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Year in Review 2016: A world exclusive interview with the real star of this year

Somewhere down the road, the year 2016 ran away from us. It  feels like just yesterday that we were living in a world where Leicester City Football Club could never really be crowned Champions of England, where Donald Trump could never become US president, J Jayalalithaa could never be elected for a second successive as Tamil Nadu’s chief minister. And all through this, we were paying for goods and services with crisp Rs 500 and Rs 1,000 notes.

So you can imagine our surprise when we were informed — by first, post and later, email — by the powers-that-be that the year was about to end. If that wasn’t shocking enough to us at FP Special Forces, imagine our distress when we were informed that we had to submit an article about the shining star of 2016. 

After several minutes of fretting, frowning and trying to construct all sorts of excuses — including, but not limited to the creation of imaginary diseases that we had inexplicably contracted — to get out of doing any work, our crack investigative reportage specialist took up the challenge. And not just ‘took up the challenge’, but secured a super-ultra-mega-hyper-exclusive interview with the star herself himself itself. It was the most obvious choice. After all, who else could it be?

The ATM.

Loosely-edited and only slightly embellished excerpts of the interview follow:

Interviewing-ATM1_380Interviewing-ATM1_380Hello,… Errr… Do you speak English?

Hello to you too. Of course, I speak English. I also speak Hindi. And sometimes, I speak a variety of local languages. You’ve caught me on a good day, because today, I speak Marathi too.

Great. What was the first thought that went through your mind when you heard you were the star of 2016?

Wow. I’m still doing my very best to let that sink in. You know-… pffffffrrrrrrrtttt 

Excuse me?

I do apologise. That was terrible behaviour on my part. It’s just that when people need cash, especially in these trying times, I must sacrifice etiquette and manners for speed and dispense their notes as quickly as I can.

Don’t worry about it. Has anyone ever told you that you’re extremely polite?

Not lately, no. But it’s alright. People have a lot on their minds. The way I see it, the least I can do is be polite when I have so many people lining up to see me on a daily basis.

I was going to mention that: It’s not that you weren’t in demand earlier, but your popularity seems to have really soared towards the end of 2016.

Yes, it was my 15 seconds of fame-…

How about 50 days of fame?

(laughs) Yes, quite right. That’s very topical.

Thank you.

My popularity, as you put it, did soar. It was rather unexpected and in fact, took me by surprise. Having people queue up like that to see me everyday was like a dream. I doubt Amitabh Bachchan has as many people queuing up outside his bungalow. Even when I was exhausted, or rather it was my supplies that were exhausted for the day, they still stood around, waiting and cursing their bad luck that they didn’t get a chance to see me up close and personal. I don’t recall a time when I’ve given out as many autographs as I did these past weeks. In fact, I regularly ran out of paper on which to give out personalised messages.

You mean receipts?

Yes. But most of all, I was just doing my job. You know the adage ‘time is money, money is time’?

Well, time is money, when you’re queuing so long.

Right you are. I was, however, slightly saddened at the sort of anger aimed in my direction during the two days that I was unwell and unable to meet the people lining up in front of me.

That’s right. You were ‘out of service’ for the two days after the prime minister’s address to the nation, were you not?

I was. Frankly, it was a case of terrible indigestion. Realising that everything inside me had turned into scrap or waste overnight was enough to make me terribly unwell. But I believe I bounced back quite well.

Well, that’s a matter of opinion.

Alright, it took me some time to get back on my feet. Having said that, I realise I don’t have feet. But it took me some time to get back to normal, but then it would take you as long if you had undergone a procedure as serious as the one I underwent. For you, it would be a bit like a procedure that changed you in a way that you went from peeing standing up to peeing-…

Right. The recalibration process. I understand. You don’t need to continue with that metaphor. But how difficult was the transition?

To be honest, things were a lot easier later. Let me tell you, those thin new notes are so easy to dispense. They’re like a dream. And so bright and flashy. You know you’ll never misplace a Rs 2,000 note.

How long do you think this popularity of yours is going to last?

Well, you never know. Your prime minister is scheduled to make some big announcements on New Year’s Eve and he just might say something that boosts my popularity even more. Maybe, I’ll be dispensing something apart from notes. Maybe I’ll be sent on paid vacation for a few months. Who knows?

In fact, I don’t see it (how long popularity lasts) that way at all. I plan to make the most of it for as long as it lasts.

A paid vacation?

Yes, I’ve always wanted to see the world: India Gate, Machu Picchu, the Louvre, Silicon Valley, Nala Sopara-…

Wait. Nala Sopara?

Well, you get the idea.

Not really. But let’s continue.

Actually, let’s not. There’s far too long a queue behind you. Do you want to withdraw some money? Maybe an autograph?

Got any Rs 100 notes?

No. NEXT!!

First Published On : Dec 30, 2016 14:53 IST

Demonetisation Day 50: Still too early to call it an ‘utter flop’ or ‘glorious success’

Maine sirf pachaas din maange hain… 30 December tak mujhe mauka dijiye…  Agar 30 December ke baad, koi meri kami rehjaye, koi meri galti nikal jaye, koi mera galat irada nikal jaye, aap jis chaurahe mein mujhe khada karenge, main khada hokarke desh jo saza karega, wo saza bhugatne ke liye taiyyar hoon (I have only asked for 50 days. Give me time till 30 December. After that, if any fault is found in my intentions or my actions, I am willing to suffer any punishment given by the country).

That’s what Prime Minister Narendra Modi said in Goa on 13 November five days after he demonetised Rs 500 and Rs 1,000 notes. And three days before the 50-day period he sought was up, he delivered a judgement on himself when he said at an election rally in Dehradun on 27 December:

 “Through the note ban, in one stroke, we destroyed the world of terrorism, drug mafia, human trafficking and underworld...

 In an interview with India Today this week, he went a step further when he said:

 “Black money has all been forced out into the open, whomsoever it may belong to — whether it is corrupt politicians, bureaucrats, businessmen or professionals.”

Modi wants us to believe that he has delivered what he promised in the 50 days, and that his “safai abhiyan” (clean-up campaign) will go on.

I have no problem in confessing that I am not an economist. But I am aghast at the way some, like Modi himself, have concluded that this demonetisation is a huge, rip-roaring success that will rewrite the economics textbooks. On one hand, we have those who are singing paeans to Modi in praise of his “bold” war against black money. On the other hand, there are others who, at the very first sight of a long queue before an ATM, rubbished the whole thing as the stupidest thing any prime minister had ever undertaken on the planet since the invention of currency.

Most of those who resorted to the premature song-and-dance were obviously the so-called bhakts of Modi.

And most of those who wrote a political obituary for the prime minister hardly a day or two after 8 November were bhakts of another kind: Left-leaning or Congress-supporting Modi baiters. It is likely that, if Modi hadn’t gone for demonetisation, they might have questioned why he hadn’t, to make good on his poll promise of ferreting out black money. If, after demonetisation, the ATMs functioned smoothly with a copious flow of the new Rs 2,000 and Rs 500 notes, they would have asked why there weren’t enough Rs 100 notes.

If Modi sneezed, they would ask why he wasn’t coughing. If Modi coughed, they would wonder why he wasn’t having hiccups. They are that sort of people. They must be disappointed that the ‘cash riots’ that they were hoping for, haven’t broken out on India’s streets.

On Friday, the two sides will once again deliver their predictable judgments, ignoring the fact that it is the last day for swapping old Rs 500 and Rs 1,000 notes for the new Rs 500 and Rs 2,000 currency. With all its good and bad effects, the demonetisation churn will continue for some more time, and perhaps it will be several months or even a year before we can arrive at a considered judgment as to whether it did any good, and whether whatever good it did, was worth the terrible things that it has so far inflicted on the people and economy of India.

File iamge of Prime Minister Narendra Modi. PTI

File iamge of Prime Minister Narendra Modi. PTI

So far, we have seen only the bad effects of it. Dozens have died in queues, and millions have lost jobs. Lack of cash led to a sharp fall in spending, which in turn led to a crash in business in virtually every sector. Fathers couldn’t get daughters married the way they wanted. In some places, farmers dumped their produce on the roadside because it was not worth selling at the rock-bottom prices.

In other places, farmers had no money to buy seeds to grow fresh crops. Not a day passed after demonetisation without a moving tale of woe being reported from one part of the country or another. The picture of a former jawan weeping in a bank that went viral summed up best the agony India went through.

All these problems of demonetisation were a direct result of the woefully slow process of remonetisation. The humongous goof-up in ensuring availability of enough cash after the scrapping of 86 percent of the currency (in value) in a country where 87 percent of the transactions are said to be in cash, is all too clear. Enough has already been said about it by friends and foes of Modi, and those who are neither.

Questions that Modi must answer now

The question upfront now is: What is the country getting in return for all that misery that India was made to go through?

It’s now reasonably clear from official data that the cash windfall that the government had expected from demonetisation — black money that hasn’t been swapped or deposited in the banks which would drop into the government’s kitty — will hover around Rs one lakh crore.

Of the total of Rs 15.4 lakh of cash in the old Rs 500 and Rs 1,000 notes that were demonetised, Rs five lakh crore was estimated to be black. So if only some Rs one lakh remains unclaimed, what happened to the rest of the Rs four lakh crore? How much of it has been burnt by its holders? How much of it has been turned into white by illegitimate means? How much of it has been seized in income tax raids? And how much has been declared under the voluntary disclosure schemes?

These are questions that are not difficult to answer. So Modi must answer them.

This is not to suggest that the absence of a huge cash “windfall” in terms of “extinguished money” means that the demonetisation is a total, miserable failure. Despite claims by Modi baiters, the effect of scrapping the high-value notes on counterfeiters, terrorists, Maoists and drug-traffickers cannot be underestimated, at least in the short term. But the questions that will take more time to answer are the ones related to the expansion of the tax net, additional resources that will be available to the government for job-creating schemes and the effect on  GDP — key aspects that will determine the ultimate success or failure of Modi’s adventure. It will be a while before we can judge these after-effects.

Although you can depend on the Union Budget that will be presented on 1 February to throw up some real and artificial clues, Modi must answer all the questions that he can right now — without delay, and without hysterics and histrionics.

The author tweets @sprasadindia

First Published On : Dec 30, 2016 13:27 IST

Demonetisation not politically motivated, says PM Narendra Modi ahead of 50-day deadline

With just a day left for the 50-day deadline for demonetisation’s benefits to show, Prime Minister Narendra Modi has claimed that the move has forced black money, whether belonging to corrupt politicians or bureaucrats, out in the open.

In an interview with India Today magazine, excerpts of which in text form were telecast by a group news channel, Modi said counterfeit Indian currency notes available with the enemies were instantly neutralised.

“Black money has been forced out into the open, whomsoever it may belong to, whether it is corrupt politicians, bureaucrats, businessmen or professionals,” said Modi on the outcome of his 8 November sudden move to demonetise Rs 1,000 and Rs 500 notes.

“Counterfeit notes, which our intelligence agencies have reported to be available in big volumes with our enemies, have been instantly neutralised. Similarly, cash held by terrorists, Maoists and other extremists has also been neutralised. There has been a crippling impact on dangerous and highly damaging illegal activities such as human trafficking and the narcotics trade as well,” he added.

PM Narendra Modi. File photo. PTI

PM Narendra Modi. File photo. PTI

“One must be able to distinguish between neeti (policy) and rann neeti (strategy) and not put them in the same basket. The decision of demonetisation, which reflects our neeti, is unequivocally clear, unwavering and categorical,” the prime minister said.

“Our rann neeti, however, needed to be different, aptly summarised by the age-old saying of tu daal daal, main paat paat. We must stay two steps ahead of the enemy. When problems are identified, we respond promptly and take necessary steps,” he added.

Modi said it speaks of the government’s “agility in responding quickly and keeping up with the evolving situation”.

“I know many will prefer if we issue one guideline and then allow them to walk roughshod over it. Let me assure them that no such thing will happen,” Modi said.

The prime minister also clarified that the objective behind the decision was to clean up the economy and curb the menace of black money.

“Our objective was to clean up the economy and society of the menace of black money, purging the distrust, artificial pressures and other ills that came with it,” he said.

“The revenue collected will be used for the welfare of the poor, downtrodden and the marginalised.”

Modi also urged citizens not to regard digital transactions as a short-term substitute for cash payments.

“Digital transactions should not be viewed as a short-term substitute for cash payments,” Modi told India Today magazine in an interview.

“Digital transactions facilitate formal accounting and sizing of the economy,” he said.

“They also deliver greater tax compliance,” he added.

On former prime minister Manmohan Singh, Modi said, “Regarding Manmohan Singh ji, it is interesting that the words ‘monumental mismanagement’ came from a leader who has been at the helm of India’s economic journey for around 45 years.”

“His reference to organised loot was perhaps a reference to the unending string of scams under his leadership… From the coal scam, to 2G and CWG scam. Demonetisation on the other hand is an unprecedented step to confiscate the loot of the corrupt,” he said.

“I pity a few of our opponents, especially the Congress leadership, for the desperation they have been exhibiting. Congress leaders are entirely preoccupied with only one thing — elections. There is nothing political in the demonetisation,” Modi said.

The prime minister said: “It was a tough decision taken to clean our economy and our society. If I were guided by short-term electoral politics, I would have never done so.”

First Published On : Dec 29, 2016 21:32 IST

RBI and its broken promise: Is there no sanctity to the promissory notes?

The draconian punishments announced for keeping more than 10 notes of demonetised currency including a four-year jail sentence seems to be a defence mechanism to discourage any trigger happy Public Interest Litigator from suing the Reserve Bank of India (RBI) for breaking its promise.

Every note carries the legend ‘I promise to pay the bearer the sum of…’ and the unilateral murder of these notes also leaves the RBI vulnerable to a breach of trust since the people were not party to the dissolution of the contractual obligation.

While illegally held notes or those that have been used for unlawful activities can be taxed and their holders penalised accordingly, the question that can be asked under the law is whether the promise still holds good.

Punish me as per the law but keep the written pledge.

Representational image. PTI

Representational image. PTI

In purely technical terms, going by the written pledge, the RBI is obligated to exchange every one of the notes with those of lesser denominations including coins because that is what it has said it will do.

But, wait a minute. Does it owe us an explanation and while it can be accused of clumsiness, is it legally within its rights to ‘renege’ on its agreement?

The promissory note has its antecedents in the gold standard when a note could be exchanged for precious metals and is based on the Bank of England’s monetary system. In fact, at one stage, every note had the name of the individual to which it was given as legal tender.

Today, the note has the signature of the governor of the Reserve Bank and under his assurance the note per se is neither black, white, laundered or, in any way, reduced in value vis a vis the promise written on it.

As a legal conundrum how would the RBI defend itself? By citing the greater good? By underscoring the criminal element in its war on the parallel economy? By submitting that the pledge was initially broken by the people who misused the note and therefore rendered the promise null and void.

Perhaps the RBI’s best bet is to state that the Indian currency note is not a promissory note as it was in the old days but is money like the coins and, therefore, not accountable legally if the promise is not kept.

If that be so and this argument will be the mainstay of the government’s stand why have the legend on the note at all along with the governor’s signature? Doesn’t it have any sanctity?

The government will say that it is a convention with no locus standi in the court of law.

Consequently, since there is a ‘for’ and an ‘against’ argument, the Rs 500 and Rs 1,000 notes that were demonetised each can have a day in court because its owner has had a pledge broken.

But it is a losing battle. Modern Indian currency is not officially seen as being a descendant of the old notes from the history books but just cash.

While most of us do not really care very much and will not do anything, one can question the premise that legally the RBI is duty-bound to honour every single note and see it as mutually exclusive from who owns it or what laws that the owner has broken.

The RBI, in simple terms, is not the police.

After all, if there is no value to the promise and the signature and the Indian currency is purely money why repeat this pompous commitment on the new notes.

Would this make for a stronger petition one cannot say but it is an interesting situation.

Problem there is that in no place on the note does it mention conditions under which this promise can be negated.

First Published On : Dec 29, 2016 14:05 IST

Demonetisation: Suicide of a bank manager in Arunachal Pradesh raises suspicion of illegal transactions

The suicide of an HDFC bank manager in Arunachal Pradesh due to “financial matters” has drawn attention to the illegal transactions — conversion of black money into white —  that have allegedly taken place in the north eastern state after demonetisation came into effect.

The suicide came to light soon after reports emerged that large amounts of cash are being flown into the north eastern states for illegal currency exchange. According to local news websites, Rituparna Gohain, the manager of Naharlagun branch of HDFC branch, committed suicide by hanging himself on 21 December in his rented accommodation.

M Bui, the SDPO of Naharlagun, told The Arunachal Times that the deceased left a suicide note where he mentioned about financial matters. He added that the letter has been sent for forensic test. The report said that the higher officials of the HDFC bank have also reached Naharlagun to probe the matter.

Representational image. PTI

Representational image. PTI

Though there has no been no official statement on what the “financial matters” were, Asomiya Pratidin, a local daily in Assam reported that the note refers to an alleged cash scam. The report mentioned illegal transactions of Rs 1,300 crores in black money and said that the bank manager was facing an enquiry for being allegedly involved in it.

Sources told Deccan Chronicle that a huge amount of fund was smuggled into Arunachal Pradesh post-demonetisation and Gohain was under pressure from various quarters to justify the transactions. The report further said that Rs 1,300 crores were deposited in a few bank accounts and that Gohain had mentioned the names of a few contractors and politicians in his suicide note, who had allegedly deposited huge amounts of demonetised currency in his branch. Sources told Deccan Chronicle that cash belonging to politicians from Assam was routed to Arunachal Pradesh after 8 November.

The tribal-dominated states of north eastern region, Arunachal Pradesh being one among them, have recently come under the radar because of black money conversion due to the income tax exemption status.

As per The Indian Express, a month ago Arunachal Pradesh Chief Minister Pema Khandu had asked the Income Tax Department to trace all accounts that “deviated from normal history and pattern of deposit and take appropriate action.”

The Indian Express quoted Khandu as saying, “Since frauds are likely to take place on account of tribal people being exempted from taxes, there is every possibility of some people from outside the state trying to use bank accounts of local tribal people to deposit money in huge amount.”

The chief minister’s move came just after a report emerged that Anato Zhimomi, a resident of Nagaland, was arrested for allegedly attempting to convert crores of demonetised currency belonging to a Haryana-based businessman Anil Sood.

In 2012, the Income Tax Department had released a press statement expressing concerns that few people, who are not residents of the North East, are availing benefits of income tax exemption granted to the Scheduled Tribes of the region. As per the report, only income earned in the specified region are subject to income tax exemption.

The problem, however, turned severe after demonetisation, with reports emerging of cash being deposited from other parts of the country in the bank accounts of local tribals for illegal currency conversion. Even terrorist groups in the region were reported to have attempted to deposit their money in the accounts of the local tribals.

Anand Mishra, superintendent of police of South Garo Hills District in Meghalaya told Firstpost that terror money worth a crore has been recovered while being deposited in the bank accounts of local residents.

An income tax official told Firstpost, on condition of anonymity, that there is a common misconception that money deposited in the bank accounts of the local tribals of the region will not be traced. “This is not correct as these transactions can also be subjected to scrutiny,” the source said.

A week has passed by after the bank manager’s suicide and the Arunachal Pradesh government’s continued silence on the issue only raises more questions about the nature of the “financial matters” that was mentioned in the suicide note.

First Published On : Dec 27, 2016 21:11 IST

Exclusive: After demonetisation, Narendra Modi to tackle benami properties, deals

It may not be a happy new year for benami property holders. Come 2017 and Income Tax (I-T) sleuths may be knocking at their doors. And if proved a “benamidar” (benami property holder), one is likely to face rigorous imprisonment from one year up to seven years.

Prime Minister Narendra Modi has given enough indications on various occasions about his intention to combat the black money menace in India by adopting stringent actions against people involved in benami properties and transactions.

And, to make it successful, unlike in the past, the Modi government has already cleared the ground making amendments in the original Benami Transaction (Prohibition) Act, 1988.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

The provisions of the amended act came into force on 1 November 2016. It has given more teeth to the I-T Department to get cracking on benami properties and transactions, with a comprehensive tracking, identifying and finally taking stringent action against offenders.

Looking back at the Benami Transaction Act

More than two decades ago, in 1993-94 and 1994-95, two alternative budgets were presented by Delhi-based Citizens’ Parliament comprising 230 eminent citizens, including politicians from diverse political parties barring the Congress and the BJP.

The author of the two budgets was Professor Arun Kumar, a noted economist who holds authority on black money. The former professor of Economics at Jawaharlal Nehru University (JNU) had suggested levying wealth tax and property tax on all properties.

“Nothing much has happened in taking action against benami property holders since 1988, when the Benami Transaction Act came into being. We had suggested in our alternative budget to levy wealth tax and property tax on all properties above 25 square yard (20.9 square metres). This will bring every property under the tax net,” Kumar told Firstpost.

“According to my estimate, 62 percent of our GDP — that is Rs 93 lakh crore is the black economy. Given the situation, identifying the benami property holders is a tough job. Will the tax department be able to do it?” said Kumar.

Amended Benami Transaction Act

The legal framework for dealing with benami transactions in the old Benami Transactions Act was weak and nothing much was achieved. Now, the amended act empowers the I-T Department to inquire into any person, place, documents or property during an investigation into any matter related to a benami property transaction.

“The amendments have made the act stricter. Apart from imprisonment and penalty up to 25 percent, the benami property will be confiscated. The property rights would go directly to the Centre, and the government can make use of the property as it wishes purportedly to help rural development plans. Now action will be taken against both the actual owner and the property holder under a bogus name,” a senior I-T official said.

