An ardent observer, analyst and critic of politics and current happenings. Truly believes in human equality, poor and peasants have first right on resources, and rule of law essential in a democracy.
Here are my reflections and collections. Follow me on Twitter @nharshakumar
Pre-poll surveys might still be leaning towards Modi, but the recenthighly ratedRBI's Consumer Confidence Survey tells another tale. The survey was conducted in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi, has showed that 48% of the citizens believe that the Indian economy has deteriorated in 2018 from the previous round. On general economic situation, income, spending, employment and price level about 48% felt the general economic situation in May 2018 was worse than a year ago and 32% perceived an improvement.
Households in general were pessimistic about the employment situation, with 44% of them feeling that it has actually worsened. An aggregate of 51% have said that do not expect any change or expect employment prospects to deteriorate in the coming year.
Over 88% felt that the general price level has increased and over 83% said they expected it will keep increasing in the coming year too.
The proportion of households expecting their spending will increase in the next one year remained almost unchanged at over 83%.
Modi government is facing a flak on the price situation as continuously increasing petrol and diesel prices have led to a spike in the rates of almost all essential commodities and transportation.
GDP grew at 7.7% in the Q4 FY18, the fastest pace in seven quarters, aided primarily by sustained government spending. While private investments are struggling to recover, slowing of private consumption (54.6% against 59.3% in the previous quarter) the main growth engine, is also a cause for concern.
Even though the government has been patting its back on bringing down inflation, 79% of respondents felt that it has actually gone up. Many respondents felt that the prices have increased and will continue to increase going ahead. About 83.8% expects food prices to rise in the next three months as against just 77.2% a year back.
Retail inflation, measured by the year-on-year change in the CPI, rose from 4.9 % in May to 5% in June, driven by an uptick in inflation in fuel and in items other than food and fuel. RBI Governor Urjit Patel says RBI needs to maintain inflation at the legislated target of 4%.
One of the major pointers towards a slowdown is the fact that people's incomes have remained stagnant. 48.9% households said that their incomes have remained same, it has gone up for 27% and gone down for 23%.
And even though incomes have declined, spending has shot up. People are spending more on essential items. For 85% spending on essential items has gone up, while for 52% it has gone up on non-essential items.
Earlier in June 2018, Piyush Goyal, finance minister in-charge, dismissed the RBI's consumer confidence survey findings. "I think the facts speak for themselves, with 7.7% growth. Some people with blinkers on seem to have come out with a report that does not gel with reality then I have no answer to them, but there will always be some naysayers in this world,” he said.
Modi's fake data wont work anymore. He must stop spreading false data and
take action or should say BJP do not have good finance knowledge and
hire experts where ever they are available ... A citizen
The BJP will not enjoy the tail winds it enjoyed in 2014 in the next elections. However, a lack of hope that the economic situation will improve significantly in the next one year. Economic mismanagement is an important opposition charge. Still the electorate has not placed its bet on an anti-Modi campaign, like it did in an anti UPA campaign in 2012. A status quo in these trends suggests it may still be advantage BJP in 2019 at a time when the opposition is banding together. It is good that institutions are coming out of Modi's evil influence in spreading fake data. Needless to say that present situation is as bad as it was in 2013-14, the last year of UPA's 10 year regime. Majority people not expecting any improvement in economy indicates their loss of confidence Modi's capabilities and could spell doom, in 2019 elections, for Modi & BJP.
Amidst reports of a cash crunch from different parts of the country, Union Finance Minister Arun Jaitley said the government was “tackling the issue quickly” to overcome a “temporary shortage” caused by a sudden spurt in demand. But the truth is that almost all ATM's in the country didn't go dry overnight. In most places ATM's were short of cash since 3 months. And RBI claims that its vaults had stock of over Rs. 2 lakh crores of currency. Only our Lutyen's Nero's deliberately ignored as a step towards less cash society.
Cash is coined liberty, fundamental right of citizens. Cash is a form of wealth and citizen's right to hold their wealth in any form can't be constrained.
As long as people are poor and less educated and governments are irresponsible, inefficient and blatantly corrupt in public spending, efforts for cashless transactions or higher tax realizations will be thwarted by its citizens.
While the shortage of currency is about Rs. 70,000 crores as estimated by SBI, RBI vaults stocked over Rs. 2 lakh crores of currency to meet any contingency. But deliberately, this was not put to use and people were subjected to hardships during past 3 months. Who is responsible for this mess?
While 130% cash withdrawals compared to cash deposits for any bank is normal, last few months banks experienced more 200% cash withdrawals. This could be attributed to crop harvesting season, marriages, elections in some states etc. which are well known.
But the most prominent reason is that people are exhibiting loss of trust in Banks due to high NPAs, centre's draft FRDI bill with 'bail in' clause and centre's reluctance in not increasing deposit insurance amount from Rs. 1 lakh per depositor (fixed in 1990's) to proposed Rs.10 lakhs per depositor.
FM Jaitley has attributed the situation to a "sudden and unusual increase" of cash in "some areas". Which areas? Poll-bound areas? Why? Nobody is answering that and nobody is clearing the air on what could have caused the "unusual increase".
