TDP quits [pushed out of] Modi ministry

• Both Civil Aviation Minister Ashok Gajapathi Raju and Minister of State for Science and Technology YS Chowdary handed over their resignation letters to Modi on Mar 8, 2018. Reacting to the TDP’s decision, two of the BJP ministers in the AP government, have also handed in their resignations a day earlier.
• The ‘uneasy’ ties between the BJP and the TDP hurtled to the edge with both partners hardening their stances on the issue of SCS. FM Arun Jaitley’s statement on Mar 7, 2018, when he categorically ruled out SCS, with added sarcasm and awkward body language, had precipitated matters. In essence BJP has pushed TDP out of Modi's NDA ministry.
• Modi reportedly made a call to Chandrababu Naidu in the evening. The TDP chief had spoken his mind on how the Centre had reneged on its promise, his 29 visits to the national Capital and finally, the PM not taking attending to his call on Mar 7, 2018. Naidu also told Modi that the people of AP were seething over FM Arun Jaitley's insulting comments. Naidu had asked Modi to do something for AP "since he had the authority".
• Naidu declined Modi's suggestion to come over to Delhi for discussions maintaining that the irreversible process has started and there is nothing for him to discuss. It is for Modi to honor all promises made in parliament and implement provisions of AP Re-organisation Act quickly since 4 years had already elapsed. Failing which TDP may exit from NDA too, very soon.
• Naidu said that Jaitley's statement was insulting to the TDP. Naidu slammed the FM for saying "sentiments will not decide the quantum of funds". Naidu's decision was appreciated and supported by all non-BJP parties.
• One national party has deceived AP and other national party has cheated AP. It’s for the nation to understand which is one and two, YS Chowdary said. The beauty of democracy, he further said, was to bring unanimity and make everyone happy and this was the BJP's responsibility.
• Between 2015-17, while Naidu made 29 trips to Delhi, during 2018 he was not even granted appointment by Modi indicating deterioration of ties. "This is the first step. We will go ahead with other actions later," PTI quoted Naidu.
• "We are committed to giving monetary equivalent to SCS to Andhra Pradesh ..." is the sentence repeatedly said by FM Jaitley and other BJP leaders, during the past 4 years, but in reality very little help was extended to AP. They adapted all kinds of delaying tactics especially for Polavaram project and capital Amaravati.
• The Congress said "The parochial autocratic alliance led by Narendra Modi could never accept a divergence of opinions or plurality and the splintering of the NDA that you are seeing now is a reflection of that philosophy of the PM and the BJP. And it does not start or end here." They said TDP is the oldest ally of the NDA as Naidu used to be the convener of the NDA, and Naidu showed the courage of his conviction to call a spade a spade in speaking out when Modi was the CM of Gujarat.
• “You cannot run away from your responsibility by attacking us. The Congress party was completely routed from AP for hurting the sentiments of the people. If you continue to hurt our sentiments by denying SCS, which is our right, you will have to meet the same fate” Naidu said.
• Prior to resignations announcement, TDP leaders said the BJP had pushed them to a position where taking a “tough stand” was the only option left. Naidu said he will take a call on whether or not to remain in the NDA before the second leg of the budget session ends. 
• FM Arun Jaitley citing 14th Finance Commissions recommendations coming in the way of granting SCS to AP is totally false and misleading. Even its former chairman YV Reddy clarified this matter. There is no body which comes in the way of working of Parliament and Central Government within the frame work of constitution. Modi is the real culprit and villain. All others are just parrots.

