Rent seeking behaviour

Rent seeking is defined as the practice of manipulating public policy or economic conditions as a strategy for increasing profits. Rent-seeking lobbyists or cronyism and rent-seeking have become an integral part of the way our biggest companies do business. Rent-seeking results in reduced economic efficiency through poor allocation of resources, reduced actual wealth creation, lost government revenue, increased income inequality, and national decline. The classic example of rent-seeking is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee to lower the chain.

• Rent-seeking often requires spending your own resources so that you can own someone else’s surplus in the end. 
• Weak property rights allows rent seekers gain more by trying to appropriate that wealth than by producing themselves. 
• Rent-seeking can include piracy, lobbying the government or even just giving away money.
• Hired lobbyists sway public policy to benefit their companies and punish their competitors. The work of lobbyists does not add value to the larger marketplace. Stable property rights would have eliminated role for lobbyists.
• Rent-seeking doesn’t add any national value. Rent-seeking is coerced trade and benefits only one side. 
• Rent-seeking of pirates motivates merchants to spend their resources to prevent the theft.
• Rent-seeking never encourages productivity. 
• The production of valuable goods and services is maximized with strong property rights. In strong economy, there are fewer incentives for rent-seeking.
• Weak economic times make it difficult to produce and rent-seeking becomes attractive.
• Downward spiraling gets created because the rewards of rent-seeking are often constant. 
• In poor economy, the burden of fixed rent-seeking costs on producers drives surpluses even lower and makes rent-seeking more attractive, which in turn burdens those who remain productive.
• Much rent-seeking is redistributing the surplus of one group to another group via the government. There might be great incentives for one group to seek another’s surplus but there is no added value for society as a whole.
• Rent-seeking is a normal impulse. Much of what we do in wealth management is rent-seeking. We practice tax management and look for ways to reduce government-legislated rent-seeking.
• Tax planning doesn’t add value to society as a whole, but it is personally profitable.
• Any legislation to subsidize or bail out struggling businesses is rent-seeking. 
• When banks take excessive risks to gain excessive returns, they are risking that the returns will be worth the hazards involved. But when government bails out these risky banks, they were able to privatize any profits from their risky ventures and through rent-seeking and they have managed to coerce the public to pay for their failures. Thus prudent lenders are punished and reckless lending is rewarded.
• A wasteful amount of rent-seeking accompanies most government spending. The best way to improve the situation is to reduce the size of government. When there is less money, there will be less corruption and less incentive to rent-seek.

ENTREPRENEURSHIP AND RENT SEEKING IN INDIA by Roby Rajan  - CATO Journal

In India, governmental intervention only creates further rent-seeking opportunities and still further resource diversion into unproductive activities. The tax base in such a society is generated by the losers in the rent-seeking game who are forced into value-producing activity at governmentally depressed rates of return. These shopkeepers, cultivators, masons, carpenters, construction workers, agricultural laborers, and so forth are forced into market activity, and their consumption is then heavily taxed to meet the rent requirements of government job /contract seekers. The rents procured, therefore, are usually invested in personal assets—such as automobiles, ostentatious housing, gold and silver jewelry, children’s education, and savings bank accounts—in amounts that reflect individual marginal rates of substitution between current and future consumption. 

Any proposal for reform must drastically reduce the magnitudes of these rents. While this may seem to imply steep reductions in government salaries and perquisites, such a step alone may only exacerbate the problem as office holders try to compensate for lost income through increased bribery, extortion, and obstruction. The more significant component of the rents is lodged in the discretionary powers attaching to public offices. Especially important among these are the extraction of bribes for permits, licenses, and the awarding of government contracts; opportunities for theft of public assets; and threats of job nonperformance. Failing the drastic curtailment of these discretionary powers, rent-seeking losses will continue to be significant. Although the theory of rent seeking dictates random allocation as the solution, it also predicts that it is the solution least likely to be adopted by the political/ bureaucratic process. 

No good man has ever made fortune in this world.

Honesty is incompatible with amassing a large fortune - Mahatma Gandhi 

Amassing of wealth is associated with exploitation of people or 

looting governments or destruction of ecological assets.