One reason could be that since all the ATMs have not been recalibrated to dispense the new Rs.200 and Rs.50 notes, while at the same time Rs 2,000 notes are being phased out (speculation only), cash is finding it difficult to make its way to the people.
Modi & Jaitley must understand that the government is duty bound to provide as much cash as people want and the government and the RBI cannot arbitrarily control the supply of cash to pursue their ulterior motives. People hoarding cash only reflects their loss of faith in government, RBI and Banking system. If they can't provide even printed fiat currency, Modi, Jaitley and Urjit Patel are unfit in their positions and must be ejected out.
Prime minister Narendra Modi has applauded India’s latest budget delivered by his finance minister Arun Jaitley, but the parallel chorus is fading out by the day. It was Utrjit Patel, RBI governor last week, this time it’s Modi’s former advisors, Arvind Panagariya, who was also deputy chairman of the Niti Aayog until August 2017. The RBI's monetary policy committee listed out reasons why inflation could stay well above the RBI target of 4% throughout the next financial year. RBI expects a rise in food and vegetable prices, crude oil prices and cost of health and personal care. Three other factors that will likely fuel inflation emanate from Jaitley’s budget.
Proposal to raise minimum support price (MSP) for farm products
Hike in custom duties for various products including industrial inputs
Wider-than-expected fiscal deficit
All this assuming that the south-west monsoon will be normal this year. The future of investments is as bleak as it was before.For Modi government, these nonchalant jabs from the RBI governor it is yet another sign that its populist budget may not help push the growth pedal.
Substantial liberalisation under PV Narasimha Rao and Atal Bihari Vajpayee, India became the first democracy to achieve 8% plus growth for nine years beginning in 2003-04. The top industrial tariff rate fell from 355% in 1990-91 to 10% in 2007-08 and imports and as proportion of the GDP expanded to 30% and exports to 24% by 2011-12. Sadly, a new generation of bureaucrats seems to have now replaced its more enlightened predecessor. It is on course to erect the wall of protection all over again.
Those who cannot remember the past, are condemned to repeat it ... George Santayana
Much is said about liberalisation and globalisation which benefited only one half of the world population while leaving other half in distress. What is visible is the constant economic growth that had eradicated extreme poverty and at the same time helped rich to become extreme rich, albeit unjustly. The casualty is environment, over extraction of non replenishable natural resources and workers with stagnant wages in developed nations. Today, US has accumulated trade debt of $20 trillion, up from $1 trillion during 1980's and has no clue or any forward looking plans to repay that debt and trade gap of $100 trillion is likely in next few decades and is saddled with huge industrial work force with stagnated wages. On other hand, China armed with huge trade plus faces deterioration of social values, degradation of landscape & environment and over exploited 150 million labour force with no human rights for over 30 years. Economics are complex and any change usually has unintended consequences. Over dependence on either exports or imports, for prosperity, is detrimental to any nation. The prudence lies in living within means and/or maintaining manageable trade gap at all times. Economic growth is never a true indicator of progress, development and wellness of any nation.
RBI Governor Urjit Patel's silence on demonetization made him an easy target for critics. Almost all public statements on demonetization were made by economic affairs secretary Shaktikanta Das giving rise to the impression that government had sidelined RBI and usurped its policy role, confining it to mere execution. But the Nirav Modi-PNB scam has forced Patel to shun reticence and speak out on several contentious issues without mincing words.
Patel rejected accusations that the regulator’s laxity was to blame for the Rs.13,000-crore fraud at state-owned Punjab National Bank, suggesting that laws need to be changed to ensure punitive action can be taken in time and effectively putting the onus on the government.
He made a pitch for withdrawal of legal immunity from RBI regulations that PSB's enjoy, saying it had led to considerable emaciation of RBI powers over corporate governance.
Patel made an indirect case for privatisation or reducing the role of state-owned lenders. He said the government should decide what to do with public sector banks if it wanted to optimise the use of taxpayer money.
He asserted that Banking Regulatory Powers in India are NOT Ownership Neutral. He then went on to read out chapter and verse, the list of clauses and sub-clauses from the legal landscape to underline the helplessness of RBI when it came to regulating public sector banks, which account for nearly 70% of Indian banking.
Making this worse is the persistence of delays, of criminal investigation and judicial process. The Governor points out that “RBI data on banking frauds suggests that only a handful of cases over the past five years have had closure, and cases of substantive economic significance remain open. As a result, the overall enforcement mechanism is not perceived to be a major deterrent to frauds relative to economic gains from fraud.”
Nearly nine months later – after two rounds of selection meetings – the Deputy Governor’s post is yet vacant.
RBI is faced with constraints. It cannot act to remove directors or the management of public sector banks. But does it need the ultimate power to prevent malfeasance? The RBI is empowered to give directions where it is in the public interest. How often has that been deployed? Has the power of inspection been utilised? A call for more power is not a credible demand when existing provisions have not been leveraged.
