VOX POPULI
by
S Kamat
as
Aam Admi
Issue: 189 Date: 20.02.2017
Contents:
1.
Moderate The Praise For
Virat Kohli
2.
The Demonetisation
Bungle Unravelled
3. Demonetisation Impact On The Economy & The Malaise of
Contradictory Figures
Moderate The Praise For Virat Kohli
The media is again going ga-ga on the exploits of Vrat Kohli
on the cricket field as also covering his personal life that is linked to the
actress Anushka Sharma. There is no doubt that Virat has been exceptional
lately in his batting and also as captain in all 3 formats of the game. If he
continues with the present form for some years and given his relatively young
age he should hold all the records relating to batting in cricket beating the
likes of Sunil Gavaskar and Sachin Tendulkar. His only competitor here is
Alastair Cook from England who has lately relinquished his captaincy ostensibly
to concentrate on his batting. Virat at the same time has kept a cool and
balanced head both on and off the field which is a rare virtue for a sportsman
particularly one so young. We should nurture such talent and nourish it to its
full potential. Therefore undue praise tending towards hyperbole should be
avoided lest Virat’s young age turns against him and makes him lose his head. In
the event of that happening it will be only India’s loss. With our sportsmen
particularly in the high voltage arena of cricket we have been quick to praise
and with a minor slip in form, we have been equally quick to castigate. Thus
the media and all those involved in cricket should tread with caution while
commenting about Virat’s exploits and show the same balanced judgment as he is
showing rather than pursue TRP or the ABC ratings which are media indicators
for ‘excellence’.
The Demonetisation Bungle Unravelled
There have been many opinions that have been expressed as to why
Narendra Modi embarked upon demonetising the old Rs. 1000 and the Rs. 500 note
on the 8th Nov 2016 while simultaneously launching the new notes of Rs. 2000
and Rs. 500. The simple answer to this most asked question over the last three
months in India was that he wanted to bring the black money syndicate closer to
him and make them sever their links with the other political parties. For this
he left a small window of opportunity for the black money syndicate to exchange
their money to the new currency notes making them much obliged. The reason why
Modi did this was to ensure that funds keep flowing to the BJP. The other
reason was that if the black money syndicate is obliged
to Narendra Modi then they may drop their plans for eliminating him as he
had claimed in an emotional speech made just about a week after 8th Nov 2016 in Goa. This
is but natural survival strategy of any individual to save his own life!
The second most important reason of demonetisation was
to starve the other political parties of cash resources before the Assembly
elections that are currently ongoing in UP and just completed in Punjab, Goa
and Uttarakhand. BJP having had the first information advantage about
demonetisation had moved their cash resources to gold and other easily
negotiable modes of money. The results of these elections in the middle
of March 2017 is being considered a referendum on Modi's policies including demonetisation
and its consequent ravages on civil society.
The demonetisation exercise was sold by Modi to the
country on the platform of wiping out black money, to fight corruption, to
erase the resources of terror and drug funding, to fight counterfeiting etc.
etc. Let us look at each of these and see how effective the demonetisation
exercise has been to combat these menaces to our civilised
society.
As for black money as highlighted above the facility of
exchanging the old notes to the new currency notes mostly the Rs. 2000
denomination was assisted by this government with its sloppy implementation.
Proof of this is the numerous seizures of cash hoards across he country mostly
in new currency and that too in the Rs. 2000 note. Just recently in a godown in
Bengaluru Rs. 4 crores odd currency was found stashed in sacks of
potatoes and onions which comprised more than 90% of the Rs. 2000 notes and the
remaining were new Rs. 500 notes. For more than a week now no one has come
to claim the cash which leads to the logical conclusion that this is black
money. The Rs.2000 note has become the note of choice for black money
hoarders now since for the average public it has no meaning since you can never
get change for it while daily shopping. With news that the government is coming
out with a new Rs. 1000 note the black money syndicate is quaking in
its shoes whether the Rs. 2000 note would be demonetised without giving them
adequate notice.
Nothing has changed as far as corruption goes since it continues
to thrive as we have seen in raids across the country where mostly new currency
has been seized. The assumption that with less cash in the economy the quantum
of corruption will reduce is another one of those daydreams that Modi has
exclusive access to experience. It will take decades for this kind of logic to
work in India since if there is less cash then corruption will shift to kind
like jewellery, gold etc.