My View:
Most rich people on this planet are rent seekers, either legally or morally, at some point of time or other. In India they are in very large numbers. There is no rich man who hasn't visited power corridors seeking favors and doling out bribes for their enrichment at the expense of others. Ambani is an exceptional expert in these matters. Ambani's riches are primarily due to their ability to extract favours worth crores by doling out few lakhs destroying their competitors. Banks NPAs in excess of Rs.Ten lakh crores threatening nation's economic collapse is a glaring example. the stories are endless. The proposed BTT (Banking transaction tax) is glaring example of government's rent seeking activity only take away public wealth with no return of any tangible benefit to people. Modi in the name of demonetization is expanding government and unleashed police & inspector raj and our heading southwards is unstoppable. Modi's utterances of all pain now and gain in long run is unacceptable nonsense.

Sasikala's power struggle in Tamilnadu

Within days of Jayalalitha’s death, Sasikala got elected as general secretary of the AIADMK although she had no official responsibility within the party and Jayalalitha had never publicly indicated any role for her. Sasikala assumed Jayalalitha’s role for herself and easily usurped it. There weren't any murmurs within the party when Sasikala wanted to become the leader although there were veterans who could have harboured leadership ambitions. Even O Paneerselvam, the only man whom Jayalalitha had shown any favour appeared meek and subservient. Sasiakala wasn’t content with just that and wanted the executive role as well and within two months of Jayalalitha’s death, her makeover was complete and she was ready to occupy the chief minister's office till the governor applied breaks on what appeared to be an easy ride.

In contrast, Jayalalitha’s story of ascendance starts with MGR picking her as the party’s propaganda secretary in 1983, and sending her to the Rajya Sabha in 1984. When MGR  died in 1987, she was treated like an outcast by an inimical coterie in the party. Jayalalitha wasn’t informed about MGR's death. She gatecrashed into his house, and then followed his body to the Rajaji Hall. Although unwanted and physically abused, she stood by his body in a white saree for 21 hours. The worst part is that she was pushed down from the carriage in which MGR’s body was taken for burial. Jayalalitha slogged for a decade and endured crushing misogyny, humiliation and even physical assault to inherit her mentor’s legacy. Jayalalithaa wrote her own story, that too following the rules of democracy, and didn’t usurp anybody else’s. Jayalalithaa didn’t take any shortcuts although she had MGR’s explicit nod as his protégé. 

In contrast, the narrative that we see now in Tamil Nadu is one of manipulation. Sasikala neither has Jaya’s approval nor people’s mandate, still, she wants to be the chief minister. She was close to Jayalalithaa, arguably the closest, who stuck with her through the thick and thin for three decades. And she had to endure the post-1996 deluge of criminal cases, which incidentally was also caused by the members of her extended family known as 'Mannargudi Mafia'. It’s also true that without her taking over, the party would have fractured. But in the public eye, nothing is good enough to subvert democracy, because that’s the core essence of India. While Jayalalithaa's story had been about talent, stardom, hard work, resolve, resistance, and success, Sasikala's is of a shadow that suddenly came to life.

How Modi once saved Jayalalitha from a Frankenstein's monster Sasikala in  2011

At the instance of Sasikala, the Chief Minister O Paneerselvam resigning, obtaining Governor's acceptance and then proposing & getting elected Sasikala as legislature party leader and Sasikala informing Governor Ch.Vidyasagar Rao and making arrangements for swearing in ceremony went at brisk pace all in a single day. The very same day Paneerselvam revolting against Sasikala, despite no support from any of his co-MLAs, and informing Governor that he resigned under pressure from Sasikala and wants to withdraw 'unprecedented' accepted resignation and requested for opportunity for proving strength on the floor of the house is simply an afterthought which was masterminded by Modi & Co. Paneerselvam, even with support of DMK (89) & Congress (8) still requires AIADMK (19) MLAs supporting him to prove majority while all AIADMK MLAs were hidden in resorts by Sasikala and unreachable.