Most central ministers are sympathetic towards the problems of AP ever since AP Re-organisation in 2014, it was Modi who was adamant in not extending necessary help to AP. All the ministers are just speaking his mind while he is maintaining silence. Modi has no respect for statutes, institutions & people and his propensity is to bend constitution, acts and rules to suit what ever he wants to do without following any kind of democratic process. His style has chilling similarity with Italy's fascist dictator Mussolini and his actions are with spectacles without any substance. While Modi is adamant by nature and has 16 year old grievances against Naidu, nothing will happen since BJP's LS numbers are comfortable. TDP exiting NDA is a certainty and that is good for AP too. But with all major parties ditching NDA, BJP saddled with all round failures of Modi will have uphill task in 2019 elections with Rahul Gandhi's graph rising day by day and UPA scams losing its charm. BJP ending up in opposition benches is not ruled out. If Rahul Gandhi becomes PM in 2019, the credit goes to Modi for achieving this impossible feat in 5 years which Sonia Gandhi couldn't do in her 10 year UPA regime.

The present crisis provides an opportunity to Vice President Venkaiah Naidu to resign and declare his solidarity with the people of his home state of AP. He has already been sidelined by Modi when nominated to VP's post last year. Having reached dead end of his political career, Venkaiah Naidu must rise above politics and become a "hero of a cause" emulating Kakani Venkataratnam in 1973.

Chest thumping will come back to haunt us

• Any monetary economist would say don't do it (demonetisation) until you have all the money printed.
• If you take poll of monetary economists, they would tell you that on the day you actually do it, you should be prepared to replace as much currency as needed for transactions. Otherwise it will cause a reduction of economic activity.
• Monetary economists would say, be ready to replace on day one everything that was used for transactions. A significant fraction of that, not all 86%, but enough so that anybody who wanted money will be able to take it out from ATMs.
• There are channels through which government can by pass RBI legally (like 1978 demonetisation ordinance).
• Ultimately if Governor disagrees - Dr. YV Reddy had a interesting response to what he would have done! - He said he would have gone to the hospital and then resigned on health grounds. Now some people can't go to the hospital they look the picture of health.
• All bank accounts could be linked to Aadhaar, keeping in mind the privacy issues. There are privacy issues and there are issues of tax collection. So long as you make sure that every revenue officer cannot start fishing in that database and lot of it is automated and you can only go into it when those suspicious transactions are flagged and ordinary citizen's privacy is protected. That is the way to reduce the flow.
• We have to recognise that we are dealing with the government employees as they are, not how we wish they would be. The reality is that there is some corruption in the government also. To give license to some areas of government (like tax officers) without checks and balances could enhance corruption.
• If you look at digitisation, we saw a blip up and then looked down after the stress period was over.
• India was growing at about 7.5 to 8 per cent at the point of demonetisation. We have come down substantially and some of this has been because of demonetisation. The world economy is going stronger than at this time last year and in that sense we should be going up with the tide and should have moved up with the growth. In fact, it has moved down. There are three factors: one is the stress in the banking system and the bad loan situation, the second is the demonetisation shock and the third is the anticipation of the goods and services tax (GST). At this point, our growth is not anything to write home about. Hopefully, these are temporary factors, but certainly we have to make sure that our business people feel more confident that there are no more surprises.
• I don’t think the RBI has been undermined, because ultimately this decision belongs to the government. 
• There has always been a tension between the finance ministry and the RBI. The finance ministry likes to believe that the RBI is one of its organs, and the RBI correctly believes that it is a Central bank and not just another regulator who is at the beck and call of the ministry’s bureaucrats. The tension about this is partly because the position of the RBI governor hasn’t been clearly established within the system. On the one hand, you have chief ministers saying ‘sir’ to you, and on the other, you have secretaries claiming that they have authority over you.
• Constant bickering is not particularly good. It takes away from you the time you have to devote to more important things.
• I was trying to say, ‘Let’s not be complacent’. We have problems; our real problems start when we thump ourselves on the chest and say how well we are doing and then don’t pay attention to the fact that there is so much more to be done. These things, like the thumping of the chest, will come back to haunt you. Let others praise you, let others give you kudos. But don’t keep boasting, because the media will take it up for a little while, but investors remember. My point was—here’s some good stuff but we have to be careful that we are not complacent. And it was taken here as me being derisive; that was clearly not the intent. We have to be much less boastful and much more focused on the work that needs to be done.
• Our future, that this is the India you want to build, not an intolerant India.
• As a public servant, you also have a public responsibility. 
• You can’t stay in the job if you have serious differences with the government. 
• When there is an environment in the public that has not been created by the government—but it emerges—then you have a duty to say that this is not the way we should go as a country.
• There was a discussion of the Enforcement Directorate looking at over-invoicing, which was rampant. Why didn’t we go after that? That was very easy to catch.
• There was no obligation on the government’s part to extend my tenure, and similarly, there was no obligation on my part to stay on. The University of Chicago was not the constraint.