The benamidars invest black money in buying land and houses through multiple channels and use bank accounts of different people. The real owner always remains unidentified. From politicians to bureaucrats — properties like land and flats are bought by floating bogus companies in the name of other people while the actual face behind benami transactions get away unnoticed, untracked.

“It was not easy to track the unknown entities in the past. But after the introduction of permanent account number (PAN) and filing of I-T Returns, the tax department has been able to collect information. Now, information from property registration office, online registration records, Annual Information Report filed with the tax department, the municipal corporation record, etc, have made tracking easy. The amended Benami Transactions Act will make escaping tougher for offenders. Punishment is now stringent,” said chartered accountant Abhishek Aneja.

What is an offence under the new Benami Transactions Act?

Any transaction made under a fictitious name; transaction made without the knowledge of the owner; person who owns the property is not traceable; amount paid to buy property from an unknown source; on records the owner is another person, whereas benefits go to the one who paid for the property yet doesn’t show up in the record of the purchase will be considered a benami.

Benami transactions could be a property or any other asset — movable, immovable, tangible, intangible, any right or interest, or legal documents. Gold or finance securities, stocks and shares can also fall under benami transaction if the requirements mentioned in the act are not met.

However, property held in the name of spouse or children, paid from known source or joint ownership of property with siblings or relatives, paid from known source — are exempted.

Tracking mechanism to be used
According to sources at the Central Board of Direct Taxes (CBDT), increasingly it’ll be immensely difficult for those having benami properties or going for benami transactions to escape from I-T radar.

The tax authority now has new tools to track benami property holders. Besides, 360-degree profiling of people who file tax returns, the Intelligence and Criminal Investigation wing of the Income Tax at CBDT receives information from multiple sources such as Financial Intelligence Unit (FIU), banks, Registrar of properties, annual information report (AIR) from banks, hotels, grand weddings, tours and travel agencies, high-value purchases like house, cars, jewellery, consumer durables, payments made through cards, and from transactions that attract tax collected at source (TCS) and tax deducted at source (TDS).

The database prepared from the information gathered by collating manual and electronic intelligence goes to the data warehouse unit for analysis. A new Non-Filers Management System (NMS) matches the data being obtained from various sources.

“The non-intrusive surveillance capabilities of the I-T Department have been enhanced. There is a huge database with the I-T Department. Parameters have been set to select cases automatically. Based on it, the creditworthiness of the owner of a property is also matched with the I-T returns. The crackdown will be on all those who have been avoiding paying taxes and show their actual income,” a CBDT source said.

“Though it’s tough and challenging for the I-T Department to determine legal and illegal holdings, it’s not impossible now, unlike in the past. The government might also come up with a scheme giving the benami property holders a chance to voluntary declare their hidden assets. In case that happens, and a person doesn’t comply and is caught later, he/she will face stringent punishment,” the source added.

First Published On : Dec 23, 2016 08:38 IST

Jaunpur: Rahul Gandhi to hold ‘anti-demonetisation’ rally ahead of UP Assembly polls

Congress vice-president Rahul Gandhi is set to hold a rally in Uttar Pradesh’s Jaunpur on Monday, to address demonetisation woes.

Aside from the fact that the Congress will be looking to score points all over Uttar Pradesh ahead of 2017’s Assembly polls, sources quoted by The Times of India claimed that the location was selected because Rahul’s khaat sabha in Jaunpur (earlier this year) had been a great success. Following the washout that was the Winter Session of Parliament, the Congress will seek to push further the view that the ruling BJP wasn’t amenable to discussing demonetisation.

This was evident in a rally held by Rahul in Karnataka’s Belagavi on Saturday.

File image of Rahul Gandhi. PTI

File image of Rahul Gandhi. PTI

“Demonetisation, which was meant to curb black money and root out corruption, is a (Narendra) Modi-made disaster, as over 100 people died standing in queues at banks for a few notes across the country,” said Gandhi at a public meeting in this Karnataka town, about 500 km from Bengaluru.

Addressing a huge rally to mark the birth centenary of former prime minister and his grandmother Indira Gandhi, Rahul said only the rich had benefitted from the note ban at the cost of the poor, farmers and labourers in millions across the country.

“The Modi government came to power in the name of the poor but is sounding death knell to the hapless population to help about 50 super rich families. Who are these families holding most of the wealth in the country? You can see them touring foreign countries with Modi at the government cost. This is your prime minister whom you had reposed hopes of bettering your lives,” he alleged.

Noting that Modi failed to realise that black money hoarders invest their ill-gotten wealth in real estate, gold and in foreign banks, Rahul said a mere six percent of unaccounted wealth was in cash while 94 percent was either deposited in Swiss banks or in real estate.

“Unfortunately, in the name of the poor, honest and tax-paying people, Modi is going after them and ignoring the remaining 94 percent,” he said.

Remembering his grandmother on the occasion, Rahul also said he was sad over the plight of the ordinary people facing hardship due to cash crunch for over a month.

“I want to ask Modiji why his government had not disclosed names of those who had stashed their black money in Swiss banks even after its government gave the list. Why he is not acting against crooks like Lalit Modi and liquor baron Vijay Mallya, who are staying in London?” asked Rahul in his speech.

With inputs from IANS

First Published On : Dec 19, 2016 09:22 IST

Demonetisation: Opposition blocking govt’s efforts against black money, says Modi

New Delhi: Prime Minister Narendra Modi on Friday ripped into the Opposition over Parliament logjam, saying unlike earlier when opposition parties stalled the House against scams, Congress-led parties are now doing so against government’s steps to curb black money and corruption.

Modi’s remarks at the BJP Parliamentary Party meeting came on the last day of the Winter Session, which has been a washout due to impasse over demonetisation.

Targeting Congress, the Prime Minister alleged that it has always put its interest over that of the country while for BJP the nation’s interests are supreme.

He again pitched for digital economy as he appealed to the masses to adopt it as a “way of life” to rid the society of corruption and black money.

Prime Minister Narendra Modi. PTI

Prime Minister Narendra Modi. PTI

Attacking former Prime Minister Manmohan Singh, who has been unsparing in his criticism of demonetisation, Modi said he advocated strong measures against corruption and black money but did “nothing” during his rule of 10 years.

He also cited late Left stalwart Harkishan Singh Surjeet to support his government’s action.

“Earlier the ruling side, especially Congress, would commit scams like 2G, coal-gate, Bofors and the Opposition would then unite and fight against it on the principle of honesty.

“But now the ruling side, the BJP-led NDA, has started a campaign again black money and corruption and opposition parties are standing against it,” he said.

Modi also noted that the Wanchoo Committee in early 70s had recommended demonetisation when Indira Gandhi was Prime Minister, recalling that the then senior Left leader Jyotirmoy Basu had demanded its quick implementation, Parliamentary Affairs Minister Ananth Kumar told reporters following the meeting.

“The Wanchoo committee had said it will boost economy. Now after 45 years we have done demonetisation but Congress is opposing it. The Left has also joined hands with Congress,” he said.

Painting Congress as a “votary of corruption”, he said it had made a law against benami assets in 1988 but never notified it or framed rules and regulations, ensuring that the legislation never came into force.

“For us, the country’s interests are always above the party’s. For Congress, party’s interests are above the country’s,” the PM said.

On a day that marks the anniversary of Bangladesh’s liberation, Modi also targeted the opposition over its remarks on the army’s surgical strikes.

The Opposition in 1971-72 did not seek evidence of the army’s valour unlike that of today, he said.

First Published On : Dec 16, 2016 14:42 IST

Demonetisation: Yogendra Yadav slams govt for seeking to dilute corruption bill

New Delhi: Terming the decision to devalue high-denomination notes a “pseudo war” against black money, anti-corruption activist Yogendra Yadav criticised the government for seeking to dilute the Prevention of Corruption Act (PCA), saying this would weaken the actual battle against corruption and help the corrupt.

“The point we are trying to make is that it is pseudo war against black money. Not an actual war. It is a very small step in the larger picture of corruption issues in the country. The (amendment) bill will help the corrupt. We are going to pose 10 questions to the government,” Yadav told IANS ahead of a demonstration his Swaraj India Party is to hold on Sunday against black money and corruption — and the weakening of the anti-graft mechanism.

File image of Yogendra Yadav. PTI

File image of Yogendra Yadav. PTI

The Prevention of Corruption (Amendment) Bill, was first brought in 2013 and the Cabinet has approved the changes proposed by a Select Committee of the Rajya Sabha. The changes will dilute and defeat the whole purpose of the law, said Yadav, once a close aide of Delhi Chief Minister Arvind Kejriwal till he transformed into a full-time politician.

Various non-profit organisations and think-tanks are learnt to have made recommendations and suggestions to the government opposing the dilution of the Act.

The Bill has an new section that bars investigating agencies from initiating an inquiry or investigation against a public servant without the prior approval of the competent authority, which effectively means the political bosses, Yadav said, terming this the babu-neta nexus to protect the corrupt.

The existing law requires approval from a higher authority before prosecuting any public servant to protect honest officers from harassment, persecution and frivolous litigation.

The new Bill requires a court order to sanction prosecution against a corrupt public servant, which, Yadav said, would discourage victims of corruption and activists from prosecuting such individuals.

Priyanka Rao, a senior researcher with PRS Legislative Research, a not-for-profit outfit, termed the sanction before prosecution as “standard” but expressed concern over the proposed approval before inquiry or investigation.

“Is not the process of investigation (meant to establish) a prima facie case against someone? However, if at the start of an investigation you need approval, on what basis will you get this approval? It is a big challenge. How will we strike a balance between allowing honest officers to work smoothly and (ensuring) investigation and trial do not take a long time,” she wondered while speaking to IANS.

The amendment has done away with the protection cover to the bribe-giver against prosecution and makes both the bribe-giver and the bribe-taker equally punishable, which would deter the former — the victim — from speaking out in cases against public servants, Yadav contended.

First Published On : Dec 15, 2016 13:50 IST

Demonetisation: Traders push for Narendra Modi’s cashless economy, chart roadmap

In a somewhat unexpected move, the trading community in India — the drivers of the country’s cash-based economy — has decided to throw its full weight behind Prime Minister Narendra Modi‘s demonetisation move, by signalling its intention to turn India into a ‘less cash’ economy.

Responding to Modi’s clarion call for a ‘less cash economy’, the trading community — a section of the economy that thrives largely on cash transactions, and often bears the stigma of doing so to avoid paying taxes — has come up with a roadmap to give a push to digital transactions.

Keeping in mind the fact that in India 98 percent of small business units lack the ability to transact digitally, the Confederation of All India Traders (CAIT) has chalked out a ‘10-point plan’ with an aim to change the contours of traditional trade transaction methods — from cash payment to the digital platform.

Confederation of All India Traders has chalked out a ‘10-point plan’ to shift from cash payment to the digital platform. ReutersConfederation of All India Traders has chalked out a ‘10-point plan’ to shift from cash payment to the digital platform. Reuters

Confederation of All India Traders has chalked out a ‘10-point plan’ to shift from cash payment to the digital platform. Reuters

Going by an NSSO survey, that shows that out of 5.77 crore small business units in the country, approximately 5.66 crore lack the ability to transact digitally, the plan to initiate small traders into digital transaction mode seems to be a humongous task. Add to this existing infrastructure bottlenecks, like lack of electricity and non-availability of internet, and the plan to go digital looks even more difficult.

After more than a month of demonetisation, most people, including the Supreme Court and the ruling government’s larger political family, the Rashtriya Swayamsevak Sangh, have raised questions over the faulty implementation of the move to root out black money. However, a large section of traders from across the country have come up with a plan to encourage cashless transactions, in effect giving a boost to demonetisation.

New Year’s Resolution

CAIT, an umbrella of more than 40,000 trade bodies and over six crore traders, has released a ‘white paper’ on ‘less cash transactions’. The resolution was reached at after two days of brain storming sessions in the national capital during the first week of December. The confederation will kick-start its initiatives across the country from January 2017.

“We’ll organise camps in the markets across the country, along with banks and digital payment solution providers, and train traders on how to go for digital payments. We’ll provide them various options ranging from e-wallet to point-of-sale machines, and the traders can choose what they want. Giving lectures in conferences won’t help. Both the government and CAIT have to handhold the traders,” CAIT’s national secretary general, Praveen Khandelwal told Firstpost.

CAIT’s road map for a ‘less-cash transaction model’

– Reach 50,000 trade leaders and create champions for promoting digital transactions; through them, reach out to 50 lakh traders across the country. More than 40,000 trade federations, associations and chambers have been roped in for this purpose.

– From January 2017, the CAIT, in association with banks and digital payment service operators will organise camps in markets etc.

– Adopt city/states to drive the ‘cashless policy’. CAIT will work on the lines of ‘100 smart cities’ and will aim to create at least 25 cashless cities over the three years.

– Organise workshops, seminars, training sessions and trader conferences for adoption of digital payments.

– Leverage social and digital media to create awareness.

– Focus on Tier-I, II and III cities and rural areas having no internet facility, so that a less-cash transaction system can be actualised.

– Seek government intervention and make local trade associations partners for training purposes.

– Engage with academics, economists, think-tanks and key influencers to communicate the value of e-payments among traders.

– Make shops a point-of-information to create help create awareness on digital payments.

“We’ve submitted a white paper along with our suggestions both to the government and the NITI Aayog. Besides, trade bodies, the government which has resources and a large network, needs to play a proactive role to educate and train traders to operate on the digital payment system. Besides, the government should also provide incentives at the merchant level to encourage the initiative,” Khandelwal said.


Transaction cost: Traders have mentioned the cost of transacting online as the biggest deterrent in the adoption of the digital payment system. While the transaction cost for debit card payment is limited to one percent, in credit cards, it ranges from one to two percent.

“The trader hesitates to pay transaction costs from his profit…it’s an additional burden on the customer. We’ve suggested to the government to subsidise the cost to the banks, e-wallet and mobile application operators,” Khandelwal said.

Security: Traders fear that their accounts accounts might get hacked. CAIT has demanded that the government and digital solution providers ensure that a security complaint system is put in place.

Lack of electricity and internet penetration: Technical issues can limit the spread of the digital payment net and can therefore reduce its efficacy as a replacement to cash payments.

Traditional mindset of traders: In spite of the countless safety measures and the ease of convenience, the mere fact that India has depended on cash forever has seeped into the inherent mindset of many traders. They trust what they can see, what they can hold and electronic money invokes an uneasy feeling among the more traditional traders.

“By organising seminars, camps and lectures, we’re trying to convince traders and small vendors to adopt a digital payment system. Once the Goods and Service Tax (GST) regime gets implemented, digital payment will be mandatory and there will be no transaction in cash or through cheques. Sooner or later, one has to go for it, so why not now. This will also help in creating a transparent business environment and will get rid of the stigma that the trading community indulges in dubious and unaccounted financial transactions,” Khandelwal said.

First Published On : Dec 15, 2016 07:18 IST

Demonetisation: RSS affiliates express concern on immediate after-effects but remain optimistic

In a month since demonetisation, various strata of society — including the Supreme Court — have raised questions against the faulty-implementation of the Prime Minister’s move to root out black money, but the most serious indictment has, perhaps, now come from within the ruling government’s larger political family.

The Rashtriya Swayamsevak Sangh (RSS) affiliated bodies have raised serious concerns on the ill-preparedness of the implementation of demonetisation exercise and its impact on the lower strata of the society.

The Sangh-affiliated Bharatiya Mazdoor Sangh (BMS) — the largest central trade union in the country — has said that the labourers, workers and daily wagers have been facing the heat of cash crunch — the foremost impact of demonetisation.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

“The question is not about the demonetisation move. It’s a good move no doubt and it’ll take time to get results. But the question is about the after effects of demonetisation, which has caused immense problem for the poor, the labourers, the daily wagers, etc due to cash crunch,” BMS president, Baijnath Rai told Firstpost.

Recently, the government expressed its intention for a cashless economy and offered sops for those going for digital transaction using debit and credit cards and e-wallets.

The BMS feels that given the traditional system of cash payment prevailing in the country, the goal to achieve a cashless economy would take time and isn’t possible overnight.

“Maximum transactions in India are cash-based, especially for the small vendors and those belonging to lower economic strata of the society. Can you pay a rickshaw-puller through a debit card? Can a small vegetable vendor have financial transactions by using plastic cards? No. The poor daily wagers, farm labourers, workers — all of them need cash in hand to run their household. But, due to ill-preparedness, especially at bankers’ end, these people are facing the heat,” he said.

The Sangh affiliates have also intimated their concerns to the government.

“Post-demonetisation, we’ve intimated our concern to the government and discussed issues during a meeting. We’ve also asked the government to develop barter system or commodity exchange system to deal with the ongoing crisis,” Rai added.

However, the BMS feels that pain is inevitable while combating a serious ailment – like the black money menace.

“The government never said that there won’t be any problem. The PM has been saying it from day one that there would be some problem. It’s like surgery. There’ll be pain but it will uproot the ailment. Black money menace and corruption have taken deep roots in our society due past political leaderships. We’re sure that the overall impact will be good,” said BMS general secretary, Virjesh Upadhyay, while giving the analogy of medical treatment.

It’s not just the mazdoor sangh, but the other affiliate organisation Bharatiya Kisan Sangh (BKS) that had expressed serious concerns a week after demonetisation was announced.

“The people who spend Rs 100-200 in cash and don’t belong to the category of plastic card users are bound to face problem. It’ll take time for the people to get into plastic card transactions. First of all people should have bank accounts. It’s the farm labourers and farmers who have been facing the problem due to shortage of cash. The farmers have to pay farm labourers in cash and if it’s not available, how a labourer will survive?” questioned a senior member of BKS.

“The cash crunch is a short-term problem and in the long-run the effect of demonetisation will be good, but due to the ongoing crisis, people are losing their patience and panic is increasing. It needs to be stopped,” the member pointed out.

Though positive about Modi’s move, the other Sangh-affiliated economic wing Swadeshi Jagran Manch (SJM), feels that preparedness should have been better prior launching of the large-scale operation.

“The problem arising due to cash crunch is a short-term phenomenon, but in the long-term it’ll be beneficial. The Direct Benefit Transfer of subsidies is an example how big leakages could be minimised. Similarly, use of technology will help in achieving the aim of cashless economy, but it’ll take time. Besides being optimistic, we’re equally concerned about the people at the grass root level facing problem due to cash shortage. No one should lose wages due to this. Banks should have been better equipped to handle this crisis,” added SJM co-convener, Ashwini Mahajan.

First Published On : Dec 11, 2016 10:43 IST

30 days of demonetisation: Parliament comes to standstill but not the nation

A week is a long time in politics but a month is not in the relatively laid back and rarified world of economics. Yet, demonetisation of high currency notes on 8 November 2016 has elicited a flurry of comments and analysis on completion of a month of its announcement given perhaps the short time– -50 days—the government gave itself to smoothen out the rough edges inevitably expected to be left by it.

That 86 percent of the currency notes in terms of value were rendered useless in commercial transactions gave rise to the apprehension that the economy will come to a standstill given the fact cash lubricated large parts of the economy especially the unorganised sector or SME and farming. No less an authority than the Apex Court darkly hinted at the approaching apocalypse– – there would be riots in the country if cash was not made available. The former Prime Minister Manmohan Singh while terming the exercise as monumental mismanagement also discounted its long term importance.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

Yet, nothing catastrophic has happened. If anything, the nation has, by and large, accepted it as something in its long term interest. Indeed the nation has braved the small pinpricks in anticipation of larger gains in the long run. The RBI announced on 7 December 2016 that as much as Rs 11.5 lakh crores of Rs 500 and Rs 1,000 demonetised notes have found their way into the banking system as against Rs 14.8 lakh crore believed to be in existence at the beginning of the exercise.

Detractors call this a single most failure of the scheme. Their index of success was the smallness of such notes entering the system so that the notes not entering the system by 30 December 2016 would go up in smoke. In other words, a large chunk of black money would have ceased to exert its pernicious influence on the economy. This is a pessimistic worldview. The optimistic one is a large chunk of the black money has entered the mainstream that would have a multiplier effect leading to greater GDP in years to come.

The catalogue of beneficial effects of demonetisation is:

1) Breaking the back of terrorists organisations especially the Pak backed ones that thrived on counterfeit Rs 500 and Rs 1,000 notes minted in Pakistani official mints;

2) Surge in bank deposits that would mainstream the economy like never before. Many bank branches are witnessing frenetic deposit of the demonetised notes often on the back of opening of fresh accounts. Indeed the unbanked are having no choice except to fall in line;

3) Surge in swiping machines on the retail landscape with 10 lakh such machines all set to get added to the system by 31 March, 2017 against the existing 14 lakh such machines. This too would mainstream the economy;

4) Leg up to digital and mobile banking. Mobile banking and e-wallets have registered a quantum jump in registration and activity since the announcement of demonetisation; and

5) A stiff price would be extracted from the black money deposited. The government is all set to notify a partial amnesty scheme under which those voluntarily admitting to having deposited black money would be let off with a 50 percent tax plus penalty as opposed to 85 percent on recalcitrant ones when caught.

Like they say the catalogue cannot be one sided. But the flipside is all about inconvenience and hardships some of which are:

1) Rural India experiencing cash crunch. But reports says this has not affected rabi sowing activity;

2) People having to idle away their time by standing in long and serpentine ATM queues. This was inevitable in an operation of this scale but the queues are shortening by the day and hopefully should be back to normal. Already Rs 4.5 lakh crore of fresh notes have been put back into the system according to the RBI in a month;

3) Private hospitals turn away patients not paying in cash unless they have insurance. This genuine concern indeed could have been addressed by permitting banks to release the amount on production of genuine hospital proforma invoices; and

4) Cassandras are predicting a 2 percent fall in the GDP in the current fiscal year. Without quibbling about the percentage, one can take heart from the heightened economic activity the surge in bank deposits are going to lead to in none too distant a future.

