VOX POPULI

by

S Kamat

as

Aam Admi

Issue: 177          Date:  21.11.2016

skamatblog.blogspot.com or aamadmivoices.blogspot.com

Contents:

1.       Tipu Sultan: The Man and his Jayanti

2.       The Demonetization Mess Continues Unabated

3.       India Reduced To A Banana Republic & Under Authoritarian Rule By Demonetization

Tipu Sultan: The Man and his Jayanti

The legends of Hyder Ali and his son, Tipu Sultan are etched in our minds through the history books that we read in school. The fact that Tipu outshone his father is also common knowledge. That Tipu Sultan was a thorn in the flesh of the English in their quest for establishing the British Empire in India is acknowledged by his sworn enemies, the English themselves. That Tipu was a master strategist and a brave warrior is recorded in the annals of many a historical battle. His principal aim was to consolidate and expand his kingdom in the South. For this his principal enemy were the English in their aim to add India to the burgeoning British Empire. To fight them Tipu Sultan reached out across the seas to ally with French, traditional enemies of the English at that time. As an administrator he was known for implementing an efficient and sympathetic revenue system. Tipu Sultan also encouraged industry to be established in the Mysore kingdom and the advances in rocketry that he achieved was used by the English in later years. Those who criticize historical figures like Tipu Sultan should remember that the times in which these people lived were different, the value systems were also different. We cannot view these figures through the lenses of present and modern times since it would be patently unfair to them. Another thing that those who raise their voice against Tipu Sultan should remember that for whatever reason people still remember him some three centuries after his death, for good or for bad which may not be the case for these people since most of them after their death will not be remembered for any equivalent span of time. Men like Tipu Sultan stride on the canvas of history painting it with their exploits and achievements which are relevant for that day and age which lesser mortals should not try and undermine. Give the man his Jayanti since Tipu Sultan fully deserves it.

The Demonetization Mess Continues Unabated

The senior ministers in the BJP like Rajnath Singh are toeing the instructions of the PM to defend the demonetization measure but the way they come across to the media, everyone seem very defensive about the whole thing. They proffer lame-duck arguments which from their sheepish manner it is apparent that they are not convinced about the benefits and the manner in which the whole thing was done. While quoting the thousands of crores that went into terrorism and counterfeiting that has been now saved by the demonetization measure, they are missing the point that the country is losing at the rate of Rs. 25,000 crore a day in GDP and this figure is increasing as the days pass by with more and more sectors of the economy facing the cash crunch. A loss in GDP means people’s productive output is coming down which translates into livelihood issues for the people. As we glance across India the non-availability of cash is hurting all sectors and as time goes by the impact will be more widespread and go deeper and deeper. By conservative estimates it is indicated that the cash situation will take at least 6 months to normalize given the production capacity of our currency printing presses to print new notes. By that time one does not really know what India’s economic position will be? It is going to be uncertain times.

On the back of drought in two consecutive years the Indian economy was looking up a bit with the better than normal monsoons across the country this year. The farmers with better crops were looking at more money in their hands. But then on Nov 8^th the ‘manmade drought’ struck on the instructions of PM Narendra Modi and 87% of the notes in circulation at one stroke became worthless pieces of paper. The people were nonplussed with this development that was projected as benefiting the poor by eliminating black money. But it is the poor and the weaker sections and the villagers in rural India who have been the hardest hit.  They actually do not know whom to turn to.

In all this exercise there seems an ulterior motive to benefit certain lobbies. With the scarcity in cash and the Rs. 2000 note a decorative piece in the hands of consumers, small traders like grocers, fruit and vegetable vendors essentially small businesses have been hard hit. Where perishables are involved the sellers are reducing their stocks for fear of the stocks rotting. The same applies for grocers who have reduced their stock holdings by 50% to match the number of customers coming in with spendable money. Thus if the cash crunch continues for another 6 months, there will not be many of these small businessmen around having been forced to shut shop. Where are the customers going that used to go to these businesses? They are going to the big departmental stores and shopping malls where they claim they are able to get change for the Rs. 2000 note or who continue to accept the old Rs. 500/1000 notes. Thus the demonetization has sounded the death knell of small traders and businesses who will find it extremely difficult if ever things become normal again in the trade. Thus is Narendra Modi cultivating the big stores and mall promoters lobby at the cost of the small businessman?

On 9^th & 10 th Nov full page ads were taken in national newspapers by PayTM and others suggesting the alternative to no cash in people’s hands. These ads carried the smiling visage of Narendra Modi indirectly asking people to support PayTM and other cashless money providers and electronic wallets. On the back of a similar ad by the Adani group a few months back this is the first time in free India that the Prime minister is plugging for a private operator and obviously seeking acceptance and contributing to his profits. This was clearly bad form and Narendra Modi should have avoided these ads irrespective of how much he can re-iterate that he cannot be bought but people will think otherwise. The cashless operation will work in metro centres where the people are IT savvy and comfortable in using PayTM or mobile wallets. In the rural sector where literacy and education is deficient and street savviness is non-existent, these mechanisms will not work. Moreover the network coverage is not reliable for assured transactions that will go through. Moreover Indians prefer a paper trail for any on-line transactions to avoid the deniability of the payment receiver. If acceptance of cheques has not taken off for payments within cities because essentially the trust factor is lacking between the buyer and the seller, how wil higher orders of transactions work. From statistics of cheque bouncing and comparing this with developed countries you can get an idea of why cashless transactions of the simplest variety of cheque payments has not worked in India. 

