buy daily necessities.
Even in this when they go to the bank they are being given the new Rs. 2000 note which does not solve their problem since the Rs. 500 is not available. The Rs. 500 note has become the note of choice with the high inflation prevailing. It is understood from news reports quoting RBI sources that the demonetization exercise was to be done in the New Year – 2017 when both the new Rs. 2000 and Rs. 500 were to become available in adequate numbers. If so why was the demonetization brought forward to 8 Nov? There are no answers to these questions. If the new Rs. 500 note had been available then a large part of the chaos would have been contained. Thus when people present the new Rs. 2000 for purchases there would have been easier options to give people change. Now the situation is the next denomination after Rs. 2000 is the Rs. 100 and that too is not available in large numbers compelling the RBI to fall back and release soiled Rs. 100 notes into the market. We have to ask which mathematical genius suggested to the PM to go ahead with the demonetization with just the Rs. 2000 note knowing the supplies of the new Rs. 500 note was slack. There is another subtle market pattern that comes to play in this context since if purchases are not close to Rs. 2000 the seller can claim lack of change available and thus force the buyer to buy more. And slowly the sellers will jack up their prices of almost all items except for the labeled MRP items to take advantage of the short supply of change in the market. So much for containing inflation. The way this whole thing has been mismanaged India’s reputation as an economic power has taken a beating and we are equated to any country in Africa and South America.
Jaitley has only now realized in a statement that he has made that 87% of the currency in circulation comprising of the Rs. 500 and Rs. 1000 notes to be replaced is a huge l;ogistical exercise. Why, did he not assess this problem earlier? If the new Rs. 500 note was likely to be delayed, why was the demonetization exercise not pushed back until both the Rs. 500 and Rs. 2000 notes were available in sufficient volume.
Similar lack of the attention to detail can be seen in ATM operation since conflicting reports were being given. The ATM’s were to start working on Fri, 11th Nov, which did not happen in many parts of the country. Even on 12th Nov when some ATM’s started functioning, they ran out of cash very quickly. The ATM’s were also dispensing only Rs. 100 notes which was a good thing but considering that a limit had been set to Rs. 2000 for each person/ bank account, they would not make a material difference in reducing the chaos for currency at the banks. It is also reported that some 40,000 ATM’s out of 150,000 will not work since their software licencing arrangement with a US Co. has expired and it will take a while for this agreement to be renewed. Once again Jaitley has made a statement that the ATM’s will have to be physically modified to handle the new Rs. 500 & Rs. 2000 notes and/or the Rs. 50 note. And this will take another 2-3 weeks. Was all this not known to Jaitley and the RBI and if so did they deliberately go ahead with the demonetization exercise consistently bluffing the public that the ATM’s would function from 11th onwards. This is rather bad form that you say that you are doing this demonetization exercise for eliminating black money for the benefit of the public and in that process continue to fool them. Thus you will see for the ATM’sw to work it will take a little more time. How much? No one is aware!
To put matters in perspective and for the information of PM Narendra Modi and his team who are leading the demonetization exercise, the aam admi is not against the demonetization exercise and the fight against black money but only wished that it had been done better and that the authorities had taken the common public into confidence which would have eased their anxiety and allowed them to go about their humdrum life quietly and without bother.
The Fiasco Unleashed On The Aam Admi By Demonetisation
One needs to understand the numbers involved in the demonetisation exercise to realise the complete immaturity with which it is being carried out. There is no question that demonetisation is one of the methods to combat black money, counterfeiting, corruption and funding of terrorism but any measure before it is undertaken needs to grasp the side-effects that it is likely to cause. The number of notes in circulation by both volume (value) for the Rs. 500 and Rs. 1000 notes were 17.4% (47.8%) and 7% (38.6%). Thus you can imagine that close to 25% of the notes in circulation were withdrawn by Narendra Modi on the stroke of midnight of 8th Nov 2016 which also constituted more than 86% by value of the notes in circulation. In any management exercise we are taught to look at the side-effects and to try to minimise and cushion the impact as much as possible particularly so if you are dealing with a large number of people and that too, like here, the common public. Nothing like this was done and Narendra Modi went the whole hog. That is precisely why we are in the predicament that we are today sitting with some Rs. 2000 currency notes because the Rs. 500 notes are yet to arrive. People across the country are finding it difficult to buy daily necessities and some are being turned away from shops not accepting the old 500 and 1000 notes and some holding the new 2000 notes being forced to buy more or what they do not need since shops are saying that they do not have change to return.