What is lost in swings would be more than made up in the roundabouts.

First Published On : Dec 8, 2016 17:50 IST

30 days of demonetisation: Pros and cons of the Modi govt’s note ban move

The demonetisation of high value currency denominations featuring Rs 500 and Rs 1,000 notes were banned effective 8 November midnight by Prime Minister Narendra Modi in a televised announcement. Today is exactly one month since the ban on the outlawed notes was imposed, but things on the ground are yet to see any meaningful change in the overall scenario.

While it has been a daily struggle for lakhs and lakhs of people so far to get their money back from the ATMs or bank branches, let’s take a look at the positives and the weaknesses the demonetisation of notes could have on the people and the economy at large.

Pros: Since the decision to ban high value currency notes was taken in early November, the government has tried to portray the brighter side of the note ban and its benefits on the economy in the long run. The decision to ban high value notes was taken to weed out black money and counterfeit notes from the system which has been deep-rooted in the economy for the past many decades.

With 86 percent of the total money circulation wiped out from the system, the government plans to keep a tight leash on the corruption front. According to Ambit Capital report, the share of the informal economy in India could shrink from 40 percent to 20 percent and the formal organised sector will gain market share.

The sustained crackdown on black money will also prevent people from parking their savings in physical assets such as gold and real estate, and instead boost the flow of savings into the financial system. With the quantum increase in financial savings, the cost of debt capital in India should fall. Further, as saving rate increases, lending rates are likely to fall in the line. Through the demonetisation exercise, the government has been pressing hard to become a cashless economy and is encouraging more and more people to adopt the digital payments system for their transactions. The government wants people with smartphones to use the United Payments Interface (UPI) app for a cashless transaction. Besides banks, online wallet companies including Paytm, MobiKwik and Free-Charge, too, are promoting their online products and wooing customers to get away from cash-based transactions.

In the aftermath of demonetisation, reports also suggest that housing prices in 42 major cities across India could drop by up to 30 percent over the next 6-12 months.

Cons: Although several advantages of demonetisation rolling into the economy could be far-fetched, there are immediate challenges the economy is already staring at. Following the decision to ban the currency notes, the government’s lack of preparedness to deal with cash availability has hit the common man really hard. Despite the government’s assurance to improve cash availability on a daily basis, several banks and ATMs across the country continue to dispense little or no cash.

People in villages and semi-urban areas are worst hit as majority of the transactions are done through cash. The government’s constant flip-flops on withdrawal and deposit limits at bank branches and ATMs have put people in complete disarray. With one month past the note ban move, the problem doesn’t seem to be fully resolved as banks continue to face cash crunch.

The bigger threat arising out of demonetisation is the impact on the country’s economic growth. While brokerage Ambit Capital created shock waves by predicting that GDP growth will fall to 5.8 percent in 2017-18 from 7.3 percent estimated earlier, former Prime Minister Manmohan Singh, also an economist, echoed concerns by suggesting that demonetisation could contract the GDP by as much as 2 percent.

According to CPM’s Sitaram Yechury, since 8 November, four lakh jobs have vanished, and more than 31.9 million people employed in the textile sector or “government” sectors have not been getting wages. Construction and allied sectors, jewellery, textiles and real estate are some sectors where job losses, if not already happening, are imminent.

Similarly, 20-25 percent of the roughly 2.5 lakh workers in the leather industry have been adversely affected as they are daily wage workers. The industry has been hit particularly hard as 90 percent of the units are small and medium enterprises. In the jewellery sector, 15-20 percent of workers, who are paid daily, too, have been affected.

Economist Pronob Sen has also warned that a virtual shutdown of India’s informal sector could spell doom for employment.

Recently, the July-September growth numbers of 7.3 percent also came below analysts’ estimates. A day before, the Reserve Bank of India in its policy statement cut down growth forecast to 7.1 percent from 7.6 percent earlier for the current fiscal year.

Demonetisation in Kashmir: Why the state experienced no mayhem at banks, ATMs

If there is one place in the country where demonetisation had little to no effect, it is in Kashmir. Rs 500 and Rs 1,000 notes ceased to be legal tender in the wake of the announcement by Prime Minister Narendra Modi — as part of an effort ‘to weed out black money from the economy’. And while the rest of country is grappling with the cash crunch with serpentine queues outside ATMs, such mayhem has not been witnessed in Kashmir.

Experts say that although the ongoing unrest is partially responsible for this phenomenon, there are other factors that have contributed to demonetisation having a limited effect in the state. When the armed insurgency erupted in the Valley in the early 1990s, there were widespread allegations of money being looted by forces as well as militants from the homes of people, said noted businessman and economist, Shakeel Qalender.

“Rather then keeping money in their homes during the turmoil, it became a habit for people to deposit it in banks,” Qalender said.

Although in the three initial days of demonetisation, a mild rush was witnessed in banks across the Valley and in Jammu, the Jammu and Kashmir Bank was quick to issue a notification, asking officials to deal in available cash for the time being, something to which they happily agreed.

Representational image. AFP

Representational image. AFP

“All employees are being credited salaries online and new schemes like NREGA and others also credit money into people’s accounts. Contractors get their money deposited into their accounts through online mechanisms. Most people in Jammu and Kashmir have banks accounts,” Qalender said.

Jammu and Kashmir has a working force of an estimated 42.5 lakh (out of the total population of 1.34 crore); a third of this is associated with agrarian activities while the rest is in the public and private sector. The state has around 2,000 bank branches which means one bank branch for every 6,500 people. In the first few days after the demonetisation announcement, one branch was dealing with at least 2,000 customers, besides having post offices and other financial institutions. Nearly 1,200 branches are operated by the Jammu and Kashmir Bank and the rest by other public and private sector banks. A majority of the state’s banking business — at least 65 percent — is conducted by the Jammu and Kashmir Bank while another 10 to 20 percent is with other public sector banks.

Outside the state, many people, including Union Defence Minister Manohar Parrikar, had said that because of demonetisation, stone-throwing incidents in Kashmir had reduced. Government figures and the measures taken to control the protests suggest otherwise. “But,” said Irshad Ahmad, a PhD student of economics at Kashmir University, “The number of stone-pelting incidents came down drastically in September, not due to demonetisation, but following a general pattern of weariness and the crackdown on protesters.”

In fact, the data released by the government shows that there was a general declining trend in the incidents of stone-pelting in Kashmir following the killing of Hizbul Mujahideen commander Burhan Wani. In July, when Burhan was killed, the Valley witnessed 820 incidents of stone-pelting incidents which came down to 747 in August.

In September, the incidents further reduced to 535. From September to October, the number of stone pelting incidents decreased from 535 to 157, witnessing a 41.53 percent fall. Today, there has been an overall decrease of 87 percent in such incidents since July.

Former member of the board of directors, Jammu and Kashmir Bank, and noted economist, Professor Nisar Ali said the state’s economic activity in terms of routine transactions had been put on hold for several months due to the ongoing unrest. He said consumers had deferred their expenditure because shops were not open and choices were not available.

“Black money has already been converted into assets here. First, it is the land that is why land prices in Kashmir are higher than in Mumbai. Most of the black money got into the hands of the land mafia. The second is the real estate and the third is gold. So the liquidity with a black money-holder wasn’t enough to generate panic,” Ali said.

The ongoing conflict in the Valley is the reason that people with black money were able to evade the law for decades. Although in recent years, tax collection has significantly increased in the state, during earlier years, a majority avoided paying taxes.

During the 2015-16 Financial Year, the Commercial Taxes Department’s collections alone stood at Rs 5,515.96 crore. Ali, however, is not impressed. “How may times have I-T people carried out raids here? Not a single instance in the past two decades. The function of such organisations is literally zero here”.

“Now the money, which you keep at your home as a safety cushion, has been spent because of the five months of unrest. The money ended and it circulated from retailers to wholesalers and distributors. It went into the banks much before demonetisation forcibly brought it there,” Ali said.

First Published On : Dec 8, 2016 08:54 IST

Black money hunt: Meet Bandra’s Sayed family who declared Rs 2 lakh cr under IDS

Very often we have come across reports that suggest how powerful businessmen, politicians, crooks and various professionals have amassed enormous amount of black money over the years and are yet not traced by the government agencies. But, have you ever imagined that a normal middle-class family staying in an apartment would reveal income that would run into trillions of crores of rupees, giving sleepless nights to the government department and the income tax sleuths.

Meet the city’s Bandra family which stunned the country by disclosing the income that was not just few hundreds or thousands crores, but an eye-popping over trillions of crores of rupees. Yes, you heard it right. Bandra’s Sayed family recently declared Rs 2 lakh crore under the government’s Income Disclosure Scheme (IDS), prompting I-T officials to cross-check whether the amount declared was authentic.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

More on this later. This revelation comes at a time, especially, when the the country is under the grip of a rigorous demonetisation exercise being followed by the government to counter the black money menace.

A finance ministry statement has revealed that the Sayed family of Bandra has declared Rs 2 lakh crore under IDS, but as it turned out to be the individual, who declared the unaccounted wealth, and his family members are not residing at the address mentioned by the government statement, Mumbai Mirror report said.

“The Sayed family you are talking about never lived here. The flat is up for resale,” Times of India reported quoting Michel, the main broker for the said flat.

The finance ministry statement reveals the family of four Abdul Razzaque Mohammed Sayed, his son Aarif, wife Rukhsana and sister Noorjahan were the residents of Flat no 4, Ground Floor, Jubilee Court, 269-B, TPS-III, Linking Road, Bandra (W), the Mumbai Mirror report said.

The fresh disclosure comes close on the heels of an Ahmedabad-based businessman, who had declared black money of over Rs 13,000 crore in September and is currently being questioned by the income tax department to know the source of the declared amount.

Coming back to the Mumbai case, the report, however, further adds that the secretary of the Jubilee Court building has denied Abdul Razzaque Mohammed Sayed as the resident of the building, and said the flat was in the name of of some company. In fact, upon further investigation the name plate showed the flat belonged to one R R Vaid, the earlier owner, but changed several hands thereafter.

Although, income tax department has started the probe against the Sayed family, nobody from the family have been questioned yet.

“The Finance Ministry revealed that three out of the four PAN numbers of the Sayed family were originally registered in Ajmer and were migrated to Mumbai in September 2016, where the declarations were filed,” the report added.

However, the government feels the declaration may not be authentic, while the income tax department was probing the false declaration by the family, Times of India reported.

Not just that, the I-T department has also rejected Mahesh Shah’s declaration of Rs 13,860 crore, who said the revelations were made on the behest of certain politicians and bureaucrats, the TOI report said.

The government is even suspicious about the basic details as the mobile number also couldn’t be verified either. The Centre suspects that the disclosures could have been made to launder money post the demonetisation exercise and convert black money into white, the TOI report added.

Hence, the government decided not to include these declarations on 27 November, while the deadline to pay the first installment of tax and penalty under the IDS stood on 30 November.

First Published On : Dec 5, 2016 16:50 IST

Despite demonetisation, Karnataka’s corruption nexus in irrigation sector thrives

A few years ago, a senior IAS officer of a government in South India spent time behind bars after he was arrested in a corruption case. Out on bail and having managed a plum posting, the grapevine in the corridors of power suggests that he is back to his greedy ways. A 15 percent given under the table is standard operating procedure to get him to greenlight a proposal. While he keeps 10 percent of the commission, he distributes five percent among the other stakeholders of the ecosystem.

As Satish Shah, who played the corrupt municipal commissioner D’ Mello in the iconic 1983 cult classic Jaane Bhi Do Yaaro says in the film, “Kuch khao, kuch pheko (Eat some and throw some for others to eat)”.

Representational image. PTI

Representational image. PTI

It is this knowledge of how the ladder works that perhaps gives SC Jayachandra, chief project officer with the Karnataka State Highways Improvement project, the confidence that the tax raid on his house is just a temporary blip. Income tax officials found Rs 152 crore of unaccounted-for income when they raided over a dozen locations in Bengaluru, Chennai and Erode. Of this, Rs 5.7 crore was cash in new Rs 2,000 notes. At a time when the aam aadmi in Bengaluru was standing in queues for hours to withdraw Rs 2,000 from an ATM, the sight of the bundles of currency on his bed was visual proof of Jayachandra’s clout.

In a bid to do damage control, Karnataka chief minister Siddaramaiah has suspended Jayachandra and Chikkarayappa, managing director of Cauvery Neeravari Nigama (irrigation corporation). The two were partners in crime and had co-opted two business houses, a bank manager and PWD and irrigation contractors to convert their black money into white after 8 November. The tip of the iceberg in his statement after the raid was that all the money was not his, and had to be paid to ministers, presumably in Karnataka.

Why there could be truth in what Jayachandra says is because he is a repeat offender and could not have thrived without the blessings of people higher up in the corruption chain. The Lokayukta Police under Justice Santosh Hegde, had raided Jayachandra in 2008 when he was chief engineer with the Hemavati Irrigation project. Illegal wealth worth Rs 84.53 lakh was unearthed back then. But successive Karnataka governments did not allow Jayachandra to be prosecuted.

“Both governments — the BJP from 2008 to 2013 and Congress after that — are guilty of not allowing the law of the land to proceed against Jayachandra because he is of their liking,” says Santosh Hegde, former Lokayukta of Karnataka, “There is no denying that there is a nexus between politicians, bureaucrats, industrialists and contractors.”

Despite building a watertight case against Jayachandra, the stamp of approval from the Karnataka government is still pending — an indication of Jayachandra’s touch-me-not stature. Which is why Siddaramaiah’s attempt to distance himself by suspending the duo is just a feeble attempt to prevent Congress from collateral damage. Whether Jayachandra is prosecuted will be a test case because if he sings like a canary during interrogation, a lot of big fish could find themselves gasping for breath.

An interesting aspect of this raid was that Jayachandra bragged that the sleuths would have found Rs 40 crore in cash if they had come a month earlier. “This sort of big talk and tall claims are quite common because such people who are used to flouting the law take pride in how they manage the system,” says Hegde.

But Karnataka is not the exception. In almost every state in India, irrigation is a big ticket portfolio in which it is easy to inflate costs of projects and allow party workers to make money while allowing the big fish to park money through benaami transactions.

Take for instance, the example of yet another Indian state. Here, on almost every project, every person in the food chain has a voracious appetite for kickbacks. The industrialist deals with the person at the top and once the project is cleared, the work is sub-contracted and then further sub-sub-contracted. This ensures even the sarpanch of a panchayat in whose village the project is grounded, gets his share of the booty.

Bureaucrats get a fixed payment for signing on the dotted line. In the manner in which the greasy system works, an honest district magistrate is someone who does not demand more than the 2.5 percent that is automatically credited into his kitty on every project in his domain, without asking. But the greedy sort look to make even upto 20 percent on each project, by asking the contractor to inflate the cost to factor the bribe.

Mining is another sector where a posting helps you hit gold if you are the kind willing to bend rules. The mining syndicates in most states again deal directly with the political leadership. But when raids take place, it is only the hapless truck driver or a lowly manager who gets caught. Officials connect the dots and realise the links go all the way up when those arrested walk out on bail within 24 hours. They admit the next time, they themselves are wary of arresting the mining mafia. Hegde referred to the Reddy brothers as the “Republic of Bellary” but today, much of India is the “Republic of Mined India”.

The raids that are showing up these seizures of currency notes are just the tip of the iceberg. And the high-profile movement to a cashless economy a mere cover-up because demonetisation does nothing to break the backbone of the way in which the corrupt system operates.

First Published On : Dec 5, 2016 09:44 IST

Demonetisation: PDP-BJP govt in Kashmir admits people facing ‘inconvenience’ due to cash crunch

Srinagar: The Bharatiya Janata Party (BJP) and Peoples Democratic Party (PDP) coalition government in Jammu and Kashmir has admitted that people in the state are facing ‘tough times’ due to Prime Minister Narendra Modi’s decision to demonetise the Rs 500 and 1,000 currency notes, which has led to a shortage of currency notes in circulation.

The difficulties have been aggravated across Kashmir due to the lack of bank branches in the state, with banks even refusing to advance loans to businessmen who defaulted on payments of interest due to the four month long shutdown. Majority of the over 2-lakh loan accounts are running in default due to delays in payment of interest.

People queue outside the State Bank of India in Jammu and Kashmir. PTIPeople queue outside the State Bank of India in Jammu and Kashmir. PTI

People queue outside the State Bank of India in Jammu and Kashmir. PTI

The government has, for the first time, admitted that people are facing grave inconvenience due to demonetisation. Through an order issued by the state’s finance department on 19 November, it was directed that a part of the salary for the month of November will be released in advance and the employees will be provided cash of Rs 10,000 to overcome the difficulties that they have been facing due to demonetisation.

The government directed that the salary be released by 24 November to non-gazetted officers and other lower income employees. The order read, “the shortage of notes in circulation has resulted in inconvenience to a cross section of society, particularly the low income sections of society including the non-gazetted and class-IV employees.”

Only four days later, however, the government expressed its inability to implement the order and informed the employees that the advance salary can’t be released as the Reserve Bank of India (RBI) had expressed difficulties in providing additional cash to the Jammu and Kashmir (J&K) bank.

The J&K bank is the lead financial institution in the state, with the government holding majority stake in the bank, and the employees’ salaries get credited into the accounts operated by the bank. As per the revised order of the government, “the salary for the month of November 2016 will be credited into the accounts of employees at the end of the month as usual. The employees, however, are free to withdraw the cash requirements from their bank accounts within the ceiling imposed by the RBI.” The order was issued by the Commissioner Secretary, Finance, Navin K Choudhary.

Minister of State for Finance, Ajay Nanda, however, appeared to be optimistic and said that the rush witnessed outside the ATMs had declined. “Once the bar on the withdrawal limits is eased by the government, the situation will improve.”

President of the Kashmir Chamber of Commerce and Industries, Mushtaq Ahmad Wani, said that the cash flow of the business units had dried up due to demonetisation. “The note ban has come at a time when we are already asking the government to restructure the loans. We couldn’t pay back the loans due to the restrictions and the curfews imposed by the government. The onus lies on the government to restructure the loans,” Wani said.

Majority of the banks in Kashmir have decided not to provide any fresh loans to account holders running in default, and to those whose accounts have been declared as non-performing assets (NPAs). The situation is more grave in the state as the banks here were already unable to meet their credit disbursal targets and as there are many areas where the bank branches don’t exist. Across Jammu and Kashmir, the banks have extended credit of Rs 15,753 crore to the 4.8 lakh beneficiaries against the target of Rs 23,605 crore in the last financial year.

The banks have also lagged in opening their branches in the state. The RBI had directed the state that the 104 villages with a population of 5,000 plus, which are devoid of banks, should be covered with new branches. However, against the target of opening 18 new branches in the last fiscal year, only one was opened. And records reveal that against the overall plan of opening of 246 branches in the state during the last financial year, only 54 branches were opened by different banks, thus drawing further flak from the government.

First Published On : Dec 3, 2016 09:34 IST

Demonetisation: As banks run low on cash, mood in queues turns less charitable

“Why not? Surely, we can take a bit of discomfort if demonetisation is meant for the greater common good.”

This was the mood at the queues at banks and their cash-vending machines a fortnight ago, around seven days after Prime Minister Narendra Modi made the big announcement. Three weeks on, the mood appears less charitable. There’s more irritation on the faces of people and they are more prone to picking fights with others for reasons they would have ignored earlier with a friendly smile. “Man! How long is it going to last? What the hell is going on?’’

Representational image. PTI

Representational image. PTI

The signs of frustration are hard to miss.

The pay-day rush has worsened the collective feeling. There are not too many bad words about the prime minister and demonetisation yet, but acerbic questions have started trickling in. “Where are the rich people in the queues? They have fun with black money and we, the middle class people, have to suffer like this,” a gentleman, around 60, tells you. He is tired of running to his bank at IP Extension in Patparganj every few days and feels he cannot take it anymore if the shortage of cash continues.

“The Rs 2,000 notes that banks offer are as worthless as the Rs 1,000 notes rendered useless. No one accepts them; if they do it, it is on the condition that you buy goods worth the amount. Nobody is prepared to let go of the Rs 100 and Rs 50 notes even if they have a good stock of both,” says another.

This is a common complaint everywhere.

The freedom to spend stands severely curtailed; and it has begun hurting the everyday activities of people. The neighbourhood grocer says he cannot give away notes of those denominations because he is not sure how long the cash problem will continue. Moreover, he has to pay with such cash for certain items he stores.

Older people, particularly pensioners, are a worried lot. The banks won’t pay them the whole amount deposited in their zero-balance accounts. They have resorted to rationing to meet the cash shortage and make it available to as many people as possible. The pensioners thus have to come back again and again and suffer the long wait to get money. A gentleman, around 80 years old, does not look happy about the prospect of coming back to the bank repeatedly. “Beta, pension ke liye wait karte-karte jaan na nikal jaye (I hope I don’t die waiting for my pension).” Why can’t there be separate arrangements for old people like him, he asked. Two of his friends concur.

The jury is still out on whether demonetisation was such a great move, but there appears little disagreement among the public that its execution has been shoddy. The government may have its explanation for the delay in the arrival of fresh cash, but there are not many takers for it now. The mood might get worse in the coming days as routine payments are disturbed and services are hit everyday, as a result.