RBI said: “The risks arising from the potential malicious use of the SWIFT infrastructure” has been a risk factor and it had “confidentially cautioned and alerted banks” on three occasions since August 2016 and added, “Banks have, however, been at varying levels in implementation of such measures.” But RBI never cautioned savers about these risks in the banking systems.
He said, “If we need to face the brickbats and be the Neelakantha consuming this poison, we will do so as our duty. We will persist with our endeavours and get better with each trial and tribulation along the way." He went on to saying that promoters and banks should seek to be on the side of the devas (the gods) rather than asuras (the demons) in this amrit manthan.
Despite his image of a reticent, submissive man, Patel withstood pressures from various sides after demonetisation, stuck to a low-inflation regime, didn't lap up the proposal to create a bad bank and opposed farm debt waivers, calling them moral hazards posing inflation risk and undermining an honest credit culture. With his robust defence of the central bank and castigation of public sector banks, Patel has buried the image of a central banker of few words. And with his mythological references, he has shown he can find eloquence when required.
Responsibility shared by two persons is not 50% each. It is 10% each.
While Bank's proper management rests with the owners (MoF in case PSB's), Urjit Patel, RBI Governor can't resort to offensive in the blame game initiated by Arun Jaitley by invoking mythological comparisons and absolve of its regulatory failures.
Had Urjit Patel shown same courage in 2016, the harebrained demonetization wouldn't have happened and nation would have been spared of its consequences borne mostly by lower class people. These discussions, reasons and advises will be engaging our time and leads to nowhere. While the loot may never get recovered, what is important is elimination of recurrence of such events in future. Urjit Patel must know his responsibility as institutional head never to allow government interference beyond a point and preserve institution's independence and integrity at all costs. Government as owner of PSB's is solely responsible for their proper functioning and the regulatory rules governing PSB's and private banks must be same. RBI's regulatory role in preserving depositors & lenders interests and integrity of banking system can not be compromised.
The RBI dividend paid to the government is the lowest since 2011-12 (Rs 16,010 crore).
The RBI did not provide any reason for the decline in dividend.
Economists said this indicated the cost incurred by the central bank in printing new notes as well as in sterilizing liquidity old currency notes that were scrapped returned to the banking system.
In the Union Budget for 2017-18, the government had accounted for a dividend of Rs 74,901 crore from the RBI and other nationalized banks. RBI’s share would be Rs 58,000 crore.
RBI Governor Urjit Patel told a parliamentary panel that notes not returned remain the RBI’s liability and cannot be passed on to the government as dividend.
The low actual dividends will exert pressure on the government and its fiscal deficit could increase from 3.2% of the GDP to 3.4% this year.
At its peak, the excess liquidity parked by banks neared Rs 5 lakh crore, on which the central bank had to pay them 6% interest. The average daily liquidity absorption continued to remain above Rs 2 lakh crore after demonetization was announced.
The appreciation of the rupee, 6% since Jan 2017, against the dollar depressed returns, in rupee terms, on the RBI’s foreign holdings.
Modi who highlights and bombards on media even smallest achievements are great, will never talk about such negatives. As Gujarat CM he neither owned up responsibility for massacre of over 2000 Muslims nor regretted it. So far, he has not talked about demonetization failure, its impacts and remedial measures taken for mitigating the problems it created to common people of India, especially in Parliament where he is duty bound to do so.
The ongoing farmers' protests in several states across India is the first major mass movement confronting the Narendra Modi government. Unless handled adroitly, the stir could throw up a major challenge to the BJP and Modi's political dominance.
Ever since he launched the high voltage prime ministerial campaign in 2013, Modi remained in perpetual promising mode. Inability to deliver is now beginning to catch up for the first time making the ruling establishment realize that being on a perpetual promissory mode is fraught with dangers.
RBI Governor Urjit Patel's statement that loan waivers add to the risk of fiscal slippage, shrinks dramatically Modi's negotiating space.
Patel's similar warning during UP election campaign was lost in the campaign noises.
The self-created pressure of labeling the dead farmers as martyrs, does not spare MP CM Shivraj Singh Chouhan: For what cause and in protest of whose government?
- Farmers are not the 'other' that can be demonized by militarist or muscular nationalism. - Farmers are not human-rights activists who are constantly arraigned as anti-nationals. - Farmers are not members of a religious minority who allegedly do not ascribe to the dominant culture of the nation. - Farmers are not foreign-funded NGOs who disrupt government by expressing empathy with the downtrodden and agitating people. - Farmers are also not gathering to seek repealing of laws which give security and armed forces the right to quash the fundamental rights of the people. - Farmers are instead intended to be the main beneficiaries of an egalitarian order that Modi proclaims as his credo. - Farmers are the custodians of our granaries and must be applauded for continuing to stick on, despite the odds stacked against them.
The opposition which was derided by BJP as a bunglers' club is suddenly accused of having the capacity to destabilize the nation.
Attempts to prevent Rahul Gandhi from reaching the troubled spots are akin to putting a person on life-support systems. It is up to the scion or other opposition leaders to capitalize on the political opening provided by farmers.