The  demonetization has not been able to curb the black money since many of those who possessed whatever little they had of it in cash have been able to transfer it to gold or have had it converted through ‘currency mules’ and or deposited it in the banks either their own or benami accounts or Jan Dhan accounts. What demonetization did was to make counterfeiting void and wiped out funding of terrorism , both cross-border and local Maoist inspired. But both are temporary phenomena since these people will find a way to duplicate the new notes though given the better technology used, it may take them more time. The same applies to terror funding where again they will find a way. Even black money will rear up its head again in an uglier avatar since the present measure has not been able to dent it much.

But the major unanticipated benefit which Narendra Modi and his financial advisors did not expect is the bonanza of money flowing into the banks as deposits. This amount at last count was Rs. 5 Lakh Crores give or take a few Lakh crores which would have been taken by way of conversion of old notes. Even then this remaining amount is a sum that is bringing a smile to every banker’s face. This amount also shows how much cash cushion each Indian keeps with him for a rainy day not wanting to trust the government or its banking system. There is a credulity gap in the system somewhere. In any case with these funds available with the banks they are looking at reducing the interest rates. Thus the benefits of the demonetization has been to the banking system which were reeling under losses because of NPA’s have suddenly turned profitable. The higher capitalization requested by the banks to the government which the latter was hesitant to provide has arrived now like manna from heaven. The banks can clean out their books of the NPA’s now since the amounts of deposits received and the NPA’s are equivalent.  Thus like we saw lately that the Rs. 8000 crores owed by Kingfisher Group to SBI was ‘written off’, we will have other NPA’s being written off also. This will mean that industrialists benefited from the demonetization and not so much the poor and the weaker sections of society contradicting PM Narendra Modi’s position on the issue. This therefore requires that the PM’s promise is restored and that is why these rumours now floating around that Rs. 10,000 will be deposited in each Zero-Balance Jan Dhan accounts. That is if Modi can find any Jan Dhan accounts with zero-balance since a couple of months ago the bank personnel were putting Rs. 10 into these accounts from their pockets to show that these were operative accounts and the rest of the accounts would have been used by the black money holders to launder their ill-gotten money. But this kind of a gesture will go well in the run-up to the Assembly elections in UP & Punjab and should wipe out the travails suffered by these people in going through the process of exchanging the demonetised note. Again it fits in with the counter to the jibes aimed against Modi by the likes of RJD’s, Lallu Prasad Yadav who has asked when the PM is depositing Rs. 15 Lakhs in each Indian’s account that he was supposed to bring back of black money stashed abroad. Modi can now say that the first installment is paid to some of the most needy people and the rest will follow!

India Reduced To A Banana Republic & Under Authoritarian Rule By Demonetization

Politicians and administrators should understand that public inconvenience should be minimised while implementing any measure. This is what Narendra Modi and his team should have realised in the context of the present war against black money and the demonetisation of the high denomination notes. The BJP has to comprehend clearly that no one is or very few are against the demonetization measure. It is in the manner of implementation which everyone is unhappy about. Could the process not have been better managed is what is on everyone’s lips? Re-emphasising secrecy to explain away the problems is not going to work since on such matters secrecy is vital but it does not mean that you implement and then ham-handedly go about solving whatever problems emerge or come forth. That essentially has been the government’s response - very much reactive rather than be top-down and driven by the government. Thus you will see that the limits for exchange were raised by a mere Rs. 500, the weekly bank withdrawal limits were raised by Rs. 4000 and the one time withdrawal limit of Rs. 10,000 was withdrawn. These are just very cosmetic changes. Then again the exchange limits for the old notes was reduced to Rs. 2000 for Sat, 19^th. There are rumours like the ATM withdrawal limits going up to Rs. 4000 from the existing Rs. 2000 from 19^th Nov is not going to happen. That one will be marked with indelible ink at the time of exchange of the demonetized notes, that one can draw Rs. 2.5 Lakh one time for a wedding by a family member. Little do the authorities know that the marriage funding will again be misused. What is the proof that is required to be shown to avail this facility? If it is printed wedding invitations, it is quite cheap to print cards so that one can obtain Rs. 2.5 Lakhs in cash. Thus you will have a spate of weddings that will not be performed but created to just avail the cash facility.

That farmers considering this is the sowing period will be allowed to draw Rs. 50000. against a sanctioned loan. If you see all these latter measures are absolutely reactive confirming that the policy makers at the time of the announcement of the demonetization did not take all this into account. That is the general story that for not doing their homework properly the government has to run around haphazardly like a chicken with its head cut.

Gujaratis are known to be street smart and resourceful persons thoroughly familiar with business But Narendra Patel, Amit Shah and Urjit Patel do not seem to be of that ilk since otherwise we would not be in this unholy mess. One needs to say here that if Raghuram Rajan had continued as RBI Governor maybe nothing like this would have happened and/or this process would have been managed better. It does not need a mathematician to tell Narendra Modi that the exchange of demonetized notes set at Rs. 4000 initially should have been given with 1xRs2000 + 4xRs. 500 which would have ensured that people had spendable money in their hands and this cash crisis would never have emerged or it would have been there to a lesser extent. But where was the new Rs. 500 note?  It was not there then and even after more than a week having passed 8^th Nov, it has not been seen to sufficient volume. In the answer to that question is the solution to the chaos that has been spread across the country.