There’s a lesson for the government in this: It should be extremely careful about dramatic moves that have potential for causing distress to the public. If the benefits of the move don’t far exceed the loss due to the disruption to normalcy caused by it, then there’s little point in pursuing it. One wishes the government had gone ahead with the cashless transaction drive with some caution and a solid Plan B in place.

First Published On : Dec 2, 2016 13:39 IST

Demonetisation: Modi flips strategy and asks BJP MPs to submit bank account statements

New Delhi: Prime Minister Narendra Modi on Tuesday asked BJP MPs and MLAs to submit their bank account statements of transaction between 8 November, the day he announced demonetisation, and 31 December to party chief Amit Shah on 1 January, 2017.

Modi’s direction at the BJP Parliamentary Party meeting came following allegations by opposition parties that the BJP had tipped off some of its own leaders ahead of the demonetisation announcement. In an apparent response to the charge that the bill to amend I-T Act will help turn black money into white, the Prime Minister said the amended Act will channel the money looted from the poor for their welfare.

Prime Minister Narendra Modi and BJP chief Amit Shah. AFP

Prime Minister Narendra Modi and BJP chief Amit Shah. AFP

The amended Act, he said, is a programme for the poor’s welfare from Lok Kalyan Marg, the new name of the road where the Prime Minister’s residence is located. “The amendment is not for turning black money into white but to spend the money looted from the poor on their welfare,” he said.

Quoting Modi, Parliamentary Affairs Minister Ananth Kumar told reporters that the bill is part of his government’s fight against blackmoney. A part of the tax collected on the money deposited under this scheme will be spent on electricity, roads, toilets and education among other welfare measures, he said.

Modi also sought everybody’s support in his effort to usher in digital/mobile economy and push the society towards cashless transactions. At the meeting, Amit Shah told party MPs to motivate traders in panchayats, municipalities and other local bodies falling in their constituency to shift to cashless transactions.

Asked about impasse in Parliament over demonetisation, Kumar said the government has been ready for discussion from the day one of the Winter session and Modi will also intervene in both the House if the opposition wanted.

The opposition wants discussion under Rule 56 which entails voting, a condition unacceptable to the government.

First Published On : Nov 29, 2016 12:37 IST

Demonetisation: Govt’s argument against black money turns into sales pitch for cashless society

The chaotic post–demonetisation period has been characterised by two significant realities. One, the central government’s motivation to weed out black money, seems to have dovetailed with a now thunderous sales-pitch for a cashless society. Two, in labelling all critics of demonetisation, particularly the political opposition as “corrupt” or “friends–of–the corrupt,” the government is reaffirming its intolerance of criticism as such. This, even as it singularly shoulders the responsibility of virtually overnight pushing the entire nation into a new and uncertain financial zone.

As evidence for my first argument, consider Prime Minister Narendra Modi’s Mann ki Baat address this Sunday. Describing the address as the “biggest push for a cashless economy”, a report in Times of India quoted the prime minister as saying: “Learn how this digital economy works. Learn the different ways you can use your bank accounts and internet banking. Learn how to effectively use the apps of various banks on your phones. Learn how to run your business without cash.”

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

While telecasting Modi’s address, the Doordarshan screen turned into an advertising canvas for various digital payment services routed through mobile phones. As news reports suggest, digital payment services have, in recent days, seen a steep hike in their business. The question that comes to mind is: Why is the Prime Minister delivering a national address in which he is so vocally and aggressively pitching for a cashless economy that is likely to benefit mushrooming private organisations? These companies have eagerly awaited a moment like this, especially in a country where the masses have not taken to electronic payment as easily as many would like.

The drive to eliminate black money has now become conflated with the drive for a cashless digital financial system. This is the system that exists in advanced economies in the West, particularly in the United States. In this context, it may be pertinent to remember that our social, cultural and economic structures have little in common with the American or European ecosystem. Equally importantly, the trajectory of Western economies in the recent past – including the fallout of near-complete electronic banking – should serve as a cautionary tale. Instead, the Indian government seems only too keen to replicate the fate of the West in this country.

The noted economist Kenneth Rogoff is one of the high-powered names associated with the desire for a cashless economy. In an article for The Wall Street Journal earlier this year, Rogoff blamed cash for all of the most sinister social evils in the US – illegal immigration, tax dodging, corruption, and terrorism. He recommended that the $100 note (along with high denominations like $50 and $20) should be phased out or withdrawn from circulation. “Will it ever happen?” Rogoff asked, answering that: “I believe the time has come. Finance ministries are desperate to collect more tax revenues without raising tax rates. Homeland security agencies are concerned about how cash facilitates terrorist financing. Justice departments are as worried as ever about the role of cash in crime. For immigration authorities, it sure beats building walls.”

If this rhetoric sounds eerily close to that being espoused by the Prime Minister today, then we should also note that some of the criticisms aimed at this hypothetical suggestion have also been borne out in India. In a response to Rogoff, titled “The Ludicrous Idea of Trying to Abolish Cash,” Tim Worstall wrote: “the real argument against this idea is that it just won’t work. … My point being that when we don’t have cash money then we’ll just use some other unit of account in the place of that cash money. And that, of course, poses a very serious problem for this idea that purely electronic money will enable the Fed to control the economy better.” All the reports we have of people improvising to survive the shortage of cash – including the return of barter systems – bears out this observation.

A deeper financial agenda seems to underlie the government’s demonetisation policy — the rapid evolution of a cashless society. Sans demonetisation, such an overhaul would have indeed been far more arduous and time-consuming than it is now. In the midst of all the hyperbole, we have forgotten the large numbers of people in India who continue to be outside the banking network, besides lacking the technological know-how enabling them to exercise financial vigilance in a digital economy.

Now, with reference to my second argument, consider the way the government has gone all out in painting the opposition and its leaders as “crooks.” There is no denying that the Congress party and Trinamool Congress do not have a clean financial record. But that underlying vice binds all political parties. The BJP is not an exception to this norm. If for instance, the ruling party submits to the financial auditing of its electoral expenses and the contributions it receives from various quarters, we might go a long way in cleansing the economy of black money. But that is unlikely to happen.

In an article for The Quint on 20 November, former Election Commissioner S Y Quraishi drew our attention the Election Commission’s two-decade long demand for political parties to submit to an annual audit by an independent auditor from an Election Commission-nominated panel. “Political parties, unfortunately, have not bothered to look at the Election Commission’s demands seriously. Governments have come and gone pushing the proposal under the carpet. And it is not political parties alone who refuse to disclose their sources of income; corporate houses also prefer anonymity,” Quraishi wrote.

Of course, it is easier to open the floodgates to votaries of electronic banking than it is to clean up one’s own house. And this is the script playing out before us today.

First Published On : Nov 29, 2016 12:13 IST

Demonetisation: Mulayam Singh Yadav says farmers, lower class families worst hit

New Delhi: Samajwadi Party chief Mulayam Singh Yadav on Monday sought Prime Minister Narendra Modi‘s statement on demonetisation in the Lok Sabha, saying that the farmers and the weaker sections of the society were worst affected by the cash crisis caused by the move.

File photo of Mulayam Singh Yadav. PTI

File photo of Mulayam Singh Yadav. PTI

“Prime Minister should come to Lok Sabha and give his statement on the government’s demonetisation move which has led a cash crisis across the country,” Yadav said in the lower house of Parliament.

He added that the farmers and the weaker section of the society were badly affected by the 8 November demonetisation.

“Farmers are not able to purchase seeds because they do not have cash with them and that is why they are not able to sow the seeds in the fields.”

“Poor and labour class people also facing lots of hardships as they do not have cash with them,” Yadav said.

The central government demonetised RS 500 and Rs 1,000 currency notes to put a curb on black money and counterfeit currency.

First Published On : Nov 28, 2016 14:23 IST

Demonetisation story can have a happy ending or an unhappy one: Which will it be?

– O Henry’s 1909 story Roads of Destiny about a shepherd boy wanting to become a poet has three different endings.

– Jeffrey Archer offers four different endings to his 1994 short story One Man’s Meat. Here, a man spots a stunningly beautiful woman and manages to get a seat next to her at the theatre. Once the play ends, he asks her out for dinner. Will she agree? Archer offers the reader four possible choices.

– Tom Tykwer’s 1998 German film Lola Rennt (English version: Run Lola Run), about a girl who must somehow get cash of DM 100,000 in 20 minutes to save her boyfriend’s life, gives viewers three possible scenarios.

I am tempted to tell the ongoing story of Prime Minister Narendra Modi’s demonetisation through the tale of 9th Century king Damodar Mowgli that has two plausible endings.

Place: Malwa Kingdom
Time: 823 AD

So benevolent and generous was king Mowgli that he made only good laws, and he derived joy from nothing but the happiness of his subjects. People adored and hailed Mowgli not only for his kindness but also for his invincible bravery, for he had fought and defeated many a king who had his evil eyes on the rich and happy Malwa.

Representational image. AFP

Representational image. AFP

And one fine winter evening, Mowgli was taking a leisurely stroll in the rose garden on the west side of the palace, brooding over the good fortune of his kingdom and the poverty of some citizens. The magnificence of the setting sun, however, diverted his thoughts, and he stood staring at the sky. A dark cloud blotted out the sun and blocked the golden rays, spreading a blanket of gloom on the roses. A scowl appeared on his usually amiable and kind face when a sudden thought struck the king. He briskly walked back into the palace.

He summoned his chief advisor and ministers at once, and after they had taken seats on either side of him, he surprised them with his sudden decision to inspect the treasury. In the calm of the evening, the heavy footfalls of the king and his minions, as they stomped to the underground khazana, could be heard by the guards at the outer gate.

The scowl on Mowgli’s face deepened as he surveyed the mountain of gold.

Shouldn’t the heap be higher?

A suspicion gnawed at his mind.

It took his men two days and nights to count the coins. The king was proved right and he told his chief advisor unhappily: “We should have had 1,08,45,000 more gold coins. I am aghast. Some people in my kingdom are not paying taxes.”

The order that ensued caused much consternation across Malwa. The king decreed that every single house in Malwa must be searched within a month to find if some citizens were hoarding wealth to avoid paying taxes. Many welcomed the order, saying that tax-evading malefactors must be caught. But many were furious that the decree amounted to treating all citizens, including the law-abiding and tax-paying ones, as criminals till they were found to be innocent.

There was a villain.

Unable to hide his glee, King Durmukhi of the neighbouring Shamsha Kingdom tweaked his dreadful moustache. He thought time would be ripe to wage war against Malwa again in a month. He was sure that, unhappy with the searches, Mowgli’s own people would rebel against him. To find out what was going on, he sent spies to Malwa in the guise of traders.

Did Mowgli’s gamble pay off? Did Durmukhi win the war?

This talem that popped up from the deepest recesses of my brain, has presented me with no definite conclusion till now but only two possible scenarios.

Happy ending

By the end of the month, Mowgli’s men had searched all homes in the kingdom and unearthed unaccounted and untaxed 16,75,452 gold coins. After sending the guilty to prison, the king distributed the gold among all people, a little more to the poor. Citizens became richer and happier. And the king had never been as contented as he was now. Without further thought, Durmukhi abandoned his invasion plan.

File image of Prime Minister Narendra Modi. AP

File image of Prime Minister Narendra Modi. AP

Unhappy ending

Even as the search went on, those who hid their wealth in attics or buried it in their gardens transferred it to other kingdoms because Malwa’s borders had not been guarded diligently enough. So the operation turned up only 286 coins, which people thought was too measly, considering the humongous inconvenience and humiliation they had suffered. They boiled with anger and some soldiers, whose own homes had been ransacked, mutinied. Durmukhi faced little resistance when he invaded Malwa.

The demonetisation story

As for Modi’s demonetisation, India must hope for a happy ending. It’s too late to sulk over whether it was necessary in the first place. Now that the operation is on, Modi must unearth as much of the Rs five lakh crore of black money stocked in cash as possible to justify the inconvenience to people and the deaths it caused, and to make his critics shut up.

I am also reminded of the weird ending to Mark Twain’s 1870 tale A medieval romance. In fact, it has no ending, since Twain didn’t conclude the story, saying he was unable to straighten out the problems that he had got the protagonist into. He said: “I will wash my hands of the whole business and leave that person (main character) to get out, the best way that offers — or else stay there.”

But we have no such problem with demonetisation. Modi himself is the author and protagonist of the still-unfurling story, and he is bent upon taking what he has started to its logical conclusion, hopefully.

India must wish Modi good luck.

The author tweets @sprasadindia

First Published On : Nov 28, 2016 11:32 IST

Demonetisation has reduced crime rate in Mumbai: Manohar Parrikar

Panaji: Defence Minister Manohar Parrikar on Saturday claimed that due to the Centre’s demonetisation move, the rate of crime in Mumbai, including contract killings, murders, extortion and drug trafficking, has come down drastically.

Defence Minister Manohar Parrikar. PTI

Defence Minister Manohar Parrikar. PTI

“The decision taken by Prime Minister Narendra Modi is a historic one. The black money, corruption money, terror funding and drug money has received a jolt,” Parrikar said while addressing BJP’s Vijay Sankalp rally in Aldona constituency in North Goa.

“One of my friends from Mumbai was telling me that the supari (contract) killings have reduced there. There is no lack of people offering supari, but there is no money to pay. In the last 20 days, the murder rate has come to half in Mumbai,” he claimed.

“The instances of extortion have also reduced in Mumbai. If anyone goes to the builder and tries to extort money, he is ready to give the sum, but that money has no value as they are old notes. Due to this, now the one who wanted to extort money has also stopped. Even here in Goa, extortion attempts from the builders have stopped,” he said.

According to Parrikar, the movement of narcotics in Mumbai has collapsed due to lack of money to fuel it.

“Thanks to demonetisation, the crime graph has been reduced in Mumbai. Modi has eliminated drug lords, terror funders, fake notes and black money,” he said.

Stating that Goa will become cashless by December 30, Parrikar appealed to the people to cooperate to fulfil this dream of the Prime Minister.

“By December 30, we will become a cashless society. Goa has a capability to become a model state for rest of the states,” he said.

“We always feel safe with cash money…A bank manager was telling me that pensioners rush to the bank on every first of the month…He said the pensioners don’t feel satisfied till they count notes,” Parrikar said.

“But I feel in the current era, there is no need for notes. In the Information Technology sector, Goa’s penetration is more than that of Singapore. We can show the way for the country,” he added.

First Published On : Nov 27, 2016 08:40 IST

Note ban: Having surrogates in the queues is superb Indian ingenuity

BookMyChotu is the quintessential example of Indian ingenuity. The same ingenuity that has the underground working on how to leap over the firewalls built as part of the assault on black money.

First off, anyone who gets insulted by the word ‘chotu’ is being silly. It is not demeaning and just about every family has one person called ‘chotu.’ It is just an expression of affection and there is nothing rude or nasty about it. To object to its use in the website offering you replacements on the grounds of this word is absurd. I am only sorry I didn’t think of something like this… it is a money spinner.

A file image of people queuing in the line outside ATM. ReutersA file image of people queuing in the line outside ATM. Reuters

A file image of people queuing in the line outside ATM. Reuters

It just means youngster and it is fair to say that most of the people who can surrogate you in the queues at banks and ATMs are young people. You will not see octogenarians opting for the job of standing in the cold.

Some suggestions have been made that the portal is illegal and the offer should be stopped because it is dealing with proxies in money matters and has to be banned and it underscores laziness.

How is it any lazier than online shopping… it simply takes the hassle out of things.

As for being illegal,why? Where is it written that you cannot stand in for another and wait the several hours on payment and then call the actual bank account holder as you approach the teller.

Not only is a very good way of percolating money from the well off to the relatively poor but it increases efficiency.

Young people without jobs are waiting anyway. Waiting for a call to a flurry of CVs, that like Father Mckenzie’s sermon never get heard or read, waiting for someone to mend the broken promises that litter their winding road of unemployment, just waiting because waiting is the core of hope.

So, if someone is paying them to wait, it is a kind of a job and at least they are getting a wage to shuffle along.

If I had no job and the postman never knocked and I was just standing at a street corner doing nothing and feeling the world was a conspiracy and someone came along and said, I will give you Rs 100 per hour to stand in the queue and call me when you are about to get to the teller, I’d load up my phone with music take a cold drink and a bite to eat and join that queue so fast it would make your head spin.

And this is so organised. Those who cannot spend hours in line are now productive. Those who were doing nothing are at least making money.

And if indeed, the customer does not come on time the honour system kicks in and you allow the person behind you to get his money and you keep saying ‘pass’ till your man arrives.

The people who thought this up are entrepreneurs in the extreme. Imagine, in all the noise and confusion and the heat and dust they sat around a table and said, hmmmmm, why don’t we offer a service and make money.

Because that is all it is… a service and a convenience and a heck of a good way to make everyone happy.

If you can get your pizza delivered why not this?

First Published On : Nov 26, 2016 12:16 IST

Note ban: ‘Printing’ errors in new Rs 500; is haste killing the very purpose of the exercise?

In its hurry to meet the demand for new notes, the Reserve Bank of India has made major errors which can have serious consequences for the demonetisation exercise. The gaffe — RBI has printed two variants of the new Rs 500 notes.

According to a report in The Times of India, the newspaper has seen at least three case studies where the new Rs 500 note varied from each other. According to one customer quoted in the report, Gandhi’s face has a more than visible shadow. Apart from this, he has pointed to alignment issues with the national emblem and also serial numbers.


Representational image. Reuters

Another Mumbai resident has told the newspaper that the colours of the notes he got were different. The report has cited one more such instance of variation.

Meanwhile, a RBI spokesperson has termed them as “printing defects” that have propped up because of “the current rush”. She has also said people can still freely use it for transactions or even return it to the central bank.

One thing is for sure: the same note with different features would mean confusion for the common man. It will be easy for the ‘experts’ in counterfeiting to cash in on this confusion.

How is the common man to know whether the Rs 500 note he has is indeed original or fake? It has to be remembered that the fake note circulation has been rampant in India despite the RBI’s frequent notifications on how to detect such notes.

Clearly, the awareness level among the general public about the security features of currency notes is very low. Notes with slight variations in features will only add to the confusion about the features.

Announcing the decision to withdraw Rs 500 and Rs 1,000 notes and issue new ones on 8 November, the prime minister had said that the move was aimed at destroying the counterfeit racket, ending terror funding and also stop black money generation.

If the haste has resulted in errors that will only facilitate counterfeiting, then it will kill the very objective of the demonetisation exercise.

Interestingly, the RBI had published on its site the security features of the new Rs 500 notes before the notes came into circulation.

It will be better for the RBI to find some practical solution to the problem before any damage is done.

First Published On : Nov 25, 2016 14:32 IST

How Narendra Modi’s survey limits the range of feedback that can be provided by user

The government has faced increasingly targeted attacks by the Opposition and the public on the merits of the demonetisation move carried out a fortnight ago. In an attempt to placate this ire and to create a feedback loop that directly engages with the public, the government has decided to conduct a mass survey to gauge public perception. The survey is hosted on the Narendra Modi mobile application that can be found on the Android and iOS app stores. This article will attempt to analyse the mobile application by looking at the design principles followed in the survey and the scope given to survey takers to express their true opinion of the demonetisation move.

At the time of writing, 90 percent of respondents expressed the feeling that the government’s move was ‘brilliant/nice’. However, one must look into the merits of the survey and its limitations to understand the true value and nature of the results of the survey.

The first step required in order to take the survey, is downloading the application itself, which forces the user to automatically grant access to Contacts, Phone and Storage functions of their phone. While there are ostensible reasons for these permissions, (sharing the data from within the application, storing downloaded information, etc.) unless the user is running Android 6.0 or above, the user doesn’t have a choice in giving these permissions. This leaves the application with the potential to collect the entire phone book of the user as as well as access any files stored on the user’s device. This is independent of the survey and provides a large scope for massive data collection from any user just choosing to install the application in the first place. It is easily possible to create a version of the application that carries out a vast majority of its current functions without these permissions and the government (along with the application developer) should endeavour to do so at the earliest. In the alternative, they should have a clear and distinct privacy policy that informs users of the data collection and its possible use.

The second major step required to take the survey is the long and tedious registration process, which requires all sorts of details with massive privacy implications. This includes the name, email ID, phone number, residency details, profession and interests, all of which are compulsory fields. Why all of these details are necessary to take a supposedly simple survey and what possible use this information can be put to by the government is both unclear and problematic. It is also possible to register using Google, Facebook, Twitter and other social networking sites where there is a varying standard of equally private and unnecessary information that is being collected by the application from these websites. There are no privacy notices or consent forms that govern this information collection nor is their any indication of how this information will be put to use beyond the scope of the survey. The generic, standard form privacy policy (less than 10 lines long) on the Narendra Modi website is hidden at the bottom of the application download page (not in the application itself) and leaves a lot to be desired to safeguard user interest.

Once the registration is complete, the user is presented with the survey, which has a total of 10 questions of 3 broad categories. 6 of these questions have multiple choice answers, 3 of them have a sliding rating meter and 1 question has general comments/suggestion page.  The article will now look at these categories and analyze the design of the questions, the extent of the choice they give to the users and finally if the survey has a coercive or limiting effect on the feedback that can be given by the user via the application regarding the demonetisation move.

Choice limiting multiple choice questions.Choice limiting multiple choice questions.

Choice limiting multiple choice questions.