Rare is the case that a mass movement can be imposed from the above; it must always emerge from below. Thereafter, it is up to the opposition parties, whether they can capitalize on it or not.
In the last few days Modi government has been demonstrated as being fallible like any establishment. This farmers agitation may peter out or spread like wildfire. But even if the BJP government succeeds in dousing the flames by offering sops, such a move compels BJP to negotiate this serious challenge. Compared to Modi's 'no dialogue' stance on contentious political issues, this will be a comedown and demonstrate that beneath his tough exterior, Modi too can be forced to grant an extra quarter.
The farmers' strife in MP is worrying for Modi and BJP because the state did not have poor monsoon last year. It was blessed with a bumper crop. MP is also not a poor state and has registered high agricultural growth over the past several years. The agitating farmers are not the poorest in the state. In the past one year, every five hours one farmer committed suicide in the state due to distress stemming from accumulated loans and the glut in the market. The government has to give serious thought why, in state after state, bumper production is proving itself to be a bane for farmers.
Agricultural policy focused on means to increase crop yield but not farmers' livelihood concerns. The government's fiscal health has been its principal worry, not the farmers' balance sheets. The policy of announcing loan waivers periodically is faulty. Analysis is required to examine reasons for repeated default.
It's a truth that farmers are unable to recover costs with their produce. Agriculture is mostly a loss-making vocation. The BJP promised to implement recommendations of the Swaminathan Commission's suggestion to ensure a minimum of 50% profits over the cost of production. This assurance by Modi was clearly aimed at wooing the farmers. Unless a comprehensive strategy to ameliorate the lot of farmers is formulated, the BJP will pay a heavy political price for its deceit.
Modi can lose sight at his own risk. The BJP's traditional support base is not rural India and farmers. Yet, they voted for BJP mainly on the strength of Modi's promises and his mesmerizing presence. Three years is a long period to initiate steps and provide evidence of sincerity.
Farmers are clearly a disgruntled lot and accusing them of taking cues from the opposition will indicate the BJP is behaving like the proverbial ostrich.
If a free society cannot help the many who are poor,
it cannot save the few who are rich ... JFK
My View:
During past 25 years, it is a standard pattern for politicians to talk about poor & peasants to win elections and once in power or opposition these leaders behave like brokers/dealers for rich, businesses, contractors etc enriching themselves. Their princely & lavish lifestyles is all the more disgusting. Farmers and poor received some sops say up to 10% of govt spending and remaining knocked off in the name of development, of which less than 25% gets capitalized and more than 75% finding way into pockets of politicians, industrialist, businessmen, and bureaucrats. While educated flourished with global opportunities, businesses flourished with obliging politicians, poor & farmers were left behind and suffered poverty. For alleviating agriculture from debt relief, mechanization to reduce expenditure, land reforms for viability of fragmented land parcels, quality inputs (seeds, fertilizers & pesticides), micro irrigation & water conservation, organic farming, warehouses & cold storage, efficient markets, food processing industries and many more - much needs to be done and so far what has been done is minuscule. A 10 year focused plan including retraining of rural labour with an investment of Rs.3 lakh crores per annum for 10 years is the need of the hour. Otherwise we will be doomed as a nation.
Not withstanding the stated demonetization objectives by Modi such as black money, fake currency, corruption and terrorism financing, Modi's eyes were only on expected unreturned black money estimated at 21% of demonetized currency i.e. Rs.3.19 lakh crores, as detailed below. After demonetization expenses, the clear profit was expected to be Rs. 3 lakh crores. In his affidavit Attorney General informed Supreme Court that they expect about Rs.5 lakh crores of black money which would not be deposited by black money hoarders during the period Nov 8 - Dec 30, 2016.
Cash in circulation Rs.17.65 lakh crores
Demonetized currency 86% i.e. Rs.15.18 lakh crores
Extinguished currency 21% i.e. Rs.3.19 lakh crores
Modi needed this much money to induce funds into cash strapped public sector banks whose NPAs doubled in the previous one year and their day to day operations are under jeopardy and also to reduce budget deficit since their lobbying for ratings upgrade by agencies from near junk status was rejected and declined to budge citing concerns over the country's debt levels and fragile banks and stated that ratings upgrade for India was some years away, depending on the progress on reforms.
After ascending to power in 2014, riding the 'anti congress' wave, Modi with charismatic and dramatic speeches had engulfed 'middle class segment', who generally live in total disconnect with the realities of rural and lower strata's of society, made them believe that he is Messiah to save save the nation of all its ills and steer it in the direction of development. But in the past 30 months he didn't do anything except hammering past blunders of Congress and enjoying foreign jaunts. Now saddled with all round political & economic failures and, midway he is under pressure to unleash some daring action to win forthcoming five state elections and President & Vice President elections. He was impressed with a 'quack economist' presentation of demonetization and tax reforms, with out getting it evaluated by experts for its veracity and impact on the common man, he saw an opportunity to resolve all his problems in one go and unleashed secretly hatched, unprepared, high risk & wild gamble of demonetization within two months bypassing and destroying institutions like RBI, Ministries and Departments, without even pretense of process of law. Ironically, demonetization was not an economic tool to achieve any of these objectives which would seemingly do good but inflicts unbearable direct and collateral damages.