If as it is stated that the Rs. 500 note was being counterfeited more as also hoarded as black money and since it constituted 17% by volume and 47.8% by value then why was only that denomination not demonetised? After the VDS scheme which mopped in amounts far in excess of earlier schemes was Narendra Modi not happy to attack close to 50% of the black money hoards? The logistics exercise wound have been that much less and the 1000 note would have served to tide over the immediate problems that people would have in buying daily necessities. The timing of this exercise may be politically very correct and that is to take the wind out of the sails of the Opposition parties in the UP & Punjab polls, but for the common man it has been disastrous. Just after Diwali when there has been a bout of expenditure and cash levels held by common people are low, you come up with a measure which wipes out 80% of even that by demonetisation and on top of that do not ensure the availability of alternative notes. In the fight against black money it may be a masterstroke but in terms of its impact on common peoples lives, it is a monstrous and stupendous blunder. Narendra Modi should have thought and planned better before implementing this measure. It is unfortunate that the PM was not better advised since we find that even his Finance Minister make a statement at this present time that there is no need to rush to the banks since there is still time until Dec 31. He has no idea that common people are not in a position of influence like he is to get credit from his grocery suppliers and need to pay in cash for their daily necessities. Additionally he compounds that statement by saying that this is a good time as any to see how a cashless economy can work. These are immature statements since India not only lives in its cities but also in its villages and while a cashless economy could work in urban areas it will take a long time to make a difference in the lives of villagers in India's vast hinterland. These are the kind of statements that one would attribute to Marie Antoinette and gives you an idea of the kind of people we have in charge now, who have no idea of what they are doing and are far removed from ground reality ensconced in their ivory towers.
The thing that hurts the most in this whole exercise of demonetisation and the process of exchanging the old notes for the new ones, is that in your own country you are treated like a criminal. Those who live humdrum lives and among them retirees for the money that they have earned through hard work or through savings are treated as if they have stolen the money with multiple forms to be filled, identity proof to be given and their pictures recorded by CCTV! All this for what because 10% of the population indulges in black money and other nefarious activities as above. Was there no other method to tackle these law breakers ? Do our lawmakers lack the imagination and ability to tackle these black money operators/possesors? For these 10% the other 90% simple, common, innocent people are made to suffer. Another aspect is that the black money and other nefarious users of the high denomination notes have always run rings around the authorities and continued to amass their wealth and even now and afterwards they will continue to find a way out of even this present demonetisation. Thus the authorities should have evolved some measure that was smarter than what their opponents can outbeat and implemented that. But the amount of intelligence available in government, as we have seen, is very limited and therefore we are in this present predicament. This is the kind of inept, immature and irresponsible government we have that deliberately puts its common citizens in trouble to experiment with the inane implementation of their policies.
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Hi,
I am mailing you the latest issue of Vox Populi to stimulate and encourage discussion and comment on current affairs. If you are interested in responding to any of the issues mentioned in this newsletter you could mail me or alternately post your comment at my blog - skamatblog.blogspot.com or aamadmivoices.blogspot.com. The comment if posted on my blogs will have the advantage of other people who peruse Vox Populi to see your comment and respond to it, if need be. On the kamatblog.blogspot.com blog you can see the back issues of Vox Populi also.
I am mailing you the latest issue of Vox Populi to stimulate and encourage discussion and comment on current affairs. If you are interested in responding to any of the issues mentioned in this newsletter you could mail me or alternately post your comment at my blog - skamatblog.blogspot.com or aamadmivoices.blogspot.com. The comment if posted on my blogs will have the advantage of other people who peruse Vox Populi to see your comment and respond to it, if need be. On the kamatblog.blogspot.com blog you can see the back issues of Vox Populi also.
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There is no catch in this and no payment of any kind is involved, now or into the future. This is being sent, as said earlier, to encourage your comment and involvement in current affairs.
Thanking you for your patience in reading through this.
HAPPY READING VOX POPULI.
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