The first category of questions, the multiple choice questions (MCQ), have varying degree of choices that the user can select from. However, regardless of the extent of the choices, their exact nature is severely limiting and makes it almost impossible to express a truly negative opinion of the survey. This is done in two ways, first the explicit restriction of choices and second the more subtle negative colouring of responses by cleverly phrasing questions. An example of the explicit restriction of choices can be seen in Question No 7. “Demonetisation will bring  real estate, higher education, healthcare in common man’s reach” which has three options, “Completely Agree, Partially Agree and Can’t Say.” There is no option to disagree with the paradigm set by the question and neither is there an option for the user to further explain or elucidate upon the answer, if he/she choose Can’t Say as an option. This also means that there will be no answers that will have “No” as an answer to the fairly open ended question, which can have a myriad of responses. The same can be said for Question No. 6 regarding the demonetisation move’s effectiveness in curbing illegal activities to which, once again, “No” is not an answer, with “Don’t Know” being the best a user disagreeing can do with the survey question.

The second, more subtle aspect of the MCQ questions are questions that serve as bait to demand a positive answer, which can be used to later bolster the survey’s results in a positive light. For example, Question No. 1 reads “Do you think Black Money exists in India” and Question No. 2 reads “Do you think the evil of Corruption & Black Money needs to be fought and eliminated?” both of which have simple “Yes” and “No” as the only two possible responses. These rhetorical questions, which demand a positive answer, provide almost no aspect for the user to subtly or explicitly disagree with motivating factor behind the demonetisation move. The placement of these questions and the lack of choice in responses that can be given to them leaves huge potential to tilt the survey results in the favour of the government’s move. For example, you can’t simultaneously agree that black money is a problem and think the demonetisation move is a bad idea, simply because you can’t express that view in a single question within the survey.

Positive bias driven multiple choice question.Positive bias driven multiple choice question.

Positive bias driven multiple choice question.

The other two categories of questions do not suffer from the overt problems of encouraging positive bias that the MCQ questions do but leave a fair bit to be desired in their outlook towards individuals who disagree with the move. In the sliding rating meter questions, there are strong visual cues that hint that disagreeing with the demonetisation move is a negative, undesirable idea. They do so by using a large, danger red frown as the icon for Question No. 5 that asks for the survey takers opinion on the ban on old 500 and 1000 rupee notes. The same goes for Question No. 3 that deals with the general moves of the government to tackle black money. This makes any opinion or answer that disagrees with the validity of the move an answer that is portrayed in a negative light. Similarly, the general comments/suggestion section in Question No. 10 is the only place for anyone to express a negative or non-concurring opinion, which there is no way to measure statistically in the overall survey results and will mostly likely not be counted in the final survey results.

Visual cues.Visual cues.

Visual cues.

All of the above points clearly show that the design of both the Narendra Modi mobile application and its survey have huge potential for coercing a biased viewpoint upon any  survey taker and ensure that it is almost possible to express a stark, negative opinion against the demonetisation move via the survey. This can and should be remedied by the government to allow for a more open, conducive and critical discourse to take place regarding the move among the public. It is only when such opinion is allowed to exist in the first place, that the government can understand, engage and respond to the various valid critiques of the move. The chilling effect that would take place in the current form of the survey would be counterproductive to the original intent behind its creation, which was to create a direct constructive feedback loop between the public and the government.

First Published On : Nov 24, 2016 11:37 IST

#NotePeCharcha Episode 1: A train to Kasara that narrates the demonetisation story in rural India

While the effects of demonetisation on urban India are immediately apparent to those with access to mainstream English media, its impact on rural lives is as yet unclear. We travelled in a north-by-north easterly direction from Mumbai to examine the depth of the impact.

Firstpost sent out Apoorv Mishra into rural Maharashtra with an iPhone, a couple of mics, a GoPro and no institutional monetary support – he had borrowed money from friends and withdrawn all the cash permitted under prevalent restrictions.

His journey started in Mumbai, on a Kasara-bound train, where the passengers told him about their lives post demonetisation. It’s a tale of hardship and struggle that only gets worse as you delve deeper.

When he started out, he had no clear idea of where to go exactly. The idea was to visit a place in Maharashtra that truly fits the rural bill and Kasara just seemed like the natural choice.

On the way, he met a businessman who seemed surprisingly unconcerned about the demonetisation of Rs 500 and Rs 1,000 notes. After all, “You only need money for travelling. You can use your debit card everywhere else,” he said. “I don’t want money [cash],” he said.

A little old lady told him that she was completely unaffected. “Those who have money need a bank,” she said.

As he approached Kasara, however, people’s reactions started to change.

Many reported that their business was dead. The lack of money and change has hit them hard. A young man said that he hadn’t been able to drive his rickshaw for over a week, yet another said that he hadn’t sold anything in days.

All these tales are coming to us just on the train to Kasara. Watch the video to find out more about our quest to dig out how demonetisation impacted daily lives in rural India:

Firstpost broadcasted Mishra’s road trip on our live blog, and our Facebook page, and is now releasing the videos in the form of a series of documentary shorts.

First Published On : Nov 23, 2016 18:29 IST

Narendra Modi poll: PM’s attempt to wrap issue in tricolour paints any opposition as corrupt

For the past several days, the Parliament has been stalled with the Opposition demanding the Prime Minister’s presence in the House. For reasons best known to Narendra Modi, he has decided not to lend Opposition MPs an ear and has given them the cold shoulder. But he did not spare an opportunity to irk Congress and company when he addressed the Coldplay concert in Mumbai via video conference over the weekend.

The inference is that Modi is telling the opposition: I don’t care for your criticism of the demonetisation scheme.

What he has done subsequently should anger the Opposition even more. Modi’s move to conduct a nationwide opinion poll by asking citizens to respond to the ten questions he has asked, is his attempt to bypass the opposition MPs. He wants the 125 crore people of India or at least those with access to a smartphone, to rate his demonetisation strike. By doing so, he is indicating that he would much rather listen to the people directly.

He is also telling the pollsters who are recording 87 percent approval ratings for his drive that he will put them out of business by conducting his own poll, with a larger sample size. It will also be seen as transparent as anyone taking the survey has to register on the Narendra Modi app and every user can take the survey only once.

Prime Minister Narendra Modi. AFPPrime Minister Narendra Modi. AFP

Prime Minister Narendra Modi. AFP

But what does this poll do to the institution of Parliament? The Narendra Modi app cuts through the parliamentary red tape and sends out the message that the prime minister treats the opposition with contempt.

A point highlighted by this answer. Union minister of state for Heavy Industries, Babul Supriyo told TV cameras that when little kids (referring to ministers like him) can answer the Opposition questions, where is the need for “Daddy” to come.

This to my mind, is not the right approach. Demonetisation is a serious enough issue for the prime minister to come to Lok Sabha and Rajya Sabha and listen to the criticism and suggestions. Particularly when more than 70 people have died waiting in long queues in front of banks and ATMs and stampedes. Death is not a ‘minor inconvenience’. It is incumbent on him to convince the MPs and through them, the nation that he has done the right thing. The Parliament after all, under the Constitution of India, is supreme and needs to debate the issue.

No one for a moment doubts Modi’s intentions. Arvind Kejriwal‘s over the top allegations don’t stick. But even many of those who strongly supported the move on 8 November are now criticising the manner in which it has been implemented on the ground. This includes even people like Andhra Pradesh chief minister Chandrababu Naidu, an NDA ally and one of the proponents of the demonetisation idea. Several economists are putting caveats on whether it will really achieve its goals.

It is a bit much for Modi to expect the economics-illiterate Indian to understand the issue for him to give an informed response to the questionnaire. What Modi is doing is to emotionalise the issue when he asks whether you think “evil of corruption and black money needs to be fought and eliminated”. Of course, it has to be. Will anyone who has India’s interest at heart, give an answer to the contrary?

Modi has also brought politics into the picture by asking “Do you think some anti-corruption activists are now actually fighting in support of black money, corruption and terrorism?” It is evident the reference is to Kejriwal. Modi is wrapping the question in the tricolour and suggesting that those who oppose it are on the side of the corrupt and the terrorists.

The prime minister also would be aware of an inherent flaw while using the Narendra Modi app to conduct the poll. While the MPs represent the voice of India from different states, the android app can be accessed only by smartphone users. According to a Cisco report, there are 24 crore smartphone users in India. The problem with it is that only 7 percent in the lower income category own a smartphone. This would mean the feedback with the prime minister would be skewed with users from ‘smart’ India responding and ‘unsmart’ Bharat almost going unheard.

May be the prime minister wants to come armed with the results of the app poll to Parliament to tell his critics that the people of India are with him. Because if the result gives Modi’s decision the thumbs up, it will prove that an app a day keeps the critics away.

First Published On : Nov 23, 2016 08:06 IST

Black money: India to get Swiss bank a/c data from Sept 2018 onwards

New Delhi: In a big step towards fighting black money stashed overseas, Switzerland today agreed to automatic sharing of information with India on Swiss bank accounts of Indians as of September 2018 and onwards.



They will not share details about accounts held prior to that period, while the first such exchange will happen in September 2019.

The ‘Joint Declaration’ for implementation of AEOI signed today between India and Switzerland provides that both countries will start collecting data in accordance with the global standards in 2018 and exchange it from 2019 onwards.

While Switzerland has conformed to the global standards on automatic exchange of information with the signing of the declaration, India, on its part, has promised to safeguard the confidentiality of the data.

“It will now be possible for India to receive from September, 2019 onwards, the financial information of accounts held by Indian residents in Switzerland for 2018 and
subsequent years, on an automatic basis,” said a Finance Ministry statement.

Describing the signing of declaration as a “big step”, Revenue Secretary Hasmukh Adhia tweeted: “The income tax department will be able to obtain information from accounts of all Indians stashed in Switzerland from 2018 onwards.”

The Swiss Federal Department of Finance said in a statement that the signing of the joint declaration with India confirms Switzerland’s international commitment to
implementing the automatic exchange of Information (AEOI) standard.

“Switzerland is thus strengthening its network of AEOI partner states. India meets in particular the high demands in terms of adherence to the principle of speciality and the safeguarding of confidentiality for the data delivered, which are prerequisites for the introduction of the AEOI,” it said.

Switzerland, which has always been at the centre of the debate on black money allegedly stashed by Indians abroad, used to be known for very strong secrecy walls till a few years ago around its banking practices.

A huge global pressure has resulted in Switzerland relenting on the tough secrecy clauses its local laws gave to the banks. Several information requests on details about Indians who had accounts in Swiss banks are still pending.

Today’s declaration, however, does not talk about exchange of information based on stolen data or pending requests from India.

Following the government’s demonetisation of high value currency notes earlier this month as a crack down on domestic black money, some opposition parties have been demanding that the government take action to bring back the unaccounted Indian money stashed abroad, particularly in Swiss banks.

The Switzerland Department of Finance said the automatic exchange of information with India will be implemented based on the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA).

The MCAA is based on the international standard for the exchange of information developed by the OECD.

The Swiss Federal Council has authorised the Federal Department of Finance to conduct a consultation for the introduction of the AEOI with India and other countries.

“It will be initiated soon. Thereafter, the corresponding federal decrees will be submitted to Parliament for approval,” it added.

In a significant step in the continuing global efforts to crackdown on illicit fund flows in the system and do away with banking secrecy practices, Switzerland had in September ratified the multilateral convention on administrative assistance in taxation matters.

The Indian Finance Ministry’s statement said fighting the menace of black money stashed in offshore accounts has been a key priority area for the present government.

The Joint Declaration for implementing AEOI was signed today by CBDT Chairman Sushil Chandra and Deputy Chief of Mission of Swiss Embassy Gilles Roduit here in India.

On June 6, Prime Minister Narendra Modi had met Swiss President Johann Schneider-Ammann at Geneva and discussed the need for expeditious exchange of information for combating tax evasion together with an early start to negotiations on the Agreement for Automatic Exchange of Information.

As a follow up, Adhia and Switzerland’s State Secretary for International Financial Matters Jacques de Watteville met on June 15 and agreed to move towards an early agreement for the implementation of AEOI between the two countries.

First Published On : Nov 22, 2016 18:59 IST

Demonetisation: AAP ministers Manish Siosdia, Kapil Mishra detained for carrying out protest march

New Delhi: Delhi’s Deputy Chief Minister Manish Sisodia and his cabinet colleague Kapil Mishra were on detained when they tried to march to Parliament from Jantar Mantar protesting the Centre’s demonetisation move.

Before beginning the march, Sisodia launched a scathing attack on Prime Minister Narendra Modi over demonetisation alleging he is making people cry and shedding “crocodile tears”.

File image of Manish Sisodia. PTIFile image of Manish Sisodia. PTI

File image of Manish Sisodia. PTI

“We don’t like Modi for what he has done in his personal and political life. This is not notebandi but note-badli. The terrorists in Kashmir today were found with Rs 2000 notes. From where are terrorists getting them? Either you are unaware of the lapse or are involved in it.

“He keeps crying all the time and makes people cry. But he sheds crocodile tears. The demonetisation drive should be rolled back. This is what people want,” Sisodia said while addressing the gathering at Jantar Mantar.

He was joined by his cabinet colleagues Gopal Rai, Kapil Mishra and Satyendar Jain. “Neither terrorist funding has stopped nor counterfeit notes nor blackmarketeering. The government has no money to give for Orop to soldiers but waives the loans of industrialists,” Sisodia added.

A day after Chief Minister Arvind Kejriwal, who is presently in Punjab, exhorted people to “change” the Prime Minister instead of the defunct notes, slogans of “note nahi, PM badlo” were raised at the march.

“The PM again became emotional… he is not getting any support. Hence, he is crying. The need is to take the fight to the streets,” Gopal Rai said.

The Prime Minister had on 8 November announced withdrawal of Rs 500 and Rs 1000 notes. The decision has been drawing criticism from opposition parties.

First Published On : Nov 22, 2016 15:32 IST

Demonetisation in Kerala: Curbs on cooperative banks are hurting Non-Resident Keralites

Kerala is one of the few states where demonetisation of Rs 500 and Rs 1,000 currency notes generated so much heat. The state witnessed a rare phenomenon of the entire state Cabinet sitting on a day-long dharna with the mutually acrimonious ruling party and the Opposition joining hands against the Union Government over the issue.

Economic experts are wondering why the demonetisation move aimed at flushing out black money has met with so much protest in Kerala, which incidentally is the country’s first total banking and completely digitised state. They feel it could be because of pressure from the black money lobbies.

Firstpost spoke to a cross-section of experts to get a dispassionate view of the situation. This is the second in a four-part report. You can read the first part here.

The demonetisation of high-value currency has brought the cooperative banks in Kerala under glare. The decision of the Reserve Bank of India (RBI) to keep them out of the currency exchange business has put the entire sector with a network of over 2,500 branches across the state in the dock. The decision has pushed the ruling and Opposition fronts led by the Communist Party of India (Marxist) and the Congress respectively to the path of agitation. After completing a series of separate agitations, the two are gearing up for a joint strike against the Centre over the alleged discrimination shown to the cooperative sector.

Representational image. Reuters

Representational image. Reuters

Chief Minister Pinarayi Vijayan, who sat on a day-long dharna along with his cabinet colleagues before the RBI office in the state capital on Friday, has accused the Narendra Modi government of trying to destroy the sector that caters to nearly one crore people, especially in the rural areas, with a huge deposit of Rs.1.27 lakh crore.

However, the BJP, which is struggling hard to defend Prime Minister Narendra Modi’s policy, has seen red in the unusual union of the bitter political rivals in the state against the Central government. Senior leaders of the party say that the two had joined hands as they may have stakes in the black money stashed in the cooperative banks. They have defended the RBI decision saying that it was prompted by the unwillingness of the cooperative banks to follow the RBI’s banking norms in their operations. They feel this may be because black money is the lifeline of cooperative banks in the state.

BJP general secretary K Surendran alleged that many politicians in the state had parked unaccounted money in the cooperative banks. He alleged that a prominent leader had deposited defunct currency notes worth Rs 12 crore in a cooperative bank in Kannur a day after demonetisation was announced. Surendran has asked the bank to furnish the details of all deposits received by them since 8 November. He said that many were depositing black money in cooperative banks as they don’t have to disclose the source. He said that this had encouraged hawala dealers, the real estate mafia and even terrorists to launder money through cooperative banks.

Describing the cooperative banks as a den of black money, the BJP leader has submitted a memorandum to Union Finance Minister Arun Jaitley to verify the money deposited in cooperative banks across the state and requested him to take the necessary action against tax evasion. The Income Tax Department has already begun the process. It has started issuing notices to cooperative banks to furnish details of the deposits. The I-T men are trying to take advantage of the helplessness of the depositors in pulling back the deposits in the current situation.

They are not able to withdraw the deposits since cooperative banks have not been provided with new currency notes. Cooperative banks have to go to regular banks to exchange the defunct notes. Since the current restriction on the withdrawal of money is applicable to cooperative banks as well, they will not be able to disburse large amounts at present. The black money estimated by the I-T departments of cooperative banks in Kerala is roughly Rs 30,000 crores. Leaders of both the LDF and UDF have denied the allegations. They have termed it as a figment of the imagination.

Leaders of both the front say that the BJP had taken up this to run a campaign against the cooperative banks. This is deliberate attempt to destroy the sector that plays a vital role in the state’s economy and rural prosperity.

“Cooperative banks came into existence in Kerala even before the formation of the state. It was part of a people’s movement to free the people from the clutches of money lenders. The BJP is trying to destroy this as they have not been able to make any inroads into the cooperative sector in the state”, said CPM MP A Sampath, who has been involved in the cooperative sector from his youth.

VD Satheeshan, vice-president of Kerala Pradesh Congress Committee (KPCC), suspects a conspiracy to drive the huge deposits from cooperative banks to regular banks. He said that those behind the conspiracy were trying to do this by showing the cooperative banks in poor light. “The cooperative banks are following the principles of banking as laid down by the RBI but they are not allowed to take part in the demonetisation drive. This will paralyse the functioning of these banks resulting in a mass exodus of accounts,” says Satheeshan.

However, a former senior official of the State Cooperative Bank (SCB) in Thiruvananthapuram told Firstpost that the claims of the political leaders were true only in the case of state and district cooperative banks (DCB) that are fully computerised and function according to RBI norms. The SCB has 20 branches and the 14 DCBs have 716 branches across the state.

The former official, who did not want to be identified, said malpractices were taking place in the 46 Primary Cooperative Agriculture and Rural Development Banks (166 branches) and Primary Agricultural Credit Societies (1,638 societies) located in rural areas.

“Earlier, the customers in these institutions were mostly farmers and small traders, who deposited money in the banks only after striking a deal or selling some property. The situation changed after the Income Tax men started keeping track of banking transactions. This forced many from cities and towns to park unaccounted money in cooperative banks in rural areas,” he said.

Even Non-Resident Keralites have opted for cooperative banks for parking their money. Sharjah-based Pravasi Bandhu Welfare Trust chairman K  Shamsudheen said that the NRKs were showing preference for cooperative banks as they were offering higher interest rates — compared to commercial banks — without paying tax.

The current interest offered by commercial banks on NRE deposits is between six and seven percent while the cooperative banks offer between nine and 10 percent for one-year terms and beyond. Shamsudheen said that a large number of NRKs in West Asia had deposits in cooperative banks. He told Firstpost that many also had illegal resident accounts in commercial banks along with their NRE accounts. They have opened such accounts and deposited money in them in connivance with bank officials, said Shamsudheen, who has been running a campaign to cultivate saving habits among expatriates.

This perhaps explains high growth in the domestic deposits in commercial banks in the state in the recent years. The state-level bankers committee reported an increase of 71.31 percent in the domestic deposits in Kerala during 2014. The domestic deposits in the banks as on 31 December, 2014 were Rs 3.3 lakh crores.

File image of Pinarayi Vijayan. PTI

File image of Pinarayi Vijayan. PTI

Curiously, the NRE deposits grew only by 15.77 per cent during the period. The high growth of domestic deposits despite the recession has been baffling economists. VA Joseph, former managing director of Thrissur-based Catholic Syrian Bank, feels that the higher interest offered by banks and opening of new accounts under the Pradhan Mantri Jan Dhan Yojana could be the main factors behind the sudden jump in the domestic deposits.

Economist Mary George does not agree. She said that the huge infusion of money into the domestic accounts could be the result of attempts by some people to legitimise the unaccounted money. Shamsudheen said many in the UAE, who deposited hawala money in resident accounts in regular banks, have started getting notices from the Income Tax department.

“Such a person in Dubai approached me for advice on how to save the money he illegally parked in a resident account in a private bank. There are many like him in West Asia. Demonetisation has put them in a big panic,” says Shamsudheen.

The I-T department put the cooperative banks under their scanner after they noticed a huge increase in their deposits in the past decade. However, their attempt to gather details of the deposits was resisted by the banks. A section of the banks even approached the Supreme Court against I-T scrutiny. The department investigation revealed that cooperative banks were the favourite channel for the real estate mafia, hawala dealers, corrupt officials and even politicians. They find it easy to deposit up to Rs 10 lakh in primary cooperative societies as they don’t have to report it to the RBI and I-T department. If the amount is higher, the banks help them in depositing money under fictitious names.

A primary cooperative society in Kozhikode district advised an NRK from Dubai to deposit the Rs 28 lakh he received from the sale of land in multiples of Rs two lakh. The bank employees facilitated the deposit of the entire amount by creating accounts in 14 names — most of them fictitious. Shamsudheen said that the man was now in a panic after the cooperative society failed to clear his doubt on recovering the money. Similarly, a Dubai-based woman, who put Rs 50 lakh in a cooperative bank in Kollam district, is confused after the bank expressed its difficulty in giving her the entire sum in one go.