But Governor indicating to hold on in view of expected Supreme Court judgement in next few days time pushing Tamilnadu into political turmoil is unprecedented and contrary to established practices. The leaks reaching media are that at the instance of Modi, Home Minister Rajnath Singh did all this, even though BJP is zero in TN. Irrespective of reasons allowing more than 5 days time to Paneerselvam in not only to contrary to practices but also resulted in intense horse trading.

If Jayalalitha (A1 in the case) could become CM in May 2016, why not Sasikala (A2 in the same case) has to await Supreme Court's final judgement? This is nothing but Modi meddling in TN matters without even having a single BJP seat through Governor. Supreme Court remarked in its hearings that "merely possessing assets disproportionate to known income does not amount to corruption unless the source of that income is illegal" and the burden of proving crime rests on CBI (not on Jayalalithaa & co etc to prove their innocence) and acquittal will surprise none.

As things stand now, Sasikala is unstoppable, even though detrimental to the interests of people of Tamilnadu.

My View:
If Sasikala becomes CM in next few days, she will be ruling Tamilnadu for next 4.5 years without mandate of people of Tamilnadu. The question is when we had no objection for Manmohan Singh ruling the nation for 10 years without people mandate, then why should we have objection for Sasikala? But knowing the attitude & character of Sasikala, especially after Mannargudi Mafia stories are convincing, Tamilnadu is heading for darker days and if DMK & Stalin are lucky a mid term poll is likely. Personally I would prefer mid term poll since people mandated Jayalilatha, without any declared successor, is dead now and people should decide on destiny of TN not Sasikala's henchmen who got elected as MLAs, clandestinely, with Jayalalitha-AIADMK's ticket.

Modi & BJP are attempting gain foothold in Tamilnadu through Paneerselvam will materialize or not, let's wait and see. Knowing the tendencies of South Indians they would neither trust BJP nor Congress, parties dominated by North Indians. DMK's resurrection is likely in case of midterm poll.

Public money for private profits

Banks raise money by soliciting deposits from the general public or using other instruments available to them and use this public money to fund various projects of the corporate or business entities after due diligence. If a borrower fails to repay the money, a bank’s primary concern is to ensure its profitability and safeguard the interests of its depositors. Until 1994, this was the prevailing view of the banks and the Reserve Bank of India (RBI). RBI had by its circular dated April 23, 1994 directed all banks to send a report on their defaulters, which it would share with all banks and financial institutions (FIs), with two objectives:

1. To alert banks and financial institutions (FIs) and to put them on guard against borrowers who have defaulted in their dues to lending institutions.
2. To make public the names of the borrowers who have defaulted and against whom recovery suits have been filed by banks/FIs.

With the liberalization and unshackling of India’s economy, a paradigm shift occurred in this shaming-the-defaulter policy. It is well known that there exists a corrupt and powerful nexus of bureaucrats, bankers and politicians which always works in the interest of big corporate borrowers. Gradually but steadily, a case was made out that if large borrowers fail to repay their debt, the lending banks must make a business decision for the revival and sustainability of the business! This flawed idea was propagated as the nation was made to believe that governments or their institutions are not capable of taking such business decisions and it is incumbent upon lending banks to help revive their ailing borrowers, and to enable the lending institutions to take this call, instruments such as CDR and SDR were put in place by the RBI to allow defaulting corporate borrowers to laugh all their way to the bank.

From past experience, every banker worth his salt knows that once a business becomes a non-performing asset (NPA), the chances of recovery are slim. Thus, in order to do proper accounting of bad debts, banks would write off the borrowed money, and interest thereof, in a period of three years. In August 2001, the RBI set up a CDR cell. CDR, Corporate Debt Restructuring, is nothing but reorganization of a company’s outstanding debt. Under this arrangement, a borrower company is allowed more time to repay the debt, and the interest rates are cut to a minimum so as to reduce the burden of debt on the company. It is presumed that this would help a company to increase its ability to meet its obligations and come out of the red. Some part or whole of the debt may be written off by creditors for equity in the company. While CDR proved to be a useful device for the corporate defaulters to bolster their losing businesses with infusion of fresh funds at much cheaper rates without fear of being declared defaulters and recovery suits filed against them, this also allowed banks to show their books healthy as such debts were no longer taken as NPAs but as CDR.