Consider how the exchange of the demonetized notes was implemented. People were asked to go to the banks with an id and allowed to exchange up to Rs. 4000. Though it was clarified that the exchange facility was being given only once until Dec 31, the loopholes of multiple ids specified that the same person could go to different banks using one id card at a time and exchange a total of Rs. 20,000 or more. The banks were also helpless since they had no clue if the person exchanging notes had availed of the facility earlier. This lacunae was exploited by common citizens as well as the black money holders. The latter employed currency mules to convert as much of the old notes as they could. The government had in fact made it easier for the black money holders since with the Rs. 2000 notes their storage space had been more than halved! Also the fact that a huge number of Jan Dhan accounts were available whose holders were ‘willing and purchasable’, black money was pumped into these accounts with the philosophy that – Do it for now, we will look at the consequences later! (Ab ke liye karo, baad me dekha jayega!) Thus where these accounts should have been used as an advantage to implement the measure, they facilitated the black money holders to exploit them.

Consider the chaos that was witnessed during the first few days and which to a degree is still continuing. If people had been asked to report to the branch of the bank where they have their accounts where the exchange of the notes would be done then the rush at the banks would have been less. The exchange of the demonetized notes could have been done on the basis of the account holders id, his passbook and a declaration that in case of his possessing another account with another bank he would not avail of the facility to exchange the notes at the other bank. The demonetized notes could have been deposited in the account holder’s account and he could draw the new notes from it. The account holder’s passbook could be stamped with date by the bank to identify of his having availed the exchange facility. Those having accounts at the post offices would be allowed to exchange their notes similarly. Again all those who are not in the banking system and who do not have a account at any bank or post office could have been directed to a number of centralized places operated by the bank handling the treasury chest in that region. It could be an off-line place of the bank like a regional or administrative office which is located close to the treasury chest to facilitate easy money transactions. The person coming in for exchange apart from the id proof and filling up the requisite forms could be photographed at entry and marked with indelible ink at the completion of the transaction making him conscious that he has been identified as well as marked, negating or minimizing the possibility of his coming again. This method would have isolated those who are maybe in cohorts with those having black money and using others to exchange money multiple times.  Was this something beyond the knowledge of our banking personnel, RBI and Finance Ministry officials? It is not that. The situation seems to be that Narendra Modi consulted very few competent and knowledgeable people and decided to wing it on his own. The result is for all of us to see and that is that Narendra Modi fell flat on his face on the ground.

This is pretty much the opinion that Narendra Modi himself has, one would think since otherwise after having implemented such a stupendous and earth-shaking measure why has he gone into hiding? He should have appeared in Parliament and with his 56” chest proudly told his colleague legislators of what he had done.

Other than these things there is something elusive about why the demonetization measure was done suddenly on 8^th Nov. Why the sudden urgency? Why as it has been stated did not Narendra Modi not wait till the New Year of 2017 and launch it when all new notes particularly the Rs. 500 denomination would have been available in sufficient number? The scenarios in this are many. Let us consider the first which is our PM Narendra Modi’s event management style. He always wants a dhamaka irrespective of a few people getting hurt or dying, 40 or more at last count, in that process. Thus the demonetization measure was an unprecedented move and right before Parliament meeting on 15^th Nov, allowing Narendra Modi to take credit for the demonetization measure. Unfortunately that did not happen and the BJP has been mouthing the same platitudes of the advantages of demonetization with its back to the wall. As for the 40 or more people who died because of the crisises, ranging in age from babies to elderly people, because of the demonetization, Narendra Modi as PM should apart from paying their families compensation, fast for one week to atone for the lives lost. This will teach him that leaders should govern in such a way so that people suffer the least. Sacrifices should be called for at the time of natural disasters, acts of God and in times of war but not when leaders because of their incompetence heap misery on the people that they rule.

The second scenario is that information about the demonetization measure had been leaked out and had reached the black money holders and even a single day’s delay would mean that the measure would fizzle out. Thus Narendra Modi went ahead with it without waiting for the crucial new Rs. 500 note which was required along with the new Rs. 2000 note. So it was a limited gain scenario.

The third scenario is that the BJP as a party and its members are not devoid of possessing black money. Thus the slipshod and ham-handed operation for exchange of notes as above was implemented giving the BJP people also time to convert their black money. Evidence pointing to this being true is in the incident where the Bengal BJP deposited Rs. 8 crores or more into the bank on the 8^th Nov and minutes before the PM went on air. Further proof is that a BJP Minister in Maharasthra has admitted that the amount of close to Rs. 1 crore in the demonetised notes seized does belong to him. No other political party or its people have yet been caught with the demonetised notes. There have also been rumours that Adani and Ambani had been given information on the demonetization well in advance.

These are only guesses and we will have to wait and see if ever the truth on this comes out.