The bank apparently cannot give more than Rs two lakh to a customer in one transaction as it could be hauled up by the I-T department. Shamsudheen said that the cooperative bank had advised the women to accept the money in different names. Shamsudheen added that demonetisation had put the customers of the cooperative banks in a total quandary. The NRK, who has been advising expatriates on safe investments, said that he was getting large number of calls from Keralites from all over the world day and night seeking his advice on their deposits in cooperative banks.

Thousands of people, who deposited money in cooperative banks thinking they will be as safe as in Swiss banks, are now in a panic. The hapless depositors are pinning their hopes on the agitation being launched by the ruling and Opposition fronts to get their money back.

Part One: Hawala, fake notes play big role in state’s economic growth

First Published On : Nov 22, 2016 11:29 IST

Demonetisation: Opposition’s criticism of Modi govt irrational, writes JDU MP Harivansh

The demonetisation divide is disturbing.

Sitting on the opposite side of the treasury bench, it becomes a normal impulse to oppose the government. But moving beyond partisan politics, a few decisions need to be seen in the context of both their end purpose and the means employed, without divorcing one from the other. The recent decision by the BJP government to demonetise requires one such analysis.

Today, India is facing countless challenges; both internal and external. Externally, a major challenge is posed by increasing assertiveness of China, a country that started its development journey with us but is now challenging the world’s biggest superpower, the USA. It cannot be disputed that it was only after it became an economic super power that China’s presence started being felt on the global high table.

File image of JDU MP Harivansh. Screen grab from YouTube

File image of JDU MP Harivansh. Screen grab from YouTube

On 13 November, Pakistan’s prime minister Nawaz Sharif inaugurated the operational activities of the strategic Gwadar Port, an important trade link between western China and the Arabian Sea. Gauging its strategic implications is not a tough job and is indeed a matter of concern for India. Fresh manoeuvring in the relationship of Bangladesh with China and Pakistan in the past few months compelled our defence minister to forge new ties with Bangladesh. The way India is being surrounded in the India Ocean also raises serious strategic concerns.

Without getting into the finer nuances of these issues, it is can be safely remarked that external challenges equal the internal ones, which are no less.

This country is of the youth. They are both our capital and strength. If we cannot provide employment to them, nation-building will not be possible. That is a categorical fact. The needs of our rapidly increasing population also need to be taken care of. Environment degradation is staring us in the face. We have mixed poison in the air and are inhaling it. Various reports have indicated how more people in India are dying than in China because of diseases caused by environmental degradation. It is not only impacting our health, it is impacting our society and our economy at large. If we don’t take strong steps in the economic realm, it is not very viable to expect the country to remain in its current shape.

Demonetisation and its desirability

Marx’s proposition that it is economic decisions that forge the historical narrative is so true and China is a living example of this. After Independence, the dream of making India great, a dream nurtured by the freedom fighters, was met with several roadblocks and the economic ones were the most gigantic among them.

To remove these roadblocks, it was only on two occasions that decisive steps — exuding full determination to bring a substantive change — were taken.

In 1969, the nationalisation of 14 banks by the Indira Gandhi government was a big step in regard to economic reforms. Also, the abolition of privy purses and nationalisation of coal mining in (1971-1973) was a decisive step that sent a very strong message to the people.

Again, decades of economic mismanagement pushed our economy to the wall compelling the PV Narasimha Rao government to initiate liberalisation and opening up of the economy in 1991.

The BJP government, while announcing the demonetisation of Rs 500 and Rs 1,000 notes on 8 November, joined the same line of reforms. Its consequences will be judged in time, but it can be safely said that it would be beneficial for the economy at large, given that it is taken to its logical conclusion by initiating more reforms. It is the sheer misfortune of this country that a decision that provides a direction to the country and determines it destiny is seen through a political prism.

Politics has become a 24-hour vocation for almost all the political parties. Every step is evaluated in terms of personal and political gain.

Of course, there are exceptions like Bihar chief minister Nitish Kumar who chose to see it from a different perspective, not allowing myopic oppositional politics to colour his views. On the very next day after the demonetisation announcement, Nitish supported the move. The reason for his support was simple: Cleansing Indian polity of black influence.

I have earlier, in various discussions in Parliament talked about the Mumbai blasts of 1993. And I have also highlighted that in the same year the NN Vohra Committee submitted its report. The committee highlighted the problem of the criminalisation of politics and of the nexus among criminals, politicians and bureaucrats in India. It showed how this nefarious syndicate is destroying this country. It pointed out that this syndicate draws its strength from black money. The report was completely forgotten. We should deliberate upon implementing its recommendations.

While we kept talking about curbing black money, a new power-broking class like Ponty Chadha, Matang Singh and Abhishek Verma and a host of political people who still hold important posts in different political parties, has emerged. Their sole interest is to generate black money on which to thrive. These power brokers have permeated defence deals, major policy decisions and even in the justice delivery system.

Demonetisation is an important but small step to check these trends. To take it to its logical conclusion, the government has to strike on benami property, where most of the black money is invested.

Tough economic decisions are required to strengthen democracy. Nitish’s decision to ban liquor — estimated to cause a revenue loss of thousands of crores — was to benefit the people at the bottom of the social pyramid. And when this happens it strengthens the democratic ethos of the country. In 2005, Bihar was written off by the leading publications of the world such as The Economist, TIME and Newsweek. It was declared as a hopeless case. But the same Economist magazine in 2010 talked about its transformation and turnaround. It was the result of some very strong legal and economic steps, like speedy trials — wherein 90,000 criminals where convicted in record time — and sounding the bugle against benami properties of corrupt government officials and politicians.

It is assumed that in a democracy, strong steps cannot be taken with decisiveness. And the long-held image of India as ‘soft state’ allows the corrupt and the thugs to turn audacious enough to openly endorse, support and perpetrate wrong.

Today top economists are arguing that the current demonetisation might be problematic in the short run but it will be beneficial in the long. Consider this: In Khairagarh, Chattisgarh, after 29 years, people came out in the open to pay up tax worth Rs 50 lakh. This is a story of a small district in Chattisgarh. In Ranchi, after demonetisation, Rs 1.16 crore was deposited as municipal tax in one week against Rs 20 lakh a week in normal times.

A Congress member asked in Parliament as to what was so great about demonetisation. It has happened earlier too. Now consider this: In 1945, of a total Rs 1,235 crore worth of currency, Rs 143 crore (11.57 percent) was demonetised. In 1978, out of Rs 9,512 crore, Rs 146 crore (1.53 percent) was demonetised. In the current exercise, of the Rs 16,41,500 crore currency, Rs 14, 21,539 crore (86.6 percent consisting of Rs 500 and Rs 1,000 denominations) has been demonetised.

This is huge and unprecedented. In terms of the value of the currency, it is a whopping 73.656 percent more than the 1978 exercise. In terms of the number of notes that need to be removed, it is even more mind-boggling. Against around 10,00,000 (give or take a few lakh) notes taken out in 1978, this time around 22,56,00,00,000 (two thousand two hundred and fifty-six crore) pieces of currency will have to be taken out. That is, this time, the effort is 22,56,000 percent larger.

Now the government should ascertain the impact of demonetisation on Naxal funding, insurgency in Kashmir and the North East. It needs to enquire as to what extent the reports of note-burning like the one reported from Kolkata are true and who these people are. Information regarding this will justify the government’s move. And in due course, all efforts should be made to ensure that if we want to move towards a cashless economy, the infrastructure to support this dream is put in place quickly.

Representational image. Reuters

Representational image. Reuters

What the Opposition should be doing now
Now what should be the role of the Opposition in this case? I think it should be of constructive deliberation. Rather than blindly opposing demonetisation, it is a moment when the Opposition should initiate a debate as to why in the last several decades, in spite of all the serious talk on the issues of corruption and black money, we failed to take any decisive steps.

In 1962, Lal Bahadur Shastri formed the Santhanam Committee to suggest ways to tackle corruption. While one of its recommendations did result in the setting up of the Central Vigilance Commission (CVC), several other important recommendations were never debated seriously. In the following years, numerous committees were formed on the same issue and several reports on corruption and black money were submitted to the government, but without any substantive outcome.

Corruption and black money was once a big issue. But over the decades, instead of sharpening the fight against corruption, ironically it got normalised by the shameless acceptance of its inevitability. In Jawaharlal Nehru’s first Cabinet, a minister named Keshav Dev Malaviya had to resign because he was accused of taking Rs 10,000 donation in elections.

Sankar Das, in his biography of Nehru, writes that in April 1963, certain charges of a minor nature were brought against KD Malaviya — a Central minister. Nehru asked SR Das, a Supreme Court judge, to ascertain whether there was a prima facie case against Malaviya. Nehru otherwise liked Malaviya because he had done useful work in helping develop oil prospecting in India. Das’ enquiry was not conducted openly; it was held in camera. However, Das found that there was a prima facie case against Malaviya on two out of six charges. Malaviya resigned.

This sort of aversion to corrupt practices has dissipated largely. It is an indisputable fact that black money is the direct outcome of corruption and there is a symbiotic relation between the two.

In the past 40 years, since the time I started observing social and political developments, the base and impact of black money has increased manifold. As members of the Opposition we need to look up how many committees were formed to check corruption and black money in last few decades and question why no steps were taken to implement their recommendations.

We need to ask if the governments till now were only interested in forming committees.

The World Bank has put the extent of India’s parallel economy at roughly 20 percent of its gross domestic product (GDP). The 2014 and 2009 Lok Sabha elections were evidently fought with black money. People like Baba Ramdev, Ram Jethmalani and Professor R Vaidyanathan were vocal about this. It can be nobody’s case that the host of social evils facilitated by black money can be allowed to remain. Now that the government has decided to demonetise currency, there is no point in irrationally criticising it.

Of course, some tough questions need to be asked of the government. But before that as an Opposition we should see that the government machinery ensures that people in the most distant places get the new notes in the shortest span of time.

Debate, dissect

CPM leader Sitaram Yechury speaks about demonetisation in the Rajya Sabha. PTI

CPM leader Sitaram Yechury speaks about demonetisation in the Rajya Sabha. PTI

Also, all the news that is emerging after demonetisation should be debated. A few days ago a leading financial paper reported that at the India-Bangladesh border, the fake currency racket has suffered a huge setback due to the demonetisation process. The same day Mint published a report headlined, ‘Hoarders woo friends to turn black money into white’. According to this report. big politicians and government officials are asking people to help them convert their black money into white for a commission.

Some other reports claimed that the government is monitoring the income of around 400 big jewellers. Given the fact that a 10-gram gold coin costs Rs 30,000, a briefcase full of such coins can hold black money worth crores. Another important concern is the way Jan Dhan accounts are being used to stash black money. According to a Times of India report, Rs 170 crore was deposited in these accounts in just three days. The government needs to probe all abnormal transactions in these accounts.

It is estimated that Rs 30,000 to Rs 40,000 crore of hawala money is with terrorist organisations. According to some estimates, terrorists funding in Kashmir rides on this money and following demonetisation, this has been severely affected.

All these news reports — both positive and negative — need to be debated and dissected by the Opposition to ensure the government follows through and taken demonetisation to its logical end. The extent of black money is vast. According to World Bank, it is around 20 percent of the total GDP.

The government estimates it at a far more conservative Rs 15-20 lakh crore which is less than 20 percent of GDP. What is the exact extent of this is tough to ascertain. Professor Arun Kumar, who has written a very important book on the subject, has, in his article published in Economic and Political Weekly (subscription required), put the figure at 62 percent of the GDP. That, too, in 2013.

It is true that farmers, small businessmen and traders, patients, passengers and common people are facing huge problems. But in a decision of this scale, it was bound to happen. An argument has been made that people should have been given some time before announcing demonetisation. It is common sense that if such a big decision had leaked even 15 minutes before earlier, it would have had the potential of destroying the economy. It is natural that with a population of around 1.3 billion, there will be challenges. The government needs to provide immediate succour to the people and move quickly to mitigate the adverse impact of this massive move.

This is a fight against organised corruption. Information regarding tax havens on foreign shores was given to this government time and again. In 2015, the Black Money Bill was introduced to bring back black money. But a measly Rs 2,500 crore was netted.

Then came the income declaration scheme. By September-end, only Rs 65,000 crore had been received. If the estimated black money is Rs 10-15 lakh crore and only Rs 65,000 crore is received, it surely calls for some serious steps.

All said and done, there is no denying the fact that demonetisation is an audaciously positive move. But it can reach its logical end only if it is accompanied by electoral reforms, confiscation of benami properties and stern action against those still in possession of wealth disproportionate to their known source of income. These objectives if attained substantially would set India on a different course. Politics can come later.

The author is a former editor of Prabhat Khabar, a Rajya Sabha MP from Bihar and JDU spokesperson. Views are personal.

First Published On : Nov 22, 2016 10:32 IST

Demonetisation: Chit funds are not black money, govt should relax norms for its continuity

The move by the government to demonetise Rs 500 and Rs 1,000 notes by replacing them with new Rs 500 and Rs 2000 notes has taken the country with surprise. The move by the government is to tackle the menace of black money, corruption, terror funding and fake currency.

From an industry perspective, we think that this is a very welcome move by the government and which has taken the black money hoarders with surprise.



It is arguably the boldest decision ever taken by the Government of India to curb the black money and reboot the entire financial system. It is very powerful in the sense that it will completely transform the way people of India deal with cash, accounting and paying taxes while using their money.

However, opinion on this decision is very far from a consensus in both the expert and the non-expert realm. The first question raised against this move is the significance of cash as a component of the money laundering networks in India. Economists have argued that this move has left the biggest chunk of black money untouched – the stacks that lie in undisclosed accounts in Swiss Banks.

The next question that may be raised is the preparedness of the government and the banks regarding implementation of a move of this scale. The argument provided for why this move was announced and administered overnight is that it denies hoarders
of black money the chance to dispose of it. While that may appear to be sound logic, it has also apparently impacted the banking system’s ability to ensure a smooth transition. Several ATMs across the nation continue to be useless by virtue of not
having enough fresh notes, while the ones that are refilled are attacked by painfully long lines and eventually emptied at once.

This in turn is the third major question raised against this policy – who is affected the most? The removal of large sums of legal tender unquestionably affects all individuals who need to engage in cash transactions in some form. Those with access
to plastic money are less directly impacted even in the short term, but in both the long and short term, specific sections have been disproportionately hit. Disenfranchised groups who lack the access to ID documents are chief among these.

The rural poor who lack the infrastructure to set up deposit accounts and who currently hold all their money in cash form have been directly hit. Even those who do have access to accounts among them struggle with ill prepared banks and post offices, small and dispersed in number, and the need to take off several crucial hours from work – sometimes in vain. It is also difficult to estimate the numbers of women across the board that will be potentially irrecoverably impacted by this policy – women who do not inform their families of hidden stashes of cash, who are otherwise fully dependent on male members of the family and who stand to lose years of savings because they cannot confess to their presence.

Chit fund, the industry I represent, is an indigenous financial institution serving as an instrument to save and borrow at the same time. It is considered to be one of the efficient financial instruments that cater to the needs of the poor.

Primary users of chit funds are daily wage earners, salaried individuals, housewives and micro, small and medium enterprises (MSME). It is used by households for consumption purposes like marriage, buying property, education and also as a way to
save free cash to provide for unforeseen emergencies and to help MSME to accumulate capital.

Though the chit fund industry is large, growing and provides useful financial services to those who are otherwise excluded from formal institutions like commercial banks, the government, even otherwise, has imposed stringent rules that has stymied its progress. For example, the government has fixed the commission at 5 percent of chit value for the chit fund operators for the last fifty years. However, the costs of running a chit have increased manifold during the same time. This has resulted in exodus of many smaller value schemes from registered space to the unregistered space, thus increasing the risk for members. In light of the heightened importance of financial inclusion in the country, it is very ironic that the government has persecuted a sector which efficiently caters to the financial needs of those who are otherwise excluded from the formal banking sector.

While demonetisation is a big boost to the Registered Chit Fund industry, as it would weed out the unregistered operators, it has also, simultaneously, indirectly hit the working of the registered industry. The above referred users of chit fund are used to
making cash payments for their monthly installments and even in case of cheque payments, they first deposit cash in their banks accounts. This cash payment, out of their daily income, is definitely not ‘Black Money’ and still they are being
inconvenienced due to demonetisation. In the absence/delay of this substantial collection, the legitimate chit operators will find it difficult to honor their payout commitments to the subscribers.

In the above scenario, few suggestions for relaxation of norms that could be given are listed below.

a. Allow chit fund companies to accept old high denomination (OHD) currency, till 30 December 2016, only in respect of those transactions wherein the chit subscriber gives a undertaking of it not being unaccounted money. This would help those who are willing to deposit OHD in their account but are unable due to the prevailing chaos at banks.

b. Other financial intermediaries can also be roped in, according to their specific needs, on similar lines.

c. The OHD accepting companies can be directed to file a declaration along with necessary supporting documents at the end of the stipulated period which would act as a deterrent to any misuse of the relaxation.

It would seem that my wish list is quite long, but the above-listed financial intermediaries, can also help in OHD exchange process if due precautions are put in place. This will also, to some extent, help control the chaos at banks.

While it is too soon to declare whether the long-term gains are indeed forthcoming, the “short term” sacrifices have been more than just significant. They have been immensely painful.

As we all know, nations were never built in a day and stepping stones like these may not be easy to traverse but are essential to reach the final destination. While the masses are ready for these adjustments and sacrifices, the Government should also
fine tune the existing legislations and facilitate smoother transition and take necessary steps in this regard.

To conclude, demonetisation comes with immense benefit but the government of India should also consider about informal sector where most of the payment is in cash only. Hence we can say the move is good but Utilitarian Principle would make it further better.

The writer is general secretary of All India Association of Chit Funds (AIACF).

First Published On : Nov 21, 2016 18:41 IST

Demonetisation: No relief for people in Telangana, Andhra for 13th day

Hyderabad/Vijayawada: There was no end to people’s woes in the wake of demonetisation of high value currency notes even on 13th day across Telangana and Andhra Pradesh.

Long queues were seen at banks and ATMs in Hyderabad, Warangal and other towns in Telangana. The situation was no different in Vijayawada, Visakhapatnam and other towns in neighbouring Andhra Pradesh.

Representational image.Representational image.

Representational image.

A day after the weekend, people in large numbers flocked to banks for exchange of cash, withdrawal of money through cheques or depositing the spiked notes of Rs 1,000 and Rs 500 in their accounts.

Standing in serpentine queues for cash, people were becoming impatient. At one of the branches of Syndicate Bank in Borabanda area in Hyderabad, people vented their anger by raising slogans. They complained that the spiked notes were not exchanged for last four days.

As the tension mounted, the bank manager locked the branch and left the place along with other staff.

Majority of ATMs remained shut, bringing no respite to the people. ‘No cash’ boards greeted customers at the ATMs.

Even those ATMs which were opened were dispensing only Rs 2,000 notes. People complained that the note is of little help to them as small currency notes were not available in the market.

The business remained dull in both the Telugu states with small traders hit hard by the cash crunch.

Farmers who bring the vegetables at Guddimalkapur, one of the major markets in Hyderabad, complained that there were few buyers due to non-availability of loose change. “Everybody is coming with Rs 2,000 note to buy Rs 50 or Rs 100 of vegetables. Nobody has change,” said one of the sellers.

People said the situation would not improve unless Rs 500 notes are made available in banks and ATMs.

Leaders of the Left parties staged a sit-in at State Bank of India branch in Visakhapatnam, demanding immediate steps to provide relief to people.

Congress’ Andhra Pradesh unit chief N Raghuveera Reddy told reporters in Vijayawada that all sections of people were badly hit by the sudden move of the Narendra Modi government.

He said the demonetisation of 86 percent currency without making alternate arrangements had led to chaos, hitting hard the common man. He demanded Rs 10 lakh compensation each for the families of those who died due to demonetisation.

First Published On : Nov 21, 2016 16:48 IST

Demonetisation: Centre’s refusal to empower EC to clamp down on notebank politics raises eyebrows

Corruption generates black money. Black money in turn funds elections. The elected makes good on the expense by being corrupt, thereby corrupting others in the process. There’s no disputing this infallible vicious cycle, that has now become part of the folklore in our country.

As former Chief Election Commissioner (CEC), SY Quraishi, had said, “Money power in elections is one of the biggest sources of corruption in the country and although there is a legal limit to expenditure, we know anecdotally that much above the limit is often spent.”

His views are reflected by most other CECs as well. But despite recognising the problem, as Quraishi said, the politicians and candidates continue to fudge the accounts, hence sustaining the scourge.

So when the Narendra Modi government declared a war on black money with their demonetisation drive, why was the Election Commission (EC) not empowered to clamp down on corruption and black money employed during elections? Does it not fall into the ambit of the stated purpose? Why was demonetisation limited to destroying the chests of counterfeit currency that fund terror, when it could’ve also been used as an opportunity to cleanse the system?

The Election Commission was not empowered by the Centre to clamp down on corruption and black money as part of the demonetisation wave. PTIThe Election Commission was not empowered by the Centre to clamp down on corruption and black money as part of the demonetisation wave. PTI

The Election Commission was not empowered by the Centre to clamp down on corruption and black money as part of the demonetisation wave. PTI

As reported by The The Indian Express, the Law Ministry shot down a proposal from the EC on Monday that permanently empowered it to cancel elections in case there was credible evidence of voters being bribed.

The refusal, though reported post-demonetisation, had been conveyed well before the step was taken – the letter to the EC was dated 28 September. But it is not the chronology but the intent that is relevant here.