However, the premise that such an instrument would not only help bring ailing corporate houses out of the red but would also lead to recovery of debt has fallen flat on its face. Given the experience so far, the instrument is unlikely to pay off. The RBI, instead of taking tough remedial measures to recover public money, has chosen to bury its face in the sand like an ostrich, as it stopped asking banks to report their NPAs to it in 2014!

In 2015 it was realized that despite CDR, NPAs had ballooned to over Rs. 3.5 lakh crore, RBI devised another strategy to help defaulting corporate borrowers evade punitive action. Now, banks could take recourse to the strategic debt restructuring scheme, wherein a consortium of lenders converts a part of their loan in an ailing company into equity, with the consortium owning at least 51 per cent stake. The SDR scheme provides banks significant relaxation from the RBI rules for 18 months. Loans restructured under the scheme are not treated as non-performing assets and banks have to make low provisions of 5 per cent in most cases. This again enables banks to report lower NPAs and higher profits for 18 months. By making banks majority owners and replacing the existing management, the scheme gives lenders the powers to turnaround the ailing company, make it financially viable and recover their dues by selling the firm to a new promoter. Loan thus restructured can be repaid in 25 years.

Contrary to RBI’s expectations, SDR scheme has met the same fate as CDR. According to unconfirmed sources, the bad debt now locked in the form of SDR stands at more than Rs. 1 lakh crore and most of the losers are again the public sector banks. If we take into account Rs. 3.6 lakh crore of acknowledged NPAs together with Rs. 3.4 lakh crore in CDR and Rs. 1 lakh crore in SDR, the total outstanding bad debt adds up to Rs. 8 lakh crore, and public sector banks account for over 90 per cent. With a cumulative market cap of about Rs. 2.7 lakh crore, the bad debts of all the nationalized banks are over three times their worth.

In a decision dated Dec 16, 2015, the Supreme Court ordered RBI to release information about its activities and the banks it is expected to regulate. Rooting for transparency in its functioning and calling for more stringent measures to punish non-compliance, RBI Governor Raghuram Rajan said in his New Year message to his officers: “It has often been said that India is a weak state. Not only are we accused of not having the administrative capacity of ferreting out wrong doing, we do not punish the wrong-doer – unless he is small and weak. This belief feeds on itself. No one wants to go after the rich and well-connected wrong-doer, which means they get away with even more.”

However, RBI has shown it does not care a fig about those words of transparency and accountability as it is refusing to share information with RTI requesters including in clear violation of the Supreme Court order. It leaves no one in doubt on whose side the officialdom of the central bank stands.

Public money for private profits; 

Risk spread on the nation and profits privatized.

My View:
It is just a matter of common sense never to lend sick unit more money and expect it to turn around and repay the debt and also additional debt. It will never work. How our banks feel that this type of schemes will work is again a matter of simple guess. In public sector banks, executives work to please their political bosses not for banks and its depositors interests. No one is accountable or answerable. All will share the booty of wrong doings. After all the money belongs to depositors and nation and not their own. CDR and SDR schemes are fraudulent schemes designed with the objectives of  'Public money for private profits' and 'Risk spread on the nation and profits privatized'. Ridiculous it may sound but in reality, it will be the duty of poor people to support during bad times and during good times the wealthy & educated will knock off the benefits and demands poor people to wait for benefits to trickle down to them with time. The best example is Kingfisher Airlines which was lent over Rs.8,000 crores without any collateral security by our public sector banks and lost the whole money, while Vijay Mallya escaped. Almost all infra companies are saddled with massive loans from banks and their net worth dwindling and repayments unlikely in near future.

Informal economy in India, is going to stay

The informal economy is in opposition to formal economy, meaning it included all income earning activities beyond legally regulated enterprises. This sector produces and distributes legal goods and services. The informal sector does not include the criminal economy that produces illegal goods and services. People of all societies regularly adjust their activity within economic systems in attempt to evade regulations.