Thus when dawn broke on two successive days on 8^th and 9^th Nov 2016 in India, the first day was when everything was normal and the 125 crores of Indians went about their normal lives but as the day progressed and evening came, a fury was unleashed on India in the form of the demonetization of the Rs. 500 and Rs. 1000 currency notes wiping out whatever little money the people had and making them paupers. On 9^th Nov 2016 with banks being closed the Indians did not know whether they were a banana republic located in the Carribean or South America or one of the countries in Africa once called the Dark Continent since they found that in these times of high inflation and cost of living zooming skywards, a financial Emergency had been imposed upon them. Since the 8^th Nov 2016 and until date every Indian has found that he is unable to withdraw his own money from banks for legitimate expenses be it for medical expenses, family functions or weddings and is being told that today you can get only this much and do not ask any more during this week. This makes every Indian feel that we have become an authoritarian Communist country behind the Iron Curtain where all resources including money belongs to the government. Toad in India if one raises his voice in protest he is branded as a black money holder and anti-national to boot since morality and patriotism is the exclusive preserve of Narendra Modi and the Bharatiya Janata Party members.  This, my friend, is the country you are living in and one may say that things will only become better but one never knows with Narendra Modi promising more ‘action’ after 31^st Dec in the war against black money. How you or I are going to be affected, God only knows!

********************************

VOX POPULI

by

S Kamat 

as 

Aam Admi

Issue: 176             Date:  14.11.2016

skamatblog.blogspot.com or aamadmivoices.blogspot.com

Contents:

1.      The Demonetization Measure Getting All The More Hilarious

2.    Narendra Modi Had Better Get Down To Brass Tacks

3.      Demonetization Exercise: A Trust Deficit Emerging

4.      The Fiasco Unleashed On The Aam Admi By Demonetisation

The Demonetization Measure Getting All The More Hilarious

Narendra Modi has correctly said that there is no pulling back of the demonetization measure. That time has passed and now there is no alternative but to go forward. Repealing the measure will only complicate the exercise making a bigger mess than existing.

But Narendra Modi should cut out the hype and the fear factor from his speeches. He should objectively go about resolving the issue of cash availability to the public so that the demonetization exercise works. Talking about counterfeit notes flooding the country from Pakistan or the drug syndicates using black money to undermine our society and that those who are in the possession of black money being out to kill him and maybe ‘burn him alive’ is completely avoidable rhetoric. In the first two instances are we as a country so weak so as to succumb to these threats? In the last where no verifiable threats exist, it is irresponsible on Modi’s part to raise these issues to sway people’s minds. Moreover such statements are not Prime Ministerial and Modi should cultivate some decorum to project the correct image. The problem with Modi is that he is always in election mode and governance is the least of his concerns. That is exactly why the country is in the mess that it is today. Any act of governance by Modi’s government has been marred with avoidable controversy which raises questions on his ability to govern. Even with the demonetization exercise, if Modi and his team had applied their minds properly to the issue then it would not have turned into a fiasco that it is progressing into.

As for the demonetization exercise being done for the poor, that is not exactly the whole truth. Modi is taking the advantage that the poor are ill-informed and also innocent and is essentially acting like the Pied Piper of Hamelin leading his rats over the cliff. If you notice in the BJP it is only Modi who talks about the poor while everyone is oriented towards benefiting the urban middle class and the wealthy. So is this a strategy to use their strongest draw in the form of Modi to eliminate the poor. That would be a very sad day indeed!

Consider the Indian economy just prior to Nov 8^th. The performance was indifferent and people’s expectations for it to improve were high. Moreover inflation was rampant and rising continuously. So effectively what did the demonetization exercise achieve in this last one week. Trade and business was hit severely with the sudden withdrawal of currency from people’s hands. People have been making a beeline to banks to withdraw their money leaving their jobs and work. Does this not affect the functioning of establishments, both government and in the private sector? Does it not impact the productivity in the economy? By any yardstick, one is not very wrong, if one says the India has been brought to a shuddering halt because of the ill-conceived manner of this demonetization. The economy has clearly been hit and will take some time to get over this setback. The TMC has put the loss of GDP in this last week to Rs. 1.5 Lakh Crores. And mind you we are not seeing the last of it. The show will continue until Dec 30^th, when Modi has promised a second act of the drama. So be prepared for turbulent times to get at your own hard earned money.

The fact that the demonetization measure was not properly planned is evident from the latest advice that people will be marked with indelible ink at the banks when they exchange the old notes to stop them from coming around a second or multiple times to exchange notes. One wonders whether we are a developing country aspiring to become a developed one since marking your people to identify them one way or another is harking back to medieval times or negating the principle of democracy since such measures are used for convicts or concentration camp inmates. This is being stated because this is your own money and which when you go to exchange you are marked as would a common criminal. The Portuguese used to do this in Goa during their early rule when the locals were asked to wear a particular type of headgear so that they could be easily identified. Assuming the marking with indelible ink is done then what about places where elections are likely? Will the government use different colour inks – one for election purposes and another for currency note conversion! We are surely progressing and pretty fast to the regime of Cho Ramaswamy’s Mohammed bin Tughlaq! 

All in all the ability of Narendra Modi and the BJP to govern is suspect and the more they attempt it, the more hilarious the situation is becoming as represented by the demonetization measure. There are many who have great ideas but there are few who have the ability and competence to translate those ideas to action. This is one department which people like Modi are not the members of.