It’s not as if the EC cannot cancel elections presently. It had cancelled elections in two Tamil Nadu Assembly constituencies, Aravakurichi and Thanjavur, in May this year following a seizure of large sums of money. But the move was unprecedented, and was postponed twice before the notification for those constituencies was eventually rescinded.

The EC does not possess permanent legal power to cancel such elections as the government has to approve its proposals. That it refused to grant the EC its requirement raised eyebrows, especially if you see it in the context of the current demonetisation wave. If the EC was empowered, in tandem with the demonetisation, then the scare among the corrupt would have been wider and much deeper.

The Deccan Chronicle reported that, “the Commission usually takes such a harsh step when there are evidences that muscle power has been used to influence voters. But cancelling polls following use of money to induce voters is so far unheard of.” The Law Ministry has now told the EC that, “It may not be advisable to compare booth capturing with allegations of bribery of voters since the circumstances are incomparable.”

The perspectives of the Law Ministry and the EC clearly differ. The former has said that it would “be desirable to maintain status quo”, for “allegations of bribery are a matter of investigation and proof”, and that it cannot be compared with booth capturing – that currently warrants the cancellation of polls. But, as asked by an unnamed EC source quoted in The Indian Express report, “Is booth capturing not a matter of investigation and proof?”

It’s possible that this is not the last we hear on the matter as the EC, regardless of who heads it and who its members are, has a tendency to quietly push on issues it considers important to cleanse the system. Though it is also true that bribery is and has been an inherent problem of the elections, as money is used to overcome the ideological resistance of voters or to persuade those not inclined to vote.

During its crackdown on bribe money in Tamil Nadu this year, the EC had seized Rs 7.12 crore in cash, 429 litres of liquor, 33.256 kg of silver from Aravakurichi and Rs 75.20 lakh in cash, 2,145 litres of liquor from Tanjavur, apart from one lakh saris and dhotis. That apart, Rs 200 crore was seized in the state overall by the EC making it, as had been reported then, the largest haul of money purported for influencing an Assembly poll.

These numbers would make anyone gasp, but then again, we as a country are used to taking it all in our stride for use of money to influence elections is routine. Ask any voter, and any politician who is willing to admit it, and they will reveal the same.

The difficulty is that despite the near universal use of money as a major influencer in elections, the EC has not been able to do much about it on the scale it ought to have. In lieu of the current demonetisation wave, the Centre’s reluctance, nay refusal, to empower the EC to clamp down on black money in politics does raise eyebrows.

First Published On : Nov 21, 2016 16:10 IST

Demonestisation LIVE: PM Modi in Agra, assures people’s sacrifices won’t go in vain

Unnecessary panic spread on demonetisation; no roll back: Arun Jaitley

New Delhi: Digging in his heels, Finance Minister Arun Jaitley on Thursday ruled out the roll-back of the demonetisation decision and slammed Delhi and West Bengal chief ministers accusing them of spreading “unnecessary panic”.

He said the move to demonetise the high value notes was “very well planned”, and added that the rush in bank branches is “significantly” coming down and 22,000 ATMs are getting recalibrated daily in order to dispense Rs 100, and new 500 and 2,000 rupee notes.

Criticising senior Congress leader Ghulam Nabi Azad’s comments in the Rajya Sabha, Jaitley said opposition has developed “cold feet” to debate the issue of demonetisation and criticised Azad for making irresponsible political comment.

Jaitley said he expected every responsible citizen, political party, state governments to support this huge effort because this will mean that India’s formal economy will increase, access to banking will increase, taxation quantum will increase, banks will have far more money to support the economy in terms of trade, interest rates will come down, and therefore the kind of economy it will generate is huge.

“Now unnecessary panic is being spread particularly by some individuals and I didn’t expect Chief Ministers of one or two states to join in this effort,” Jaitley told ANI.

Rejecting the demand of political parties like Aam Admi Party and Trinamool Congress, he said, “whatever AAP and Trinamool Congress said about the roll back, there is no question of that.

It is a clear decision of the Prime Minister and government to cleanse politics and economy of the country. We will stick to it (demonetisation)”. Jaitley questioned the “vested interest” of Congress party in opposing government’s effort to root out black money.

“At the end of the day, this exercise will only succeed in rooting out black money, crime money and make the Indian economy cleaner. Congress as a national party must support this,” he said.

Jaitley also criticised certain comments of Leader of Opposition in the Rajya Sabha and senior Congress Ghulam Nabi Azad during the debate on demonetisation.

He added: “What is the vested interest of Congress party in opposing this campaign to root out black money, crime money and make the Indian economy cleaner. Congress as a national party must support this.”

On why the government was targeting only cash to unearth black money, Jaitley said it was necessary to squeeze cash to prevent generation of more black money.

“You have to squeeze cash because black money generates more black money. Not whatever is in assets is a matter of assessment by the income tax authorities. But whatever is lying in hard cash so that it does not generate anything for the future, has to be squeezed out,” he added.

Jaitley also dismissed the criticism that banks have written off loans belonging to large industrial houses.

“That is completely a false statement. These were loans given during the Congress government. Obviously there is no write off, only the column changes. Some of performing assets become non-performing. But you still keep chasing the loan for recovery.

“Write off in the banking parlance, does not mean loan waiver. It just means, that a performing asset has become a non-performing asset. And therefore the opposition must understand the banking terminology before making an irresponsible statement,” he added.


Narendra Modi invokes Bob Dylan’s ‘The Times They Are A-Changin’

Mumbai: Prime Minister Narendra Modi on Saturday quoted lines from Nobel Laureate Bob Dylan’s iconic The Times They Are A-Changin’, a song which had apparently become an anthem of change, to make a veiled reference to the political situation in the country in the backdrop of the demonetisation move as he addressed the Global Citizen Festival in Mumbai.

“Back in 2014, I had enjoyed attending the Global Citizen Festival in the beautiful Central Park of New York. However, this time, my schedule did not permit me to come in person,” Modi said in a video address to thousands of people who had gathered for the event in suburban Bandra Kurla complex.

“I have had my own set of idols. But you will be perhaps more familiar with Bob Dylan, Norah Jones, Chris Martin and AR Rehman,” Modi said.

Prime Minister Narendra Modi. AFP

Prime Minister Narendra Modi. AFP

“So to quote from one of Dylan’s transformative anthems which holds as much meaning today as it did when it was first sung in the 1960.

“Come mothers and fathers, throughout the land, and don’t criticise, what you can’t understand. Your sons and your daughters, are beyond your command. Your old road is rapidly agin’. Please get out of the new one if you can’t lend your hand, for the times they are a-changin'” Modi said, quoting Dylan’s famous lines from the song released in 1964.

“Elders must learn from these words of wisdom,” he said.

“We better get out of the way as indeed the times they are a changing,” added the Prime Minister.

“Artistes have often inspired generations. My dear young friends, I’m convinced we can and we will build a Swachh Bharat free of all forms of filth within one generation,” he said.

“You bring an energy and idealism that is unparallelled,” he said, adding, “you can be the change you want”.

At the outset, Modi said, “I know that I stand between you and Coldplay and so will make this brief.”

Maharashtra Chief Minister Devendra Fadnavis, who was present at the festival, said, “Young India is eager to hear the Prime Minister.”

The Global Citizen Festival India was held at MMRDA Grounds in BKC here and thousands of fans from across the country thronged the event.

The festival featured performances by international as well as Indian celebrities. Apart from Coldplay, Jay-Z, Demi Lovato and The Vamps, Amitabh Bachchan, Shah Rukh Khan, A R Rahman, Ranveer Singh and Katrina Kaif were among the performers.

Global Citizen Festival is focused on creating an impact in areas of education, equality, and clean water and sanitation.

The festival, launched in 2012, partners with the Global Poverty Project, a movement aiming to end extreme poverty by 2030.

First Published On : Nov 19, 2016 22:10 IST

Demonetisation: Data from SBI shows how public sector banks are saving the day for Modi govt

Following the 8 November announcement by the Modi government of demonetising the Rs 500 and Rs 1,000 notes, the banks were faced with an almost insurmountable challenge: How to manage the disbursal of new currency in a timely manner, in spite of the high demand.

Under such circumstances, the role played by automated teller machines (ATMs) in dispensing cash was hugely important and their success in disbursing the cash effectively was, to a great extent, going to decide the fate of the demonetisation scheme.

Following the note ban, long queues outside ATMs across the country became a common sight. In most cases, the ATMs ran out of cash almost instantaneously, leaving people hassled because of the sudden cash crunch. It was the biggest challenge ever faced by the banking sector in India.

Following Prime Minister Narendra Modi‘s announcement, the Reserve Bank of India (RBI) stated in a press release that all ATMs and other cash machines will remain shut on 9 November (and 10 November) to facilitate the re-calibration of the machines (as the new notes had different dimensions from what the machine accepted). It stated that when ready, they will be reactivated and that cash withdrawals from ATMs will be restricted to Rs 2,000 per day per card up to 18 November, with the limits being raised to Rs 4,000 per day per card from 19 November.

While most private banks shied away from taking responsibility, SBI took charge to effectively implement the demonetisation scheme. ReutersWhile most private banks shied away from taking responsibility, SBI took charge to effectively implement the demonetisation scheme. Reuters

While most private banks shied away from taking responsibility, SBI took charge to effectively implement the demonetisation scheme. Reuters

Facing impossible odds, it was left to the Public Sector Banks (PSBs) to plan and execute the re-calibration on a short time-frame, proving yet again that they are still the backbone of the economy in spite of all the criticism heaped upon them for the mounting bad loans and their mode of functioning.

According to a high ranking bank official, a meeting of all the bank chiefs was called upon on 8 November to deliberate upon how the re-calibration of the ATMs would be managed. The official claimed that most of the private sector banks expressed their inability to carry out the re-calibration work in such a short span of time – given the logistical constraints.

It was under these circumstances that India’s largest public sector bank, State Bank of India (SBI), rose to the occasion and took charge of the situation. With a host of private banks bowing out, it was the SBI that assured the government of effective management of its ATMs. The assurance was a big risk given the enormity of the task at hand.

According to RBI data, as on July 2016, out of a total of 1,03,282 onsite and 98,579 offsite ATMs in the country, SBI has 20,419 (onsite) and 29,496 (offsite) ATMs – close to a quarter of all ATMs. In this context, SBI’s role in implementing the demonetisation scheme was of immense importance.

When the ATMs reopened on 11 November, 27,000 machines were up and running on the very first day. Out of these, 17,000 were replenished by SBI.

However, since these machines could hold only up to 2500 notes of Rs 100, it was hard to maintain the flow of currency.

“We could maintain continuous cash flow for the onsite ATMs and replenish it on regular intervals but for the offsite ATMs, it was a difficult proposition. So, we took various other steps,” said a high ranking SBI official.

It was at this point that the role of banking correspondents in the rural and semi-urban areas, mobile banking, online banking and point of sale (PoS) cash disbursal became important.

SBI has PoS facility at 3,40,000 merchant locations in total, out of which 2,33,000 POS machines were re-calibrated so that the merchants could provide cash against a debit card swipe. Such merchants could provide cash up to Rs 2,000 in rural and semi-urban areas, while the limit was Rs 1000 for urban areas. These merchants conducted over 10,470 transactions worth Rs 40 lakh during the time the ATMs were closed in country.

SBI is also helping big corporates for salary and other services with its PoS machines. Around 470 vans are running to help such customers with 100-150 more vans to be added to the fleet soon.

On 14 November, RBI announced the constitution of a task force under the chairmanship of the RBI deputy governor SS Mundra, for the re-calibration and reactivation of ATMs

Stressing the fact that “ATMs play a vital role in meeting the currency requirements of the public and have become a major channel for disbursement of cash”, RBI said, “ Re-activation of ATMs extends the availability and disbursal of notes for the customers of banks at convenient time and location in judicious mix of higher and lower denominations.”

According to the RBI press release, re-calibration of ATMs involves multiple agencies – banks, ATM manufacturers, National Payment Corporation of India (NPCI), Switch Operators, etc, and multiple activities making it a complex operation requiring immense coordination among these players.

According to current data, 9,187 ATMs of SBI have been re-calibrated for the new Rs 2,000 note. There are currently 7,725 SBI ATMs dispensing Rs 100 notes as well as the new Rs 500 and Rs 2,000 notes.

“The re-calibration process is going on full flow. With more than 2,000 ATMs being currently re-calibrated (till Thursday, the number of functional ATMs touched 13000),” said the SBI official. SBI ATMs have conducted 2.46 crore transactions worth 4,551 crore rupees in the last one week.

In yet another move to ease the pressure on ATMs and bank branches, SBI has reached an understanding with public sector oil companies to provide nearly 3,043 petrol pumps with SBI PoS machines to start dispensing cash against debit card swiped. They will get Rs five per transaction. SBI will replenish the cash to the merchants.

Currently, the average number of transactions conducted through SBI debit cards has increased to 35 lakh daily as compared to 22 lakh before the announcement. It seems that the success or failure of the demonetisation move is currently hinged on the efforts of the public sector bank and its innovative methods of restoring some liquidity to the economy.

First Published On : Nov 18, 2016 18:36 IST

Demonetisation: What’s with the fuss, let the Modi govt crackdown on black money

Jump to original: Demonetisation: What’s with the fuss, let the Modi govt crackdown on black money

Govt issues order to attach Rs 18,866 crore properties under PMLA

<!– /11440465/Dna_Article_Middle_300x250_BTF –>Government said it has issued provisional orders to attach properties worth Rs 18,866 crore for offences under the Money Laundering law on Friday.It has also taken a host of initiatives, including effective enforcement of law, to curb the menace of money laundering in the country, Minister of State for Finance Santosh Kumar Gangwar said in a written reply to a question in the Lok Sabha. “As of October 31, 2016, 658 provisional attachment orders have been issued by attaching properties worth Rs 18,866 crore. Further, 283 prosecution complaints have been filed for the offence of money laundering (under Prevention of Money Laundering Act),” he said.Referring to the steps taken by the government to deal with the menace of black money, Gangwar said the government recently demonetised 500 and 1,000 rupee notes “in a historical move that will add record strength in fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes”.The other initiatives, he said, include enactment of the Benami Transaction Act, amendments to FEMA and foreign black money law. Under the Black Money (undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, 648 declarations involving undisclosed foreign assets worth Rs 4,164 crore were made. The amount collected by way of tax and penalty in such cases is about Rs 2,476 crore.As part of enforcement measures, during April 2014 to October 2016, the Income Tax department has conducted searches in 1,242 groups of assessees, seizing undisclosed assets worth Rs 2,029 crore. These assessees admitted undisclosed income of Rs 28,567 crore. During the same period, 13,690 surveys conducted resulted in detection of undisclosed income of Rs 30,001 crore. Also the I-T department has filed 1,514 prosecution complaints while offences were compounded in 2,244 cases and 75 persons have been convicted by the courts, Gangwar said.Under the Income Declaration Scheme (IDS), the government has received 64,275 declarations disclosing undisclosed income of Rs 65,250 crore.

Demonetisation LIVE: 2,500 petrol pumps to dispense cash, notes exchange limited Rs 2,000

Unnecessary panic spread on demonetisation; no roll back: Arun Jaitley

New Delhi: Digging in his heels, Finance Minister Arun Jaitley on Thursday ruled out the roll-back of the demonetisation decision and slammed Delhi and West Bengal chief ministers accusing them of spreading “unnecessary panic”.

He said the move to demonetise the high value notes was “very well planned”, and added that the rush in bank branches is “significantly” coming down and 22,000 ATMs are getting recalibrated daily in order to dispense Rs 100, and new 500 and 2,000 rupee notes.

Criticising senior Congress leader Ghulam Nabi Azad’s comments in the Rajya Sabha, Jaitley said opposition has developed “cold feet” to debate the issue of demonetisation and criticised Azad for making irresponsible political comment.

Jaitley said he expected every responsible citizen, political party, state governments to support this huge effort because this will mean that India’s formal economy will increase, access to banking will increase, taxation quantum will increase, banks will have far more money to support the economy in terms of trade, interest rates will come down, and therefore the kind of economy it will generate is huge.

“Now unnecessary panic is being spread particularly by some individuals and I didn’t expect Chief Ministers of one or two states to join in this effort,” Jaitley told ANI.

Rejecting the demand of political parties like Aam Admi Party and Trinamool Congress, he said, “whatever AAP and Trinamool Congress said about the roll back, there is no question of that.

It is a clear decision of the Prime Minister and government to cleanse politics and economy of the country. We will stick to it (demonetisation)”. Jaitley questioned the “vested interest” of Congress party in opposing government’s effort to root out black money.

“At the end of the day, this exercise will only succeed in rooting out black money, crime money and make the Indian economy cleaner. Congress as a national party must support this,” he said.

Jaitley also criticised certain comments of Leader of Opposition in the Rajya Sabha and senior Congress Ghulam Nabi Azad during the debate on demonetisation.

He added: “What is the vested interest of Congress party in opposing this campaign to root out black money, crime money and make the Indian economy cleaner. Congress as a national party must support this.”

On why the government was targeting only cash to unearth black money, Jaitley said it was necessary to squeeze cash to prevent generation of more black money.

“You have to squeeze cash because black money generates more black money. Not whatever is in assets is a matter of assessment by the income tax authorities. But whatever is lying in hard cash so that it does not generate anything for the future, has to be squeezed out,” he added.

Jaitley also dismissed the criticism that banks have written off loans belonging to large industrial houses.

“That is completely a false statement. These were loans given during the Congress government. Obviously there is no write off, only the column changes. Some of performing assets become non-performing. But you still keep chasing the loan for recovery.

“Write off in the banking parlance, does not mean loan waiver. It just means, that a performing asset has become a non-performing asset. And therefore the opposition must understand the banking terminology before making an irresponsible statement,” he added.


Demonetisation: Wedding arrangements in Muzaffarnagar made easy, families can avail up to Rs 24,000

Demonetisation: Wedding arrangements in Muzaffarnagar made easy, families can avail up to Rs 24,000


Muzaffarnagar: The District Authorities have decided that families can avail Rs 24,000 from their bank accounts to prepare for the upcoming weddings of their kin during this month.

Representational image. AFP

Representational image. AFP

After talking to their respective bank managers the families can get the one time cash of Rs 24,000 on priority bases, without standing in a queue, District Magistrate DK Singh in Muzaffarnagar on Thursday.

The step was taken after several cash-strapped families on Wednesday demonstrated outside the District Magistrate’s office in Muffarnagar, demanding adequate money to prepare for the upcoming weddings of their kin in wake of the demonetisation move.

The protesters waved their wedding cards during the demonstration last evening, alleging that they were not able to withdraw cash from their bank accounts leading to “great problems” while making arrangements for the weddings.

They submitted a memorandum to the DM and demanded that they be allowed to withdraw reasonable cash from their bank accounts for the ceremonies.

First Published On : Nov 17, 2016 13:34 IST

Demonetisation: Govt eases restrictions on farmers, allows withdrawal up to Rs 50,000 per week

New Delhi: With cash crunch following demonetisation impacting agri sector, the government on Thursday eased guidelines for farmers by allowing them to withdraw up to Rs 50,000 cash per week from bank.

Representational image. PTI

Representational image. PTI

Besides, it has also extended the deadline for payment of crop insurance premium by 15 days and permitted APMC-registered traders to withdraw up to Rs 50,000 per week.

These steps will ensure that sowing takes place adequately in the Rabi season and enough cash is available to the farmers to buy fertiliser, seeds and other inputs, Economic Affairs Secretary Shaktikanta Das told reporters in New Delhi.

“The government has decided to permit the farmers to draw up to Rs 25,000 per week against the crop loan sanctioned and credited to their accounts, subject to the limits…and this will also apply to Kisan Credit Cards,” he said.

These accounts have to be in the name of the concerned farmers, the accounts will have to be KYC compliant, Das said.

Besides, if the farmers receive payments either by way of cheques or RTGS into the bank accounts, they can withdraw up to Rs 25,000 per week, Das said.

Similarly, the registered traders with the Agricultural Produce Marketing Committee (APMC) markets also will be permitted to draw Rs 50,000 per week to meet various cash requirements like payment of wages to workers and other sundry expenses.

“So, this will facilitate smooth procurement process and help farmers to sell their produce without any difficulty,” Das said.

The government has also allowed its Group C employees, including from PSUs, defence and railways, to get salaries up to Rs 10,000 in cash in advance which will be adjusted against their November salary. “It is expected that this will relief pressure on banks,” Das said.

Following the demonetisation of 500 and 1,000 rupee notes on 8 November by Prime Minister Narendra Modi, the government allowed withdrawal of up to Rs 24,000 per week per person through cheque and Rs 2,500 from ATMs.

First Published On : Nov 17, 2016 13:09 IST

Demonetisation: From the stench of old notes to fights, here’s a banker’s view

On 8 November, Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, in order to flush out black money. Thus began the mad scramble for cash. Queues outside ATMs and banks grew as frustrated and anxious citizens made a beeline to exchange or deposit the old notes, or get cash. Banks were directed to extend their working hours and meet the demands. A bank employee shares her experience with Humans of Bombay after the currency ban came into effect:

“I’m the manager at a bank. On 8 November, I was working a bit late when my husband called me and said, ‘how did you not tell me that 500 and 1000 Rupee notes are getting scraped’ and I was shell shocked. None of us had any idea what was going on… we just knew it was huge. So we went into work the next day, preparing for the days to come but no amount of preparation could fully prepare us for what was coming.