In India, for historical reasons, informal economy is most prevalent where most transactions are CASH based, has GDP share of 55% and provides livelihood to over 90% of people who are less educated and less skilled and are not employable in formal sector. They are perfectly legitmate but are neither regulated, nor monitored and most doesn't pay income tax with most people's earnings at below free limits of income tax slabs. Most women workers work in informal sector.

Although the informal sector makes up a significant portion of the economies in developing countries it is often stigmatized as troublesome and unmanageable. However the informal sector provides critical economic opportunities for the poor and has been expanding rapidly since the 1960s. As such, integrating the informal economy into the formal sector is an important policy challenge.

The components of informal economy are:

1. Agriculture
2. Construction
3. Contract workers
4. Trade services
5. Bullion markets
6. Cinema production workers
7. Retail shops
8. Self employed professionals & skilled workers
9. Street vendors
10. Small industrial workers
11. Domestic helps, drivers etc
12. Garment workers working from their homes
13. Informally employed personnel of formal enterprises
14.   ... and many more

Workers in the informal sector typically earn less income, have unstable income, and do not have access to basic protections and services. Informal businesses lack the potential for growth, trapping employees in menial jobs indefinitely. On the other hand, the informal sector can allow a large proportion of the population to escape extreme poverty and earn an income that is satisfactory for survival. Some people would earn more money through their informal sector work than at a job in the formal economy. Even if workers made less money, working in the informal sector offered them more independence, the chance to select their own hours, the opportunity to work outside and near friends, etc. While jobs in the formal economy might bring more security and regularity, or even pay better, the combination of monetary and psychological rewards from working in the informal sector is appealing for many workers. Some people who are formally employed also choose to perform part of their work in the informal economy to make some extra money for their family well being.

Governments feel that their inability to collect taxes from the informal sector is hindering in financing public services is devoid of any merit. Collecting small amounts of taxes from very large numbers employed in informal economy comes with huge expenses and doesn't make much sense or profitable. Informal economy doesn't pay direct taxes bwhich anyway is only a fraction of the indirect taxes they pay on goods they consume. On the contrary informal economy mitigates unemployment issues by providing casual work to unemployed laborers. Government needs to recognize that the informal economy produce significant goods and services, create jobs, and contribute to imports and exports which is critical for governments.

Poverty, illiteracy and lack of skills are the prime reasons for booming informal economy and their reluctance to regulation & taxes at all costs. As country becomes more educated and more prosperous, over time, automatically informal sector will migrate to formal economy for protection and benefits it provides.

In capitalism man exploits man; in communism it is the other way round. 

No good man has ever made fortune in this world.

 In general, amassing of wealth is associated with exploitation of people or 

looting governments or destruction of ecological assets.

My View:
Modi having thoroughly mismanaged and messed up economy during first half of his tenure, despite favorable GDP growth and low oil prices, brought the country to near junk status and public sector banks to the brink of collapse. Desperate he was, saw an opportunity to rob off the wealth from 'cash hoarders' running into several lakhs of crores of rupees with a stroke of pen, secretly planned without consulting any one and without even pretense of process of law, demonetized Rs.500 and Rs.1000 notes, plundered and laded the nation into instant disaster. Of course, he was more eyeing on publicity it could generate as a lone crusader against the evils of corruption & black money, to win UP & Punjab elections. Even though several countries considered demonetization as a weapon to fight corruption and black money menace but didn't dare to venture due to its complexity, size, uncertainty, collateral & pernicious damages and unintended consequences. Which ever country did demonetization in the past had bitter experience and faced disastrous consequences. While Modi could generate much publicity for himself but the problems faced by poor, vulnerable and rural masses put him in dilemma of converting publicity into winning much needed in UP & Punjab elections votes. His leadership ability is in a big question now.

Migration of informal economy into formal sector is a matter of policy challenges for the governments and for a populous, poor, illiterate and underdeveloped country like India it is long road, which will happen steadily overtime with development, prosperity & education. What Modi has done is carpet bombing and destroying the existing informal economy and all its working capital now with banks attempting to expand formal economy ignoring its adverse impact on livelihoods of poor & vulnerable people destroying their stable livelihoods, will not work anyway. He will go down in the history as a worst leader India ever had.