Narendra Modi Had Better Get Down To Brass Tacks

One thinks that Narendra Modi should cut out the drama and get down to brass tacks to solve the problem created by the demonetization exercise on 8^th Nov 2016 launched by him. By his own admission there are only a few lakh persons involved in accumulating black money and if so, why is the whole population being punished. Could he or his brilliant advisors not have come out with specific measures to target only those involved with black money? Again as per statistics put out by his own government during raids on persons possessing black money only 5-6% is the amount that is recovered in cash. If so why all this tamasha of demonetization since effectively only 0.5 – 0.6% of the black money is what is being targeted. There should therefore have been some other method in this madness which has been unleashed on the whole country since 8^th Nov.

In any case, with the latest announcements that the new Rs. 500 note is likely to become more available and the easing of withdrawals from bank to Rs. 24,000 per week without the limit of Rs. 10,000 at one time as it was earlier, things should ease the crowd at the banks. Further the revised limit of Rs. 2,500 at one time for ATM withdrawals should also ensure that some spendable money is in the hands of the people even after the ATM is modified to accept the new Rs. 2000 note. Otherwise the worry was that you would get a single note of Rs. 2000 for the ATM withdrawal leaving you essentially in the same position vis a vis spendability but with the comfort that you at least have some legal money in your pockets. 

The problem has been that those involved in policy making and advising Narendra Modi have no idea of what is happening at the street level and what impacts the common man. With Indians there is a certain degree of comfort that you get to have some cash at home. This is kept to take care of unforeseen needs and emergencies. The amount of this cash may vary from individual to individual. Also high denomination notes like how the black money hoarders prefer it are also preferred by common people who apart from the above reasons may have no access to the banking system. All this is not black money but hard earned money of the aam admi. The present crowing and exultation expressed by the banks that since 8^th Nov they have in total received more that Rs. 300,000 crores in bank deposits may not all be black money. In the majority, the perception is that Narendra Modi’s government is like a bandit who on 8^th Nov in one fell swoop stole all the money available in the hands of citizens and is continuing to still make it difficult for people to withdraw their own money.

Modi has also been saying that the aam admi is with him in the demonetization measure. It is suggested therefore that the government should conduct a survey over the next 7 days at the various banks where people have been collecting and let him see what the reality is. They will say that they are with him on the fight against black money but are very much against the way this demonetization has been done. No one is against the drive against black money but Narendra Modi and his colleagues in the BJP should not paint everyone who is coming out criticizing the government, that these people are mouthpieces for the Opposition parties or are possessing black money. This way they are refusing to see reality. This happened the earlier time, some 10 years ago, when the BJP had come out with its India Shining campaign just before the general elections and India was not shining. The result was that the BJP lost in the elections badly. Thus if Narendra Modi and his government continues to make a mess of simple things then they will have to say goodbye to winning any more elections in India.

The worst part is that whenever anyone is raising his voice against this demonetization or any other measure then the BJP and this government  moves into a threatening mode. They should do this to those who are the perpetrators or offenders like against the 10% of the people who indulge in black money. They deserve it and in fact the government  should not be a paper tiger but go after them with hammer and tongs. But please do not threaten the 90% of innocent people and put them into difficulty as done now, since it is this 90% which can make a difference come election time. As to Narendra Modi seeking 50 days time for the   demonetization measure to resolve itself, that is too long a time and in fact confirms the fact that he did not know what he was getting into in the first place. Many of the people may not also be around given the number of deaths caused by the non-availability of cash. Since the 50 days synchronises with the first week of Jan 2017 which was what was the recommended time for the demonetization measure. The nation would like to know why this was preponed to 8^th Nov. 

Narendra Modi going emotional on this is also another sign that he was unable to gauge the problems that would emerge and is therefore now tugging at the hearts of women and the gullible poor. That is not going to work this time. This is clearly a failure of the government and he has to address the nation and come out with a clear-cut apology on this and rectify the situation as soon as possible. He claimed in his speech, he gave up his life, his home and his family for the nation! Putting it simply, the country would have been better off if he had not done that. Since any more gaffes at this scale are not going to be acceptable. He has said that after the 50 day period is over, there will be new measures to fight black money. These had better be thought out with more reason and implemented with more sensitivity if the aam admi is to be affected.

Demonetization Exercise: A Trust Deficit Emerging

Since 8^th Nov, 7 persons have died: 3 in Kerala, 1 in Andhra, 1 in Bengal and 2 in Maharasthra., which are related to the demonetisation, either while standing in queue to exchange old notes or for not understanding the issue properly and in frustration resorted to taking their lives. These are the martyrs to black money. Will Narendra Modi and his government pay their families compensation for the sacrifice? One would presume that Modi had not anticipated this kind of outcome from his resolve to wage war on black money.

There has been absolute chaos all across India since 10^th Nov. No spendable cash in the hands of the people has become acute which is affecting people’s daily lives because of their inability to purchase necessities. The poor are the hardest hit since their lack of literacy confuses their understanding of the procedure to go through the process of understanding this demonetization. Trade and commerce has been hit because with no cash, customers are not coming in. This has affected perishable food items like fruits, vegetables, meat and fish which are rotting in some parts of the country. With the supply of new currency notes of Rs. 500 and Rs. 2000 denomination not improving there is no end in sight of the chaos for at least another week.  