These were the main reasons and all other things told rhetorically by Modi was 'bakwas'.
After dramatized high pitch announcement by Modi on Nov 8, 2016 that with demonetization he would save the country from the menaces of black money, fake currency, corruption and terrorism financing, but with in days it was clear that it was a monumental debacle with inept cash replacement arrangements resulted in crores of poorer section people loosing their livelihoods and ending up in serpentine bank queues. Stunned with this Modi invoked 'patriotism' like a scoundrel and demanded that people bear the brunt for 50 days. Some days later he shifted goalpost from 'black money, fake currency, corruption and terrorism financing' to 'cashless economy' which would expand 'formal economy' and shrink 'informal economy' and higher tax realization would accelerate development.
What he has not told is that informal sector will stand to lose at least one third of its working capital (from black sources) and how that informal economy (with 45% GDP share and 90% employment share) would survive and get funded by banking sector.
What he has not told is that 'cashless economy' which is at least 10-20 years away, due to 'infrastructure defects & constraints' and will involve holding and usage costs unaffordable by lower class people of India.
What Modi has not done is that the moment he realized demonetization landed in fiasco subjecting crores of poor people to hardships he should have initiated mitigation measures and instead went ahead with resolution at least six months away. All that he has done is demanding suffering for 50 days, in the name of patriotism. Except some hollow speeches, nothing else.
He was remorseless for people sufferings, 100+ deaths of aged and women in bank queues and 10+ bank employee deaths consequent to abnormal work stress.
Over 60 circulars from RBI, often contradicting, indicates thoughtlessness, unpreparedness, panicky management by concerned authorities. Fortunately riots haven't erupted and that is no credit to government.
Modi instead of participating in the mandatory & obligatory parliamentary debate and explain the nation, abstained from parliament and chose to address public meetings, where he need not have to answer any questions, flabbergasted the nation that after short term pain (to poor), long term gains (to rich) will start pouring in, is nothing but audacity of an arrogant tyrant.
Dramatized speeches blaming opposition parties is OK for a political leader to win elections, but as Prime Minster addressing nation must desist from dramas or blame gaming and harping on blunders of previous regimes, but must be truthful to people of the country exhibiting honesty & sincerity of purpose, upholding principles of democracy and defending constitution and laws of the land.
This demonetization which is under the purview of RBI and Parliament, was done with a mere televised announcement by Prime Minister, himself and followed by a notification of Ministry of Finance and without undergoing even pretense of process of law. Purposeless secrecy was taken as a shelter for violation of all constitutional processes.
As PM and leader of parliament, he was responsible for proper conduct of both the houses more than any body else. He took no step for resolving the parliament logjam on demonetization issue except blaming Congress etc. He neither intervened with any statement nor replied to opposition leader Manmohan Singh criticizing the demonetizing process as 'monumental mismanagement, organized loot and legalized plunder'.
Now after passing Dec 30, 2016, it was clear that 97% i.e Rs.14.82 lakh crores of cash has gotten deposited with Banks & RBI leaving just 3% i,e Rs. 46,000 crores, unreturned black money. With NRI's having time upto June 30, 2017, the final figure would be much less.
The expenses for the 50 day period, direct & indirect, are estimated as below:
Direct expenses to RBI & GOI Rs.16,800 crores.
Banks to bear an estimated cost of Rs.35,100 crores.
Cost of queues to exchange currency is estimated at Rs.15,000 crores
Enterprise* losses are estimated at about Rs.61,500 crores. * includes all businesses, farmers, input suppliers, transporters, wholesalers, retailers, manufacturers, stockists and distributors, malls and other retail outlets, restaurants, entertainment and other enterprises.
Total cost of demonetization, during 50 days period, is estimated at Rs.128,400 crores
Total amount confiscated during raids is Rs. 4,000 crores.
With gain of Rs.40,000 crore or less and 50 days expenditure at Rs.128,000 crores, inestimable collateral damages to economy, and crores of workers thrown out of livelihood, bringing informal economy to standstill and impact stories surfacing incessantly for next 1-2 years, leaving all stated problems intact & unsolved with some respite, demonetization is a senseless, politically motivated, one man made, economic disaster.
Insanity is defined as doubling the speed in wrong direction
My View: Modi's ascending to power in 2014, with a massive campaign expenditure of about Rs.10,000 crores funded by his industrialist friends is not without having made massive and horrendous economic & moral compromises. He is neither a saint nor a statesman but a low class politician with deep roots of RSS ideology. Therefore his secret decision of demonetization even though seems to be in national interest is primarily aimed at deriving political benefits. Ironically, it has become a war with gullible common man.
RBI Governor Urjit Patel's perplexing silence sacrificing his & institution's reputation for probity, competence and independence is in tatters indicating that he was not consulted but just asked to implement. Any institution can be independent in its functioning to the extent elected executive desires. In this case Modi & co just bulldozed them.