For terror and drug funding it was a temporary setback and now
they are comfortable with moving to the Rs. 2000 note and the other
denominations. Nothing has changed in these areas irrespective of whatever
fudged statistics that the government puts out. As for counterfeiting it was
again a matter of time that the new notes would have been copied and the latest
is that the Rs. 2000 note coming out of Pakistan is as good as the original, if
not better since our experts are studying more the the Pak origin note than in
concentrating to make our note copy-proof!
How was all this demonetisation exercise sold to the people? As
something benefiting the poor. How it does that no one knows as yet though
close to 3 months have passed since 8th Nov 2016. However, one must say with
certainty in the days post-demonetisation the poor were badly hit with daily
wage labour thrown out of jobs, no money available for food making a
mockery of Modi's statement that the rich are spending sleepless nights
while the poor are sleeping comfortably. The cash shortage thereafter resulted
in unending queues in front of banks which physical trauma and
anxiety led to many deaths. Additionally there were deaths linked to
non-availability of cash and non-acceptance of the old notes by doctors
and at hospitals that led to more deaths. Thus 125-130
lives were lost across the country. The central government has been
strangely silent on this issue. No compensation has been announced
for them except that Akhilesh Yadav in UP made a pre-election gesture of
offering a nominal amount of money to them. Thus one cannot but come to the
conclusion that Modi is bothered about his life as mentioned earlier but
not about the lives that were lost because of his actions. This is being rather
insensitive and callous, a trait of character that Narendra Modi should
try and eliminate.
In the euphoria immediately after demonetisation when it
was expected that out of the 87% of the currency then in circulation of the Rs.
1000 and the Rs. 500 notes would not all come back to the banks, it was
rumoured that every Jan Dhan account would be credited with Rs. 25,000. But it
was found that the black money syndicate and/or the Jan Dhan account holders
were smarter and a large number of these accounts were found to have crores of
deposits already made in them. Being outmaneuvered Narendra Modi made a
rather lame duck speech on New Year's Eve posting minor sops to various classes
of ctizens which many have said sounded like a Budget speech. It was also found
that majority of the demonetised notes to the extent of 93% in some
estimates have come back to the Banks. The wind was thus taken out of
Modi's sails once again since the expected windfall dividend by the RBI to the
government based on which the initiatives of funding the poor was to be taken
had vanished. The latest is that Urjit Patel, Governor of the Reserve Bank in
the manner of the King Was In His Counting House Counting All His Money, will
do this for another 6 months given the present capability of the counting
machines with the RBI. By the time they come out with the information the
public would no longer be interested and the matter would have died its own
death. The latest on funding the poor by the government is that without putting
in Rs. 25,000 into every Jan Dhan account they are planning to put this money
into each BPL account with the banks. Whether the Jan Dhan and the BPL account
is the same is not known given the double-speak and obfuscation that everyone
speaking for the government indulges in these days. Thus nothing may happen as
far as the transfer of the Rs. 25,000 to each BPL account is concerned. So much
for doing things for the poor as Narendra Modi has claimed. The other concern
whether it is this Rs. 25,000 transfer or the current talk of the UBI
(Universal Basic Income) quantum of the latter yet to be specified, it should
not be that the money is transferred under whatever pretext to their own cadres
to fill up the BJP pockets be it individual or party coffers.
Another thing that happened post-demonetisation was with the
shortage of the new Rs. 500 note and queues unending at bank counters there was
a necessity for the government led by Narendra Modi to change the narrative.
The spin on the 'cashless' economy commenced as the latest saviour of the
'poor' man. This proposition had inherent flaws since no economy can be
essentially cashless and the poor man definition extended to all people and not
necessarily those who are not monetarily well off. The intention was to
divert the attention of the people from the trauma and difficulties of
accessing their own cash at the banks. For this the government announced
incentives for using debit and credit cards which has financial implications
for the card issuing agencies like banks and vendors notably petrol pumps apart
from the crores budgeted for a bonanza to the consumers and the trading
community for supporting cashless transactions. This apart because of the cash
shortage the government exempted parking fees and toll charges across the
country resulting in a loss of revenue for NHAI - National Highway Authority of
India, alone on tolls amounting to more than Rs. 900 crores, for which it has
asked the government to reimburse them. Who's going to pay for these thousands
of crores that the government is doling out? Why was this done in the first
place? The reason is the classic case of - Act in Haste and Repent At Leisure.