Chest thumping will come back to haunt us ... Raghuram Rajan

YV Reddy's analysis of demonetization impacts

The School of Economics, University of Hyderabad (UoH) organized a lecture ‘Indian Economy: New Challenges and Opportunities’ by Dr. YV Reddy, former RBI Governor on April 21, 2017. 

• Demonetization as an unprecedented move by the government and the enforcement of stringent punishments will not decrease the flow of black money in the market. 
• A billion people have been put to inconvenience for over nearly two months for no fault of their’s. It never happened in any country. Despite the collateral damage to innocent people of that magnitude, the public kept quite. That means people were disgusted with the system
• The unintended and incidental consequence of the demonetization drive is the new-age digital economy of the country. 
• The note-ban has helped a quantum jump in digitization and the follow-up provisions in the Budget have strengthened the regulatory powers of tax administration. There was strong and massive support from the public for reforms that address systemic problems that were once considered intractable.
• There are downsides to digitisation, which demands higher degree of vigilance, they do not deter its benign impact on modernization of the economy mainly by formalizing semi-informal sector and reducing transaction cost.
• Short-term economic impact of demonetization has been negligible so far. 
• It’s direct and immediate impact on black money and corruption is similarly negligible. 
• It is not a mere shock akin to a truckers’ strike but has systemic implications for the future.
• Stringent laws are the most violated in our economy. 
• A public policy can be effective only if the governance is effective. 
• Punishments are not an analytical solution to black money. It can only appeal to the masses.
• The inter-relationship between market and the government and the dynamics involved in it should be considered.
• Goods and Services Tax (GST) needs a huge administrative, technological and logistical base, and its implementation would cause a short term inconvenience for the Indian economy.
• When something good happens, advanced states grow rapidly. Thus, there is an unequal growth among states. Consequentially, compensation from the government to bridge this gap diminishes the scope for improvement. If both Centre and State fight for an equal headroom in regard to GST, the tax rates can go upto 40% from 28%.
• The lawless globalization of capital and the public sector banks getting involved in business creating the menace of Non-Performing Assets (NPAs) in Indian economy. 
• Capital infusion of public sector banks should not be done by government alone as it may give windfall gains to private shareholders. Taxpayer's interests are thus involved in any recapitalization. 
• Major private sector banks do not have problem of capital adequacy despite non-performing Assets.

Criminals are driven by the same desires as we are, 

but they take disastrous shortcuts and end up in a real mess ... Colin Wilson

Indian Economy: New Challenges and Opportunities

My View:
There is no question that demonetization 2016 has left with 'All pain & No gain' situation with Modi’s reputation as a sound economic manager taking severe beating and resurrection of fears that the ruling BJP takes policy advice from quacks. Modi's dreams to modernize India by 2019 has been shattered. Now he has to resort to age old political gimmicks of fake narratives rather than truths. This lousy technique will give some benefits up to an year and when economy goes out of control sooner or later, he will be the casualty where as the price will be paid the common man of India. In contrast, Congress with all its drawbacks, corruption & scams, always exhibited sanity of mind never to muddle with the livelihoods of poor & peasants and preserve institutional autonomies, where as this autocratic Modi dealt deadly blows to them in the name of demonetization with all faked objectives and autonomy of institutions destroyed.. In the process, rule of the law and institutional independence were severely compromised and at the same time giving rise to police raj with sweeping powers to tax men that is detrimental to democracy.