In all this uncertainty, there is also black humour with PM Narendra Modi addressing an Indian audience there which must be Indians settled there, journalists whom he flew out on his plane and Indian Embassy staff who applauded when Modi said that the aam admi is with him on his adventure to eradicate black money! Unfortunately Modi and his Finance Minister, Jaitley are not on the same page since the latter has been trying to talk down the chaos of the aam admi at banks around the country by saying that there is no need to rush and people have time till Dec 31^st to exchange the demonetized notes. He was also trying to reassure that the people’s money is safe with the banks. Here again Jaitley is partially missing the point since people are not worried about losing their money but they are rushing to the bank for valid cash to be used to buy daily necessities.

Even in this when they go to the bank they are being given the new Rs. 2000 note which does not solve their problem since the Rs. 500 is not available.  The Rs. 500 note has become the note of choice with the high inflation prevailing. It is understood from news reports quoting RBI sources that the demonetization exercise was to be done in the New Year – 2017 when both the new Rs. 2000 and Rs. 500 were to become available in adequate numbers. If so why was the demonetization brought forward to 8 Nov? There are no answers to these questions. If the new Rs. 500 note had been available then a large part of the chaos would have been contained. Thus when people present the new Rs. 2000 for purchases there would have been easier options to give people change. Now the situation is the next denomination after Rs. 2000 is the Rs. 100 and that too is not available in large numbers compelling the RBI to fall back and release soiled Rs. 100 notes into the market. We have to ask which mathematical genius suggested to the PM to go ahead with the demonetization with just the Rs. 2000 note knowing the supplies of the new Rs. 500 note was slack. There is another subtle market pattern that comes to play in this context since if purchases are not close to Rs. 2000 the seller can claim lack of change available and thus force the buyer to buy more. And slowly the sellers will jack up their prices of almost all items except for the labeled MRP items to take advantage of the short supply of change in the market. So much for containing inflation. The way this whole thing has been mismanaged India’s reputation as an economic power has taken a beating and we are equated to any country in Africa and South America.

Jaitley has only now realized in a statement that he has made that 87% of the currency in circulation comprising of the Rs. 500 and Rs. 1000 notes to be replaced is a huge l;ogistical exercise. Why, did he not assess this problem earlier? If the new Rs. 500 note was likely to be delayed, why was the demonetization exercise not pushed back until both the Rs. 500 and Rs. 2000 notes were available in sufficient volume.  

Similar lack of the attention to detail can be seen in ATM operation since conflicting reports were being given. The ATM’s were to start working on Fri, 11^th Nov, which did not happen in many parts of the country. Even on 12^th Nov when some ATM’s started functioning, they ran out of cash very quickly. The ATM’s were also dispensing only Rs. 100 notes which was a good thing but considering that a limit had been set to Rs. 2000 for each person/ bank account, they would not make a material difference in reducing the chaos for currency at the banks. It is also reported that some 40,000 ATM’s out of 150,000 will not work since their software licencing arrangement with a US Co. has expired and it will take a while for this agreement to be renewed. Once again Jaitley has made a statement that the ATM’s will have to be physically modified to handle the new Rs. 500 & Rs. 2000 notes and/or the Rs. 50 note. And this will take another 2-3 weeks. Was all this not known to Jaitley and the RBI and if so did they deliberately go ahead with the demonetization exercise consistently bluffing the public that the ATM’s would function from 11^th onwards. This is rather bad form that you say that you are doing this demonetization exercise for eliminating black money for the benefit of the public and in that process continue to fool them. Thus you will see for the ATM’sw to work it will take a little more time. How much? No one is aware!

To put matters in perspective and for the information of PM Narendra Modi and his team who are leading the demonetization exercise, the aam admi is not against the demonetization exercise and the fight against black money but only wished that it had been done better and that the authorities had taken the common public into confidence which would have eased their anxiety and allowed them to go about their humdrum life quietly and without bother.

The Fiasco Unleashed On The Aam Admi By Demonetisation

One needs to understand the numbers involved in the demonetisation exercise to realise the complete immaturity with which it is being carried out. There is no question that demonetisation is one of the methods to combat black money, counterfeiting, corruption and funding of terrorism but any measure before it is undertaken needs to grasp the side-effects that it is likely to cause. The number of notes in circulation by both volume (value) for the Rs. 500 and Rs. 1000 notes were 17.4% (47.8%) and 7% (38.6%). Thus you can imagine that close to 25% of the notes in circulation were withdrawn by Narendra Modi on the stroke of midnight of 8th Nov 2016 which also constituted more than 86% by value of the notes in circulation. In any management exercise we are taught to look at the side-effects and to try to minimise and cushion the impact as much as possible particularly so if you are dealing with a large number of people and that too, like here, the common public.  Nothing like this was done and Narendra Modi went the whole hog. That is precisely why we are in the predicament that we are today sitting with some Rs. 2000 currency notes because the Rs. 500 notes are yet to arrive. People across the country are finding it difficult to buy daily necessities and some are being turned away from shops not accepting the old 500 and 1000 notes and some holding the new 2000 notes being forced to buy more or what they do not need since shops are saying that they do not have change to return. 