Reflections

Reflection is defined as an opinion formed or a remark made after careful thought.

People consciously reflect in order to understand events in their lives and as a consequence hopefully add and enhance meaning. Reflection is associated with 'looking back' and examining the past in order to learn from what happened and not repeat mistakes.

• Style is a reflection of your attitude and your personality. 
• Fashion is a language, for sure, and it is a reflection of society.
• Music and fashion are a sign of the times and a reflection of what people want and need at this very day and age.
• Football is a sport of paradox. It requires reaction, not reflection. Yet you must use your mind to calculate, to anticipate - to think and not think at the same time.
• Cinema is a reflection of its own society.
• The real man smiles in trouble, gathers strength from distress, and grows brave by reflection.
• How we treat the poor is a reflection of who we are as a people.
• Without reflection, we go blindly on our way, creating more unintended consequences, and failing to achieve anything useful.
• Work needs to be a reflection of your social values. You are how you work!
• Popular culture is simply a reflection of what the majority seems to want.
• The coming of honor or disgrace must be a reflection of one's inner power.
• There is a terrible price to be paid when your exterior life is not an honest reflection of your interior life.
• Today self-consciousness no longer means anything but reflection on the ego as embarrassment, as realization of impotence: knowing that one is nothing.
• It is a most mortifying reflection for a man to consider what he has done, compared to what he might have done.
• With some people solitariness is an escape not from others but from themselves. For they see in the eyes of others only a reflection of themselves.
• To doubt everything or to believe everything are two equally convenient solutions; both dispense with the necessity of reflection.
• Our observation of nature must be diligent, our reflection profound, and our experiments exact. We rarely see these three means combined; and for this reason, creative geniuses are not common.
• The conditions of suffering that exist today in our impoverished communities are not acceptable. The reflection of those conditions are less concerning to me. And I work everyday about changing the conditions.
• There's nothing like meeting someone's family to get a true sense of them and a reflection of their ethics and personality. It just makes them a more rounded person.
• Bereavement is terrible, of course. And when somebody you love dies, it's a time for reflection, a time for memory, a time for regret.
• A string of excited, fugitive, miscellaneous pleasures is not happiness; happiness resides in imaginative reflection and judgment, when the picture of one's life, or of human life, as it truly has been or is, satisfies the will, and is gladly accepted.
• It is not so much the example of others we imitate as the reflection of ourselves in their eyes and the echo of ourselves in their words.
• We complain of the increased tempo of our lives, but our frenetic lives are just reflection of the economic system that we have created.
• Social media is something of a double-edged sword. At its best, social media offers unprecedented opportunities for marginalized people to speak and bring much needed attention to the issues they face. At its worst, social media also offers 'everyone' an unprecedented opportunity to share in collective outrage without reflection.
• The enemy of science is not religion. Religion comes in endless shapes and forms. The true enemy is the substitution of thought, reflection, and curiosity with dogma.
• Action and faith enslave thought, both of them in order not be troubled or inconvenienced by reflection, criticism, and doubt.
• Forgiveness is a very personal and intimate thing. Forgiveness is not something that you can speak for others because it includes not only your desire and will, your reflection and intellect, but also your emotions.
• Most executives I know are so action-oriented, or action-addicted, that time for reflection is the first casualty of their success.
• Comedy is a reflection. We create nothing. We set no styles, no standards. We're reflections. It's a distorted mirror in the fun house. We watch society. As society behaves, then we have the ability to make fun of it. 
• Democracy is just a reflection of our morals and the things that we believe. 
• We learn our virtues from our friends who love us; our faults from the enemy who hates us. We cannot easily discover our real character from a friend. He is a mirror, on which the warmth of our breath impedes the clearness of the reflection. 
• The Amateur Marriage grew out of the reflection that of all the opportunities to show differences in character, surely an unhappy marriage must be the richest. 
• Chaos is the first condition. Order is the first law. Continuity is the first reflection. Quietude is the first happiness.
• Mass communication, radio, and especially television, have attempted, not without success, to annihilate every possibility of solitude and reflection. 
• Philosophical reflection could not leave the relation of mind and spirit in the obscurity which had satisfied the needs of the naive consciousness.
• In sum, thought and reflection have been rendered thoroughly pointless by the circumstances in which modern men and women live and act.