A 'good policy badly implemented' is worse than a 'bad policy well implemented'. In short, we are in a massive mess. Demonetization move would not have any lasting benefits. No politician or upper class person was seen in any of the bank queues and for them life and business were as usual. They just exchanged old notes with new notes through paid agents and several other ways & means. Middle classes armed with with plastic cards and habituating living in total disconnect of realities of rural & poor of India, were not much effected and it is the poor which suffered most losing livelihood and ending up in serpentine bank queues for exchanging paltry sums after several hours of indignity. Even the raids, mostly with political underpinnings, conspicuously excluded politicians and officers. Modi suffers from worst possible type of corruption: an insatiable desire for personal glory at any cost, an extremely deep moral and spiritual corruption. He also represents the worst aspect of democracy: a demagogue who caters to an irrational populace’s cravings for self-identity and release from self-responsibility. Any difference of opinion is tarred quickly as unpatriotic and anti-national by the troll brigade.
It is not that easy to flush out the black money. Projecting that demonetization will resolve issues of black money and corruption is misleading the gullible masses of the country. Reforming the tax administration and tracking data would have given good and lasting results. Modi's inaction during the past 30 months in this matters speaks volumes about his real intentions. Modi's unprecedented act of demonetization, is not only damaging country's economy and threatening destitution to countless millions of its already poor citizens but is also breathtaking in its immorality. What Modi has done is committing a massive theft of people's property without even the pretense of due process; a shocking move for a democratically elected government. The scale and speed of Modi’s scheme has more in common with the failed experiments of dictatorships which led to runaway inflation, currency collapse and mass protests. Demonetization was supposed to be a fight against black money but now it seems like a war against the people. Instead of making surgical strikes against corrupt & black money hoarders, Modi has carpet bombed the whole economy destroying informal economy resulting in crores of poor people losing their livelihoods. Shifting the goal post to 'cashless society' indicates Modi's acceptance of failed operation and it is also suspected at creating economic devastation and usurping of an individual's economic liberty.
Modi would have truly walked the talk if he had attacked the nexus between the big business and politics which truly nurtures the black money ecosystem. BJP is the most cash funded party these days. So far the pain has been largely borne by the ordinary people. Modi burned down country's economic house in the disguise of eradicating the pest of corruption? Modi has shot himself in his foot and India fell.
PM Modi announces demonetization of Rs 500 and Rs 1000 currency notes
PM Narendra Modi on his televised address to nation on Tue Nov 08, 2016 at 8PM on announced the demonetization of Rs 500 and Rs 1000 currency notes and said the move was aimed at curbing the negative impact of fake currency, black money, corruption and terrorism on the nation's economy. Pakistani spy agency ISI was pumping fake notes of Rs 500 and Rs 1,000 to finance terror activities within, even earning a handsome profit of around Rs 500 crore per annum in the process.
The immediate impact was that citizens were stunned and dismayed, who never experienced demonetization in the past, found themselves with all their cash worthless, transactions in pipe line stalled or aborted, property values eroded with only few hundreds of rupees left. Small business owners & daily wage earners surviving on day to day work for making living are so much helpless today with no activity and income, how to pay monthly bills at the beginning of next month. Not many have any reserve cash.
Demonetization is not new invention by Modi & Co. In the past many countries did it but none achieved even 10% of the targeted benefit. Morarji Desai's 1978 demonetization was a utter flop then. What made Modi to believe this would do would do wonders for him, despite inherent risks and with no proper plan for mitigation & implementation? The guy who advised Modi and influenced him must be sacked at once for his irresponsible projections.
While the told reasons are impressive and in the interest of the nation the untold reasons are purely political for the following reasons:
All economic parameters are well within limits.
Annual economic growth rate at over 7% is impressive.
UP Elections are slated for early 2017.
BJP is desperate to win UP elections. Otherwise their numbers in Rajya Sabha will remain minority for reminder of Modi's term. BJP candidate will have uphill task in winning President & Vice President elections next.
Fake currency below Rs.1,000 crores is less than 0.01% in the economy size of our country.
Black money is nothing new. There are many ways of dealing with it seamlessly.
Terrorism control can't be achieved with demonetization alone.
Demonetization involves printing of currency in large quantities with additional security features, logistics for quick exchanging, disposal of withdrawn currency, toning up Post offices, Banks & ATMs for handling new currency, and above all secrecy of operation until announcement and is a year long activity to ensure minimal impact on common man as well as on economic activity. Modi's hasty announcement within 2 months of Present RBI Governor Urjit Patel, with no proper arrangements -- points needle towards politics rather than any economic expediency or nation's well being. Needless to say the previous Governor Raghu Ram Rajan was never blindly obliging MoF/Govt but used to make decisions focused on primarily inflation control and anything else next.
Demonetization by an executive order is improper. Govt should have proclaimed an ordinance and immediately enacted law. Misuse of authority without proper constitutional authorization indicates highhandedness of the Prime Minister Modi and his dictatorial tendencies.