If as it is stated that the Rs. 500 note was being counterfeited more as also hoarded as black money and since it constituted 17% by volume and 47.8% by value then why was only that denomination not demonetised? After the VDS scheme which mopped in amounts far in excess of earlier schemes was Narendra Modi  not happy to attack close to 50% of the black money hoards? The logistics exercise wound have been that much less and the 1000 note would have served to tide over the immediate problems that people would have in buying daily necessities. The timing of this exercise may be politically very correct and that is to take the wind out of the sails of the Opposition parties in the UP & Punjab polls, but for the common man it has been disastrous. Just after Diwali when there has been a bout of expenditure and cash levels held by common people are low, you come up with a measure which wipes out 80% of even that by demonetisation and on top of that do not ensure the availability of alternative notes. In the fight against black money it may be a masterstroke but in terms of its impact on common peoples lives, it is a monstrous and stupendous blunder. Narendra Modi should have thought and  planned better before implementing this measure. It is unfortunate that the PM was not better advised since we find that even his Finance Minister make a statement at this present time that there is no need to rush to the banks since there is still time until Dec 31. He has no idea that common people are not in a position of influence like he is to get credit from  his grocery suppliers and need to pay in cash for their daily necessities. Additionally he compounds that statement by saying that this is a good time as any to see how a cashless economy can work. These are immature statements since India not only lives in its cities but also in its villages and while a cashless economy could work in urban areas it will take a long time to make a difference in the lives of villagers  in India's vast hinterland. These are the kind of statements that one would attribute to Marie Antoinette and gives you an idea of the kind of people we have in charge now, who have no idea of what they are doing and are far removed from ground reality ensconced in their ivory towers. 

The thing that hurts the most  in this whole exercise of demonetisation and the process of exchanging the old notes for the new ones, is that in your own country you are treated like a criminal. Those who live humdrum lives and among them retirees for the money that they have earned through hard work or through savings are treated as if they have stolen the money with multiple forms to be filled, identity proof to be given and their pictures recorded by CCTV! All this for what because 10% of the population indulges in black money and other nefarious activities as above. Was there no other method to tackle these law breakers ?  Do our lawmakers lack the imagination and ability to tackle these black money operators/possesors? For these 10% the other 90% simple, common, innocent people are made to suffer. Another aspect is that the black money and other nefarious users of the high denomination notes have always run rings around the authorities and continued to amass their wealth and even now and afterwards they will continue to find a way out of even this present  demonetisation. Thus the authorities should have evolved some measure that was smarter than what their opponents can outbeat and implemented that. But the amount of intelligence available in government, as we have seen,  is very limited and therefore we are in this present predicament. This is the kind of inept, immature and irresponsible government we have that deliberately puts its common citizens in trouble to experiment with the inane implementation of their policies.

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Hi,

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OPinionatED

or

VOX POPULI

by

S Kamat 

as 

Aam Admi

Issue: 175          Date:  07.11.2016

skamatblog.blogspot.com or aamadmivoices.blogspot.com

Contents:

1.      Desirable Demonetisation But Sloppy & Insensitive Implementation

2.      The Reality of OROP

3.      TV Channels: Self-Regulation or Monitoring of Content

Desirable Demonetisation But Sloppy & Insensitive Implementation

The sudden demonetisation of the Rs. 500 and Rs. 1000 currency notes was like a 'surgical strike' against black money, counterfeiting and corruption. With the BJP government and PM Narendra Modi in the mood for such action after the hype created around the surgical strikes against Pakistan post- Uri attack, this demonetisation exercise is probably intended to keep the hype going. There is no question that such action against black money, counterfeiting and corruption is very much needed but then more thought should have gone in the implementation of the measure. Because the 'collateral damage' out of the withdrawal of the Rs. 500 and Rs. 1000 currency notes on the common man during this transition to the new currency, albeit over just a few days, can be quite crucial and distressing. 

There is a belief that government and our leaders should look after the people particularly those that are weak and vulnerable. Unfortunately in this measure this aspect has been conveniently forgotten. In the intention to hit hard, those possessing black money and involved in corruption who hoard the large denomination currency notes, the common man who has maybe a few of the Rs. 500 and Rs. 1000 notes is finding himself for a day without any money considering that the banks and ATM's are not operating. Modi should also have realised that the Rs. 100 note and the denominations below that hardly buy anything these days and the Rs. 100 notes are probably less in circulation than the Rs. 500 which has become the popular note given the prices prevailing all around. But considering that Modi is not a family man, how do you expect him to know all this? 

Thus the assessment should have done as to which note, the Rs. 500 or Rs. 1000 is the more popular for black money hoarders and demonetise only that. The other note could have been demonetised after another couple of years. This would have softened the impact on the common man since then he has an alternative to the Rs. 100 note. This option would not have achieved the desired level of eliminating black money but then in the interest of the larger interests of the common people and softening the impact on them such a decision would have been better. 

These aspects are very important particularly in a country like ours where education levels generally across the whole country are low, communication tends to be distorted and everything is slanted to the convenience of those in authority or those with more resources.  In the rural areas particularly not having money could be critical even for a day. Like it is said - Jor ka jhatka dhire se lage - but then for an event management specialist like Narendra Modi going for the maximum impact was, one would think, more important.  