By actively considering the thoughts and actions one becomes aware of the power of reflective thinking as a tool for continuous improvement, and one that has implications beyond the personal. This in turn enables them to improve ongoing practice, by using the information and knowledge they are gaining from experience. Reflecting critically, and sharing the outcomes of this, can be frightening; working in groups can offer the support and multiple input needed to help deal with this and provide evidence that the process is worthwhile, even if it feels daunting at first.

By three methods we may learn wisdom: 

First, by reflection, which is noblest; Second, by imitation, which is easiest; 

and third by experience, which is the bitterest. -- Confucius

All heroism is due to a lack of reflection, and thus it is 
necessary to maintain a mass of imbeciles. If they once understand 
themselves the ruling men will be lost.

My View:
When you do routine things you get bored. Then go to a serene place and enjoy in a state of solitariness for self-analysis, introspection, reflection and replenish energies. Therefore, solitude is fortitude. 

Modi unveiling cash restrictions and police raj

Cash is one form of wealth like gold, house, land, bank deposits, stocks, bonds etc. It is citizen's right to hold his wealth in what ever form he wishes. In fact no sane person will hoard cash or in bank deposits with inflation corrected bank deposits yielding negative returns. Prudent person will either invest cash or rotate it to earn more returns. In the recent hearing of Jayalalitha's disproportionate assets case, the Supreme Court Bench observed that merely possessing assets disproportionate to known income does not amount to corruption unless the source of that income is illegal.

Our Indian banks has of late became precariously unsafe with NPA's increasing manifold leading to downgrading of ratings to a notch above junk status. No prudent person will keep his wealth in bank deposits. However India has many weak, old and vulnerable persons who hold their wealth in the form of bank deposits. RBI's deposit guarantee is limited to just Rs. One lakh per person. In the absence of returns & safety, government coercing its citizens to maintain their wealth in bank deposits with negative yields is nothing but cruelty.

Cashless transactions is another fraud. In a country with 40% illiteracy and 80% internet banking illiteracy compelling electronic payments without reliable infrastructure, robust privacy laws, unbearable transaction charges and high level of frauds is nothing but enabling corporate's flourish at the expense of poor & needy and in violation of fundamental rights.

No one in the world pays taxes willingly and smilingly. Tax evasion in India is primarily due to unreasonable high tax regime, uncourteous and blatantly corrupt tax administration with umpteen loopholes deliberately meant for corrupt activities. Make taxes reasonable and taxmen citizen friendly, infrastructure reliable,  robust privacy laws protecting citizen rights, and cashless transactions affordable and people will use them as they see benefits. Without these in place, pressurizing citizens compromising their freedom & rights will prove counter productive.

Most of the cash wealth is getting rotated in informal economy which contributed 45% of GDP and employs 90% of people who are mostly less educated, less skilled and under qualified who are otherwise not employable in formal sector. Migrating them into tax compliant formal sector is slow process and government must promote the same with incentives and creating awareness rather than sudden changes of laws and unleashing taxmen & policemen with long sticks.

Almost all black money hoarders are from cities & towns and none from rural areas. Enacting laws which make all these men criminals and taxmen chasing them doesn't produce any positive results except for publicizing the government's efforts to fight corruption which any way doesn't yield desired results.

The recent demonetization has diverted large portion of working capital of informal economy into banking channels. Deprivation of working capital has crippled informal economy, which hitherto was booming since a decade, with millions losing livelihood and returning to their villages, and those who survived are making earnings at half level. No announcement was made by government to provide them with working capital infusing arrangements. Informal economy and formal economy are so much interdependent on each other, formal economy is likely get affected with a time lag of two quarters. The devastating effects and unintended consequences will surface incessantly for next two years and nothing can be done except dazing at them.