Article 21 which reads as follows:-
Protection Of Life And Personal Liberty: No person shall be deprived of his life or personal liberty except according to procedure established by law.
The demonetization had thrown out millions of people in "informal sector" etc without livelihood. There was no process of law which has been followed. Depriving livelihood tantamount to depriving life and personal liberty, Supreme Court ruled in the past.
Our Jurisprudence is based on the Blackstone's formulation is that: "It is better that ten guilty persons escape than that one innocent suffer".
HUGE COSTS
Modi’s startling and sudden move to withdraw 500 and 1,000 rupee notes a week ago has left India with 14% of its currency in circulation. Small businesses, real estate, gold and the informal sectors -- which see a high component of cash transactions -- have been affected as hundreds of thousands of people spend time in long queues to exchange currency rather than working. The informal sector (which is 40% of economy & provides 65% jobs and livelihood to 850 millions) has come to grinding halt and revival is estimated between 6 months to two years.
Printing of new currency notes Rs.12,000 crores.
Improper arrangements derailed economy and recovery would take at least 2 months.
GDP lost Rs. 2-3 lakh crores.
Growth rate is likely to be reduced by 2%.
RBI's likely to gain Rs.3 lakh crores of black currency not deposited.
Naxalites lost their extorted and concealed amount of Rs.5,000 crores.
Fake currency made redundant about Rs.1,000 crores.
Informal sector, Agriculture etc effected people over 850 million.
Enormous stress borne by bank employees dealing with unending queues, fear of giving away more money, extended work hours for several days in a row, petty quarrels with customers leading to stress.
Public standing in serpentine queues for several hours only to get exchange worth Rs.4,000.
At least 50 deaths reported standing in long queues for currency exchange.
First two days were bank holidays the truth that Rs.500 & Rs.1000 notes are worthless sunk into brains of people. From Nov 11, 2014 long serpentine queues were common scene before every bank with ATMs derated to just 10% of its capacity dispensing only Rs.100 notes. Only 50% ATMs are operational due to poor maintenance. The new Rs.2,000 notes were as good as worthless since none in the market accepted for payment with very little change available with them. With less than 14% currency left in the economy retail took immediate beating with retail sales less than 30% and informal sector grinding halt with no cash.
Modi should remember that the people standing in long queues certainly don’t have the mindset of a soldier fighting a national cause but only have curse words for the government for turning their lives into a nightmare. Modi must have acknowledged this state of affairs, the failure of the government on execution front and promised to resolve the issue as early as possible. Instead, he warned about further measures post December 30, 2016, when the deadline expires. This will only add to the panic since people would start speculating that what the next blow is going to be.
Common man would need to pay to his vendors, a majority of whom still live in the cash economy, for whom PoS terminals, plastic money, PayTm are all still fancy words. While in metros like Mumbai and Delhi, people still have the possibility to use plastic money to meet most of the daily needs, in the semi-urban areas and villages, life will turn hell when ATMs dry out of money, daily labourers are denied wages because their employer doesn't have cash and kirana wallah frowns when asks for credit yet another day.
The mob psychology works in full swing on such occasions. And that psychology would drive the common man into a panic mode, telling him to run fast to the nearest bank branches and ATMs to withdraw maximum possible amount permissible (as of now Rs 2,000 per day), even if he doesn’t need that amount. It is getting clearer that economy is heading to politically motivated & fast reaching point of disaster. While many are still hopeful that this landmark initiative will reap dividends eventually, deeper analysis concludes it is not only poor politics but also an unmitigated disaster.
With commodities supply-chain-retailing systems crashed, shortages will be come order of the day in coming days.
Armed with shots to fire, opposition parties have common cause to conduct street agitations and Modi is helpless in dealing with them. Politics without principles leads BJP to nowhere. BJP leaders are now arguing that in long term demonetization benefits nation, in low voice. Despite demands and obligation, Modi hasn't attended Parliament last two days.
CASHLESS PAYMENTS
The idea of a cashless economy sounds great. But it is viable only at high-end convenience stores, shopping centers, malls etc along with the online shopping industry. The transaction overheads is an added cost to consumer indirectly or directly. Not all commodities have that much margins for seller to pay these costs. Also high cost items like cars etc, it makes sense to avoid cashless payment and save some bucks.
The fear of unfamiliarity is very fundamental and money matters are serious; hence the reluctance of consumers to shift from cash to plastic, even for across the counter transactions. As for online transactions horror stories of cyber-crime and sheer unfamiliarity with online payment systems is the basis of this reluctance.
Cashless economy will become reality slowly with higher income levels, awareness, education levels and transaction costs coming down to affordable levels.
EUPHORIA GONE; PANIC & DAMAGE CONTROL BEGINS
Modi's demonetization flight took off without flight plan and not knowing how to and where to land. In crash landing, who knows how many will perish and how many will survive.
The government was ill prepared to deal with what was going to follow and completely miscalculated the enormity of the move it was making. Every honest citizen wants his country to be free of the evil of fake currencies and black money. The miserable failure of Modi government to design the implementation in the days after the demonetization announcement, though no one is questioning the intention.