The government acted in haste on the demonetisation measure and is silently
getting the aam admi to pay for their blunder while implementing it. All this money
is just being committed irresponsibly to shore up the credibility of the BJP.
Was that the reason the people of the country had handed over the reins of
power to the BJP in 2014? It is not just the BJP but all political parties when
voted to power conveniently forget their high sounding rhetoric and degenerate
into a morass of unaccountability in financial matters. The latest to sink into
this dirty swamp is the Aam Admi Party which is planning to change its name as
learnt from reliable sources since it is no longer aam admi or
for that matter represents that community. This is the sad story of Narendra
Modi who refused to accept responsibility for his blunders in implementing the
demonetisation exercise and ride to bluff his way out of the predicament. And
in that process committed the country's financial resources to profligate initiatives
and t measures that are much ahead of time for the country like the cashless
economy.
Demonetisation is a good and effective measure if done properly.
It tackles black money and inflation in conjunction with other economic
measures. However, in isolation as far as black money is concerned it can
impact just about 10% of the black money since that is the amount estimated
that hoarders hold in cash. Over a longer term a less-cash economy is
also beneficial in combating inflation and legitimising economy activity
since it is assumed that the black money or shadow economy will progressively
move to the white economy. But for moving to such stages needs time, patience,
ability and skill to ensure that the existing economic activity is not unduly affected.
For doing the public a future good politicians like Narendra Modi should not
sacrifice the present good as was evident since 8th Nov 2016.
Demonetisation Impact On The Economy & The
Malaise of Contradictory Figures
With China reported to be massaging its economic indices to show
positive trends in its growth story, India seems to be following suit. With the
Economic Survey presented in Parliament before the Union Budget positioning a
dip in growth with the GDP likely to show an increase of only 6.5%, the CSO
(Central Statistical Organisation) a couple of days later has said that the
growth would be 7.1%. The attempt seems to be to show that demonetisation has
not affected the economy. But this is contradictory in the face of reality
where every sector of the economy has got hit including the hi-tech Apple which
for their IPhones has seen a drop in sales by over 30% post-demonetisation.
Narendra Modi on this matter made a rather immature comment in Parliament
recently saying that the Indian economy was strong and therefore could
withstand demonetisation. This clearly implies that there has been an impact of
demonetisation on the economy. It also signals a change in stand of this
government which was in denial all this while that the economy has not taken a
hit post-demonetisation and the cash shortage after that. Another aspect of
this was the timing of the demonetisation which was at a time when the Indian
economy could least handle it. After a sluggish year or more the economy was
just picking up when it was hit by the double whammy of demonetisation
and cash shortage. The result has been like when you are climbing a hill
and then you are pushed back which makes it all the more difficult to climb
again even with double the effort. Estimates are that the demonetisation
and the untimely emphasis of moving to a cashless economy has put back the
country by over a decade. This is reflected in the recent IIP figures showing a
slower growth with capital goods remaining sluggish and consumer durables having
taken a major hit of more than 25%. Recently the CPI figures were released
showing the prices in the marketplace on a downward trend which one must say is
not reflected when you go out to buy anything. But then a few days later the
WPI has shown a substantial surge! How in the same economy the CPI & the
WPI can be at variance is what our CSO should elaborate? At most the
indices should track each other with a marginal differential which could be
because of a lag in reporting or whatever. The government thus has to seriously
get down to brass tacks and examine the figures they put out since a serious
credibility gap is building up. Arun Jaitley, Finance Minister in his
overzealous attempt to defend the demonetisation and the initiative
towards a cashless economy has been selective in quoting figures and is thus
suffering from the malaise of the old adage that a hundred lies are required to
hide a simple truth.
Sometimes it is said that the people get a
government that they deserve. The Union Budget this year was in the majority
just an announcement of sops in direct taxes which essentially was buying out
the people at large and making them complacent so that they do not complain
about the drastic effect that demonetisation had on their lives. The fact that
the direct tax reductions were a pittance compared to loss in livelihood and
business losses that demonetisation brought is what the people will realise,
though they have no choice in the matter and cannot do anything about it. The
Budget was also getting the people ready for the GST regime which will lead to
a spurt in inflation and to soften that blow by giving them the concessions in
taxes. In this matter the people have been well and truly fooled but as said
earlier it is a fait accompli for them. Thus when people are bought over, we
call them corrupt which is true for the whole of India and no wonder we get a
corrupt and inept government time after time after time.
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