Modi's restrictions on cash at Rs. 3 lakh level will do no good to economy except it seems to increase tax compliance. Govt might get higher income tax collections but overall reduced economic activity will result in indirect taxes crumbling, offsetting gains and overall tax collections looking southward. On other hand increasing government will have disastrous effects like citizen harassment, legal entanglements, increase in corruption, ease of doing business looking southward, FDI's reduction and ratings remaining at junk level will do no good to any one. Authoritarian type of decisions will yield quick results in dictator ruled small countries but while doing no good, will run into legal tangles in large democracy like India.

Modi has ignited 'spiraling down' of economy with his senseless, authoritarian, illegal actions destroying institutions like RBI, without even pretense of process of law and now he has no 'magic wand' to control it or stop it and normalization is two years away and in the mean time common man is the casualty.

All dirty politics!!


My View:
Modi badly managed Indian economy during past 30 months, despite favorable crude oil prices and retaining 85% in the form of increased duties, and growth of over 7.5% highest in the world, inflation fairly in limits of below 8% mainly due to his industrialist friends defaulting on bank loans with NPA's rising alarmingly manifold and crippling banks with no funds even for their normal operations and not taking any solid action against willful defaulters despite warnings. Even in 4th budget revenue deficit is at unacceptably more than 3% of GDP. He is under pressure from World Bank and rating agencies to set house in order and unleashed quack advised senseless demonetization for quick benefits of Rs. 4-5 lakh crores as disclosed in affidavit filed in Supreme Court. With deposits exceeding 97.5% of cash in circulation his scheme failed miserably and is dramatizing with cashless transactions and as lone crusader against corruption, which requires focused efforts continuously for few decades.  In a hurry to make quick financial and political gains Modi is resorting to half baked actions with loop holes which will end up in fiascoes and citizen harassment. He is not bothered about long term national gains but focusing on the immediate political mileage needed to win UP, Punjab elections in the aftermath of demonetization pain inflicted on rural masses and urban poor. Attempting to manage country's finances in this botched fashion will only end up horribly both for people and for himself, with no gains whatsoever.

Power of Apology

• Apology has the power to repair harm, mend relationships, soothe wounds and heal broken hearts.
• Apology is not only a social nicety but also an important ritual, a way of showing respect and empathy for the wronged person.
• It is a way of acknowledging an act that might compromise the relationship.
• Apology disarms others of their anger and to prevent further misunderstandings.
• Apology cannot undo past actions, but it can undo the negative effects of those actions.
• Apology actually affects the bodily functions of the person receiving it, blood pressure decreases, heart rate slows and breathing becomes steadier.
• When we receive an apology, we no longer perceive the wrongdoer as a personal threat. 
• Apology helps us to move past our anger and prevents us from being stuck in the past. 
• Apology opens the door to forgiveness by allowing us to have empathy for the wrongdoer.
• By apologizing and taking responsibility for our actions we help rid ourselves of esteem-robbing self-reproach and guilt.
• Apology has the power to humble even the most arrogant. 
• When we develop the courage to admit we are wrong, we develop a deep sense of self-respect.
• Apologizing helps us remain emotionally connected to our friends and loved ones. 
• Knowing we have wronged, but once we have apologized we feel freer to be vulnerable and intimate.
• Apologizing usually causes us to feel humiliated but acts as a deterrent not to repeat the act.
• When wrongdoers apologize, we find it easier to forgive them.
• When someone confesses to and apologizes, the person's humility and apology cause us to see him as more human, more like ourselves and this moves us.
• It easy to forgive an apologetic wrongdoer, because apology and confession increase empathy, that heightens the ability to forgive.
• Apology encourages forgiveness by eliciting sympathy.
• Apology leads to empathy and empathy mediates forgiveness.
• If apology does not come sincerely, it will not feel meaningful to the other person.
• The desire to apologize must come from within. 
• Apology, when sincere and intentional, is a powerful and life-altering tool for both the giver and the receiver.
• Apologies that are used as manipulations or mere social gestures will come across as empty and meaningless.

Apologizing is the best way to deal with a mistake.

It simply disarms the opponent.