The situation is not likely to change soon. Finance Minister Arun Jaitley has said it will take about three weeks to replace the old notes. By then, the problem can go totally out of hand for the government. Printing Rs. 500 and Rs.100 notes now and making available for exchanging is at least a month away.
PM Modi made a bad analogy comparing the cash drought prevailing in India now, to the chaos prevailed in Japan in the aftermath of the 2011 earthquake. "People stood in line for four hours, six hours but accepted the decision in national interest the way people of Japan tackled the aftermath of the 2011 disaster," Modi said speaking in Japan. The chaos that follows a natural disaster and the will power of a society to withstand the difficult days is one thing while the chaos and disruption of normal life in a society post a “well-thought-out decision” planned months in advance by the government is another.
Modi-government thought of an ideal situation where people will laud the government and put their personal miseries behind the larger cause of patriotism. "Don’t preach the scriptures to someone who is hungry" – was forgotten.
Over the weekend, Modi made an impassioned plea to the nation to give him 50 days to weed out ill-gotten wealth in the country.
Today i.e. on Fri Nov 18, 2016, Supreme Court refused to restrain various high courts and subordinate courts from hearing petitions against the Union government's demonetization notification, saying "people are facing real problems and we cannot shut them from moving courts to register their grievances."
The ill-thought of idea to use indelible ink during withdrawal at banks will not just take more time in dealing with a customer but also, it can be easily removed.
Unless the RBI & Govt increases Rs.100 notes to overcome shortage, there's a high chance that fake notes of this denomination will soon be circulated.
Worst is 50+ people so far died across India standing in queues for cash exchanging or stress related issues, in first 10 days.
Panic is reflected in unstable govt guidelines modifying every day creating confusion for the bank staff.
Software modifications in ATMs can't be done in hurry. Modifications are to be designed, planed for implementation. With changing procedures several ATMs are out of service and many ATMs not upto date with govt directives. In any case ATMs exhausts cash within an hour.
With short cash chasing too many goods - undesirable deflation is a certainty. Later improved cash position - inflation will impact economy.
Presently, the situation is not in control of the government. The long queues before ATMs and bank branches can soon take the shape of street protests. Delhi CM Arvind Kejriwal has already entered the ring, Congress vice-president Rahul Gandhi has already joined the ATM queues. It is not long before regional satraps smell an opportunity.
"In the name of demonetization, the common people are being made to suffer. Modi ji has brought miseries and pain for the poor which is extremely wrong. I would like to ask why people of the nation are being troubled like this," said Mayawati.
Former Union Minister Arun Shourie mocked the claim of demonetization of high-value currencies being a radical measure, stating that jumping into well or committing suicide is also radical.
Why hasn't the BJP-led government first targeted the black money deposited in Swiss banks as it was promised during the election campaign? The situation of crisis, in the name of "fight against black money", has affected the poorest the most. The good intention behind the currency ban and the long-term benefits it will bring to the economy will then be forgotten and Modi will run the risk a strong the anti-incumbency wave, if the cash drought continues and remedial measures are not brought into place. Better watch out for a bigger storm than the 2011 Japan earthquake, Mr. Narendra Modi.
Demonetization is bound to leave indelible impact on the nation. Shrinking economy leaves many jobless and recovery will never be the same again. Needless to say we may find ourselves pushed backwards by about 10+ years paying bitter price for Modi's adventures.
Modi's decision seemingly was in his & BJP's political interest rather than in national interest and he will go down in history as India's greatest wealth destroyer.
BJP leaders of UP felt that post demonetization blues, they have no face to show up in UP and were reluctant to either for campaigning or for erecting hoardings. They opine that Modi has effectively reduced BJP to ZERO.
"Without proper design and detailed plan, collapse is certainty"
My View:
It doesn't require an expert to say that corruption and black money is an evil that has crept into every segment of society like cancer and bulk of the blame is to be borne by Politicians from all parties. Even a clerk will tell you that there is no single medicine or surgery that can eliminate corruption and black money, instantly. The only way is awareness, leveraging technology, vigilance, creating accountability, eliminating discretionary power at all levels, reducing/eliminating cash flow in all public domain payments/transactions, emphasizing merit, etc and society would become cleaner gradually. Keeping eye on UP Assembly elections and subsequent President & Vice President elections, Modi abruptly demonetizing currency and its inept handling has thrown the nation into chaos effecting 850 million people starving for cash & change and threatening their livelihoods. Now that demonetizing has boomeranged, Modi has no face to show up in either Parliament or public. If any shame is left in him, he must own up responsibility for the fiasco, apologize nation and step down so that his successor would do better damage control and rehabilitation without the burden of the past. Also FM Jaitley and RBI Governor Urjit Patel should be eased out along with those who recommended this failed operation. Had Modi followed Gandhi Talisman while making decisions, I am sure he would have made correct decisions in national interest and this chaotic situation averted.
Gandhi's Talisman:
Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to Swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.