The demonetisation exercise has also, one would believe, certain other concurrent objectives for the  BJP and Narendra Modi, mostly political. Firstly, it takes off the attention from the fact that the economy is in a mess and nothing is moving. Secondly, with the advice that a Rs. 2000 is being introduced, it indicates that the government has given up its fight against inflation and has reconciled itself to the prevailing high prices. Like in some of the banana republics and countries in South America where inflation is rampant, you have currency denominations of 50,000 and 100,000. So shortly in India you will see probably notes of Rs. 5,000 and Rs. 10,000.  Thirdly,  with elections around the corner in two important States, Punjab and Uttar Pradesh, this is a clever way to take away the cash hoards of the opponent parties like SP, BSP and the Congress cramping their ability to fund elections. With inside information available to the BJP on the demonetisation, Amit Shah would have probably converted his party's currency war chest to holdings in gold. It would not be surprising that election dates for the two States are announced in a month. Everything is fair in love, war and at election times! Lastly, for the black money hoarders there is a silver lining on the dark clouds of demonetisation, since with the launch of the Rs. 2000 note they can plan to have just half the amount of space or less while storing their ill-gotten wealth in the future. Even they have acche din coming to them. Thus Narendra Modi's  demonetisation exercise has multifarious effects. 

What next in Narendra Modi's plan of things? Maybe a short, high intensity war with Pakistan in March or April 2017, considering that the Defence Minister has recently denied going to war against Pakistan, which in the weather man's terminology means the opposite is likely to happen. With all this on the anvil, who can stop the BJP coming back to power in 2019 with a resounding majority?

The Reality of OROP

The politics being played out in the suicide of the army veteran over the OROP issue is rather unfortunate. The fact that Rahul Gandhi and Arvind Kejriwal joined issue on the matter to the extent of making their presence very much visible at the Haryana funeral showed their humanitarian immaturity. In trying to make political capital in the death of a human being and that too a confused and elderly one, these wet-behind-the-ear wannabe politicians are showing up their selfish and rapacious side. The ex-serviceman had a grouse which enormity had an overbearing effect on his mind and unable to rationalise the problem with anyone, he decided to take the extreme step of taking his own life. Rahul Gandhi's sweeping statement that OROP has not been implemented is going to sow further confusion in the minds of other ex-servicemen with similar problems and it would not be impossible that we would have others considering other similar extreme steps. The BJP government on their part are not making anything easier for the ex-servicemen with the Defence Minister making a comment that all OROP issues would be resolved in two months time. If it was known that there were problems in OROP then would it not have been better that helpdesks should have been opened at the Cantonment/Canteen Stores Dept./Medical Clinics where these ex-servicemen normally visit and telephone helplines installed at specific offices of the defence services where the affected personnel are able to seek clarifications. Where these  ex-servicemen survived maybe the bullets of the enemies at our borders it is rather unfortunate that they should take their own lives for lack of sensitivity of their own people who sit in the services as their present bosses.

TV Channels: Self-Regulation or Monitoring of Content 

The one day ban of some TV channels notably NDTV India while covering the Uri attack is in no way a restriction of press freedom nor an attempt by the government to muzzle the press. The media for long, the TV media in particular, has been given a long rope and they have been literally going consistently over the limit of the boundaries of national security, human rights etc. This has come to the fore from the times of the 26/11 attack in Mumbai where we had the TV reporters posturing like the NSG commandos lying flat on the ground etc., interfering with the activities of the commandos and the fire fighting personnel and generally making a nuisance of themselves to the extent of their being a hindrance to the objective of the action like taking down the terrorists or fighting the fires. Little do these TV reporters realize that they look ludicrous and most people watching TV have the whale of a time laughing at their antics which takes away the gravity of the problem that is being depicted. In the Uri case, the issue is not whether the matters commented on the TV channel were already in the public domain but the fact is that there was no further need for the TV channel to go and further expose it. Someone may have made a mistake of exposing the particular information but there is no further need of repeating and compounding the mistake. Similar exposure of sensitive information has happened or happens when the TV channels cover news relating to our space or missile program or new acquisitions of military hardware. The TV channels need to be sensitive of the fact that it is our space/missile program on which we are giving out information and be careful about it. The prerogative of giving out information is with the space/missile organization and the TV channel need to clear it with them before they can spew information out or stream pictures of the launch site or of the missile like Brahmos for instance. This happened also when the C-130 Hercules was incorporated into the IAF. Though Jane’s Book will give all data about the C-130, there is no need of us to relay it out. At all times in matters of national security the attempt of all involved including the TV channels should be to make it difficult for our enemies to get information and not volunteer it ourselves, mostly to score brownie points over your colleagues or against a competing TV channel. Like it is possible that the Pakistanis do not know about Jane’s Book to get information on the C-130! So do we have give to them on a platter! We have also seen that when people are attacked on the street by someone the TV reporters instead of using their presence and influence to protect the victim and/or defuse the issue, they let the incident play out fully so that they have a ‘good’ story while the victim gets seriously hurt. Similarly when there are disasters man-made or natural we have seen TV reporters asking those affected – How do you feel now? What is there to feel when a flood has wiped out your last assets or a building has collapsed in which you have lost a near and dear one or a fire from which you have managed to escape with limited burns etc. What is there to feel? Do we not all have the same feelings put in the same situation. In cases where a mob is involved or there is police action like a lathi-charge or firing one can accept that the TV reporters cannot intervene but they can at least do that on one on one situations. The TV channels persist in carrying such pictures to ‘shock and awe’ the viewers and boost their TRP ratings which are today the indicators of success in the visual media world. It is time to stop that and either allow the TV channels to become more responsible and be self-regulated while having the government as in the ban incident act as a watch dog to award punitive measures in the event the TV channel strays from the accepted and agreed charter of what they can show and what they cannot show. One cannot understand why there should be a debate on such matters and allow it to go up to the Supreme Court is not understandable.

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