Image courtesy: Humans of BombayImage courtesy: Humans of Bombay

Image courtesy: Humans of Bombay

People’s view of the whole situation was limited to the lines they saw outside the bank, but what was happening behind closed doors was entirely different. We became a part of the dirty cycle that runs in this country. On one end there were chaiwallas, istriwallas who are queuing up to deposit their hard earned money but on the other end we’re receiving black money that had been stashed away for years possibly and all this cash smells like rotten leather to the point where every one of our branches has ordered masks for the cashiers — that’s how unbearable the stench became! From fights breaking out and the police intervening to educated people storming our offices and violently asking us for money — we’ve dealt with it all.

Just the other day a builder who’s had an account with us for many years, came forward to finally pay us an amount that he had defaulted on a Non Performing Asset. When we had chased him for months to pay up, he had defaulted but all of a sudden he came forward! He has over 300 crores in black money, but before this he claimed to have none at all — that’s how dirty the business is.

Don’t get me wrong, I’m not complaining about what has happened — it’s a revolutionary move that will only strengthen our country and I completely understand what the common man is going through as well, but what can we possibly do? There’s only so much cash we have, and only so many people who can attend to such a large population.

What’s ridiculous is how people are behaving — they’re treating us so badly. Just 4 hours ago I received a call from a man from a place called Nanded who screamed at me non-stop. He went on yelling, blaming me, cursing in Marathi and I’m sitting there just wondering what I could possibly do and we’ve received dozens of such calls each day. Not just that, but the threats have also come. We get calls from people who are politically endowed and threaten to ‘send media to expose us’ or to ‘create a scene’ if we don’t move money — I mean when will we learn? We’re bankers — there’s only so much we can do! We’ve hardly slept these past few days, we’re not taking any weekends off… in fact most of us haven’t even exchanged our own 500 Rupee notes because we’re trying to help others first.

Our banks are losing money on interest and there’s already enough chaos… do we really need to add to it? We’re all in the same situation, we just need to sit tight and understand that steps are being taken to aid the process — this is for the future of our country and the least we can all do at a time like this is have patience and believe that everything will stabilise soon. And for heaven’s sake, stop trying to use more corrupt methods to get out of an already corrupt situation… we don’t need any more of it!”

First Published On : Nov 17, 2016 09:32 IST

Opposition rallies against govt on demonetisation issue as Winter Session begins in Parliament

Demonetisation: ‘Aakhir’ queue? Aam aadmi struggle for cash, big fishes appear nowhere

Since the government has already ordered bank staff to use indelible ink to mark those withdrawing money, here is another suggestion: Why not keep ballot boxes also at ATMs? We will know both the mood and hear the voice of the nation instead of believing what we all hear in our private echo chambers.

People standing in long queues to exchange their old Rs 500 and 1000 notes in Gurugram on Tuesday. PTIPeople standing in long queues to exchange their old Rs 500 and 1000 notes in Gurugram on Tuesday. PTI

People standing in long queues to exchange their old Rs 500 and 1000 notes in Gurugram on Tuesday. PTI

A week after the government’s surgical strike on currency notes, queues at banks and ATMs are getting longer and louder. What you hear in the queues is, a wag pointed out, a simple query: Aakhir queue?

It is impossible to reproduce the wisecracks and quips heard in these queues verbatim. But, suffice it to say: Money isn’t changing fast, the mood is. And, instead of laughing, most people have started crying.

Those outside banks are complaining of hardships in daily lives. Small traders are worried that business has come to a standstill. Construction activity has stopped. Builders have stalled ongoing projects. Farmers are waiting to sell their crops in the market but there is no cash in circulation.

In a park, where people gather after dark, a trader is wailing: “We will have to start from the scratch. This is like the new Partition of India, we are all being monetarily dislocated.”

The good thing about suffering is that it sounds noble only if it comes with the pleasure of knowing that others are suffering more. So, at the moment everybody is happy his nose is being cut to spike the rich man’s, ISI’s, Al Qaeda’s, Congress’, Mayawati‘s, Mulayam’s face. What he feels next would depend on what he sees next: His own bleeding nose or the disfigured face of the promised victim.

It will depend on how fast the promised change comes, both at the counters and in collective lives.

But, where are the intended faces in the ATM crowds? While the aam aadmi struggle, there is no sign of the big fish.

Where are they? One answer is simple, most of them have parked their money in various other hidden assets, their cash savings are not significant. As pointed out by Firstpost earlier, presuming that stashed cash is 50 percent of the currency in circulation, it is just 5-6 percent of the GDP. In essence, it is loose change.

And, even this loose change is getting absorbed. Here is how:

1. There are reports that networks of touts and bank staff are using identity cards in their possession to launder money for the hoarders of cash. Since there is no way of finding out how many times an ID has been used in different banks, it has reportedly turning into a neat business with a rate of return estimated to be 20-30 percent of the turnover.

2. Another set of touts are identifying people those who have legitimate borrowings from bank —money withdrawn and spent — to replace it with cash accumulated by someone else for a quick profit. For instance, if your account reflects Rs 2.5 lakh as withdrawal during the current financial year but you have spent that money, these touts will offer you this amount and seek just 70 percent in return.

3. The third set of launderers is of people hired to queue up at bank branches and get Rs 4,500 commission for a quick commission. They go from branch to branch, getting as much currency replaced as possible. Since the indelible ink will take some time to reach banks, this will go on for a while.

4. And the fourth category is of people with small sums — Rs 10-25 lakh — lying in cash at home. They are getting the amount adjusted through family and friends since the government has promised not to harass those who deposit small amounts, especially if they match I-T their returns.

While the aam aadmi struggles in those long queues by the day, the economy of greed goes to work at night.

You don’t need ballot boxes to know who is going to win this battle.

First Published On : Nov 16, 2016 18:17 IST

Effects of demonetisation: Tea sales go up, but country’s sugar levels are in the dumps


Effects of demonetisation: Kadak chai sales go up, but country’s sugar levels are in the dumps

How foolish of me! I thought that Prime Minister Narendra Modi only had an economic axe to grind with his demonetisation move. But it dawns on me now that his fight against black money clearly had other cleverly hidden agendas. It’s a shame that it took until day 7 for this realisation to strike, following his decision to trash 86 percent of the cash in the country. But I am glad that it did, with the precision of a surgical strike and the finality of a nail in the coffin.

Lessons in frugality are the first and foremost things that the currency ban has drilled into my head. I am wiser now. The desperate need to conserve the available legal notes – and coins – has taught me, quite convincingly, that a rupee saved is a rupee earned.

Cappuccino? Kill the thought. Head for the nearest roadside tea vendor who is wearing shorts and a towel over his shoulders. His kadak chai costs roughly 15.85 percent of its Cafe Coffee Day counterpart/rip-off. (You see, the ban has also made me a walking calculator.)

Instead of taking a cab now, I take an auto. Instead of an auto, I take the bus. Where I can take a bus, I remember that I have legs that can carry me.

The long queues outside ATMs following the demonetisation is helping people to get some much needed vitamin-D. PTIThe long queues outside ATMs following the demonetisation is helping people to get some much needed vitamin-D. PTI

The long queues outside ATMs following the demonetisation is helping people to get some much needed vitamin-D. PTI

Never since my birth had I realised the profits of a walk, and the perils of an automobile. A walk brings to humanity a three-fold benefit: it saves pennies, it cuts vehicular pollution and, of course, it adds to your longevity.

It’s not surprising then that the All-India Cardiac Surgeons Association has reported, after a snap WhatsApp poll, that cholesterol levels in India have crashed by 12.4 percent among middle class in the past seven days since demonetisation. A Twitter poll conducted by the Indian Diabetes Society has revealed that sugar levels have, in the 35-55 age group, come down by 22.8 percent during the same period.

And to those still refusing to accept the salutary benefits of physical exertion, doctors are now exhibiting photos and videos of a 96-year-old lady called Heeraben Modi from Gandhinagar, who insisted on going to the bank herself and exchanging her Rs 500, Rs 1000 notes.

But wait, there is more!

A Firstpost reader has pointed out that standing in ATM queues for long hours in the sun is helping Indians overcome their vitamin-D deficiency. So even if the cash queue doesn’t guarantee you vitamin-M (money), it sure does promise some vitamin-D. Health is wealth, right?

Talking of sun, demonetisation is encouraging India’s youth to traverse the literary path like never before. An example:

After a visit to the ATM, my friend’s son from Chennai wrote an impromptu masterpiece on how “pulchritudinous” a sunrise was. (And the spelling of that awesome word was right as well.) Never in his life had the 28-year-old seen the sun rise before. And he witnessed it at last because his mother had emptied half a bucket of water on him at 5:30 am the other day, thrust a card into his hand and made him run to the ATM. Now he has made it a habit to stir out of bed before Chennai’s eastern sky turns a shade of orange.

“God bless Modi; Children wake up early now,” said the happy mother in an SMS to me. A tear of joy rolled down my face. Now she wants demonetisation of notes once every three months to ensure that the new inculcation of health regime is not a passing thing.

As for me, I have shed my supercilious outlook towards an ATM which, I always stupidly considered, was a dumb machine that thoughtlessly coughed up cash when I fed my card and a few numbers into it. Thanks to the flood of information that I have after the currency ban, I now know what a magnificent contraption an ATM is, with all its many pockets – packets? – like a cowboy’s pantaloons. And how it can think! When you want Rs 3,000, it decides in seconds which different denominations to spew out.

This knowledge enhancement has by no means been limited to the hoi polloi. It extended to the political class just as effectively. A little bird overheard BJP honcho Amit Shah remark to Arun Jaitley: “Arun bhai, I didn’t know so many poor people in this country had been blessed with so many Rs 500 notes that we have scrapped, did you?”

And then you thought the only queue that Rahul Gandhi ever knew was barbeque! Yes, it indeed was, but that was in the pre-demonetisation era. Now he knows better.

Never mind the reports from villages in Andhra Pradesh which claim that mothers are showing their crying babies the photographs of Rahul standing in a bank queue. They say that the offspring then are rolling with laughter.

It isn’t just Rahul. Modi’s fight against corruption has made West Bengal’s Mamata Banerjee rediscover that in real politic there are no permanent friends and enemies and that note-bank-politics are as profitable as vote-bank-politics. The CPI(M) which, she had often said, committed every crime imaginable in the world and which had turned her state into Waste Bengal is now her trusted partner in fighting something which she had accused the communists of in the past.

As for Arvind Kejriwal, he continues to be the absurd, congenital fool which I myself was before 8 November, groping around like a blind man with a stick. Besides not realising the collateral medical and political benefits of demonetisation, he hasn’t learnt that the black money that Modi is trying to flush out was the creation of all political parties in the last 75 years.

Will Kejriwal lend AAP’s famous hoard of brooms to Modi to help him tidy up?

Disclaimer: This piece is a satire on the demonetisation of Rs 500, Rs 1000 notes by the Modi government on 8 November.

The author tweets at @sprasadindia

First Published On : Nov 16, 2016 18:00 IST

Govt defends demonetisation in Rajya Sabha, says only BJP has the guts to take on corruption

New Delhi: Facing opposition onslaught, government today put up a strong defence in Rajya Sabha on demonetisation, saying the step was taken in national interest to end corruption and black money, which it is said is also used for terror activities in the country.

Power Minister Piyush Goyal, who spoke on behalf of the ruling side after Congress leader Anand Sharma slammed the government, rejected as baseless the opposition charge that there was “leakage” of the decision and said everyone was taken by surprise which is why there are “initial” problems.

Piyush Goyal Image Courtesy: PIBPiyush Goyal Image Courtesy: PIB

Piyush Goyal Image Courtesy: PIB

“There is no politics in it. It is a step taken in national interest,” he said, adding the step will help the country in the long run.

“If anyone has the strength to take on black money and corruption, it is the BJP government and Narendra Modi,” the minister said. He claimed that common people are out in support of the
government’s move which is aimed against graft and terror and that the step will lead to curbing inflation and tax rate may come down.

Goyal claimed that the country has welcomed this initiative of the Modi government and it is natural that some people who have black money and are indulging in corruption and black money are worried about it.

“Desh me imandaar ka samman hua hai aur be-imaan ka nuksaan hua hai, (The honest have been honoured and the dishonest have faced losses),” he said. “I am confident that public is understanding the initial problems because the decision was kept a secret. No honest tax-payer will lose a single rupee. The loss will be of those who have amassed wealth through corruption and black money and the public should also support the government in the move,” he said.

Goyal said some pain and difficulty in the implementation of such a decision is inevitable but despite that the people have strongly supported the move. He urged all the parties to support the move so that the House gives a message to the country that all are against corruption and black money.

To Sharma’s charge that those questioning the government are labelled as anti-national, he said, “Understandably if someone opposes it (demonetisation), questions will be raised on whether they are against ending the menace of corruption and black money in the country.”

Taking a dig at the opposition, he said, “We thought all political parties will support us in Parliament. But for some reasons they have opposed the move. It seems they are worried due to the large public favouring it and supporting the government despite the problems being faced by them.”

Goyal also said BJP has already put out its poll expenses on the website and after this step all will think before indulging in corruption and black marketing.

First Published On : Nov 16, 2016 15:38 IST

Budget 2017: After demonetisation, a carrot by way of banking transaction tax on 1 Feb?

Listening to Narendra Modi‘s speech to NRIs in Japan last week, many would have wondered if the prime minister is not in touch with what is happening back home. His joke about people not having money to conduct weddings in the family, coming across in particular as insensitive.

Since his return, the NDA government has tried to get its act together. Micro ATMs have been deployed in semi-rural areas and the limits for withdrawal have been increased. To check on cash hoarding, incredible India is turning into indelible India, with the ink that is used to check voter fraud in elections being used on the fingers. A terrible move in terms of optics and messaging and is annoying citizens to no end.

That the BJP is invested in this big ticket move is obvious from the manner in which Amit Shah is reportedly supervising the nuts and bolts of ‘Operation Demonetisation’. If there is anyone in the political establishment who perhaps has an inkling of Modi’s mind, it is Shah.

File image of Prime Minister Narendra Modi. PTI

File image of Prime Minister Narendra Modi. PTI

Speaking in Goa on Sunday, Modi indicated that demonetisation is only the first step in the anti-black money conveyor belt. And that post 30 December, many more financial surgical strikes would continue. That will most likely be on jewellery and the benaami land deals, where most of the black money is parked. Aadhaar seeding of revenue data of agricultural lands and property tax data would be used to weed out the benaami holders, by linking their assets to their PAN card.

All this is going to essentially line the exchequer and will filter down in terms of more social welfare benefits for the poor. But what is in it for you and me, the Form 16 salaried middle class, for who the queue in front of the bank and the ATM have become a home away from home in the last one week.

Admittedly, things have not gone according to Modi’s plan. The Finance Ministry and RBI have goofed up in estimating the scale of operations that were needed to roll out the new currency to the public. With most ATMs running dry and people suffering from ‘withdrawal symptoms’, India is looking like a state running helter-skelter. The immediate priority would be to get things under control, even as a parallel political slug fest plays out in Parliament.

The reason Modi went for demonetisation first instead of say, scrutiny of land deals was to get public mood on his side. Nothing excites a human being and an Indian in particular, than to give him the feeling that Modi will get the rupee from the rich into your pocket. That job is not yet done and Modi has another 42 days to win his fellow Indians over.

If demonetisation and the other measures that will follow can achieve the desired results of bringing in even one third of the black money into the legal system, Modi’s purpose would be largely served. It is a tall order. The second step to follow would be to seen as visibly passing on the benefits to the common man.

Depending on the results of the drive till 30 December, one of the very drastic options before Modi could be to scrap income tax from 2017-18 and replace it with Banking Transaction Tax (BTT) from 1 April, 2017. If done, this will be the biggest financial decision since 1991. In one stroke, it will excite the huge Indian middle class. On the face of it, there won’t be an incentive to deal in cash any more and every transaction can be shown in the books. Dealing with corruption in the I-T department will also be a thing of the past.

With BTT imposed, it will bring that many more people into a different kind of informal tax net. Revenue generated from income tax was Rs 2.86 lakh crore in 2015-16 and the BTT with a wider base could start replacing it. Besides, revenue can also be generated as they are now, through a more transparent auction of coal and spectrum. A win-win situation for both the government and the people.

Yes, there will be that section of people who do not fall under the tax bracket now and will not like being subjected to a BTT. The poor who were encouraged to open bank accounts under the Jan Dhan Yojna too would resent having been trapped by a tax net. Modi will have to particularly look at how to ensure the poorest of the poor do not feel aggrieved.

In terms of consumer behaviour, this will also lead to a reduction of high value consumption because there would be no more black money to splurge on unnecessary stuff. It will end up making the economy more honest. With no tax burden, there will be more savings by households, which would find its way into investments.

But this comes with a huge risk baggage. If it does not work out, India’s economy could simply collapse. A safer carrot for Arun Jaitley to offer would be to adjust the tax slabs and lower rates significantly in order to give more concessions to the salaried class and keep it happy.

This financial year’s Union Budget is going to be presented on a different date — 1 February, 2017 instead of on the last day of February. It will be a much anticipated financial document.

First Published On : Nov 16, 2016 08:36 IST

Demonetisation will not address the problem of black money, say social activists

New Delhi: Terming Centre’s demonetisation move as “misconceived”, a group of over 150 eminent citizens on Tuesday said the decision will not address the problem of black money as it has not taken any step to curb generation of black money and “inexplicably” introduced Rs 2000 note.

Representational image. Reuters

Representational image. Reuters

“…the decision to demonetise Rs 500 and Rs 1000 notes is misconceived and will not address the problem of black money,” a statement issued by the citizens including social activists Aruna Roy and Nikhil Dey and renowned lawyer Prashant Bhushan said.

“If it is the Government’s case that high value denomination currency is used to hoard black money, then the decision to reissue new Rs 500 and Rs 1000 notes does not make sense. Issuing even higher value Rs 2000 note is completely inexplicable and puzzling,” they added.

The signatories noted that black money is generated through evasion of taxes on income from lawful activities and money generated from illegal activities.

“In the absence of steps to curb the generation of black money, demonetisation is a futile exercise, as it proved to be in 1978,” they said.

They also questioned government’s intentions and sought clarification on state-run banks’ decision to waive off Rs 1.14 lakh crore of bad debts over the last three years “at a time when loans worth lakhs of crores of rupees are still outstanding”.

They also demanded the government to declare names of beneficiaries of the waiver and also those who have stashed money in banks abroad.

“We demand the government to ensure common people have immediate access to enough money to pay for their daily needs…failing which, we demand the rollback of demonetisation,” they said.

First Published On : Nov 16, 2016 07:52 IST

Demonetisation Day Seven: Do you see any wealthy people standing here, ask customers

Demonitasation Day seven: Has the situation changed at all?


As demonetisation entered the seventh day today customers continue to queue up before banks and ATMs.

The government today again announced a few steps to improve the cash availability and curb the crowd coming to the bank.

Department of economic affairs secretary Shaktikanta Das today said the banks will use indelible link to identify the customers who are making withdrawals. This is aimed at curbing multiple transactions and putting a stop to tax evaders using the poor to whiten their ill-gotten wealth.

Firstpost imageFirstpost image

Firstpost image

The government had earlier announced other measures to improve liquidity in the system, which has not made much of a difference to the customers.

As we went around the ATMs today, disillusionment was palpable despite the improvement in the situation.

“Do you see any wealthy people standing in the queue here?” asks a customer.

Watch the video above.

First Published On : Nov 15, 2016 18:01 IST

Owaisi draws govt’s attention to currency ink, silver thread, says Pakistan has same supplier

Hyderabad: AIMIM chief Asaduddin Owaisi on Tuesday claimed that the supplier of ink and silver threads used in currency notes is the same for India and Pakistan and sought to know what was government’s strategy to deal with it.

AIMIM's head Asaduddin Owaisi. AFPAIMIM's head Asaduddin Owaisi. AFP

AIMIM’s head Asaduddin Owaisi. AFP

“The ink and silver thread supplier is supplying the same thing to Pakistan as well. So, what is the government going to do about it ? (to end counterfeit menace),” the Hyderabad Lok Sabha member asked while talking to PTI in Lucknow.

Maintaining that the demonetisation move has caused “immense problems to everyone”, Owaisi said the government
should give ample time — at least a couple of months — for people to exchange old notes. He said if anyone deposits huge amount of money, it can certainly be tracked.

He said ample time was given to the people when there such a move (demonetisation) in the Philippines, as also in Europe when Euro was introduced. “This (giving ample time for people) has been the norm in various countries”.

Owaisi said he would give a notice for an adjournment motion in Lok Sabha, where winter session commences on, to discuss the demonetisation move which, he said, has put farmers, rural and urban economies in distress.

People are finding huge difficulty in usage of newly introduced Rs 2,000 note because “no one has change”, he

“Eighty-six percent of our currencies are in the form of Rs 500 and Rs 1,000 notes. You (government) have not planned for it, you have not prepared for it. Re-calibration (of ATM machines) would take more than 100 days. The worst part is: my money is in the bank but I cannot take it out,” he said.

First Published On : Nov 15, 2016 17:48 IST

Demonetisation: ‘Tough day’ for the common man, but we all know who’s having ‘sleepless nights’

The ‘stupid common man’ is happy about the cleaning and with a masochistic smile, sipping the ‘strong tea’, to which in any case, he has become accustomed over the years.

Prime Minister Narendra Modi, while addressing a rally in Ghazipur (Uttar Pradesh) on Monday, said, “My decision is a little harsh. When I was young, poor people used to ask for ‘kadak’ (strong) tea but it spoils the mood of rich.”

The prime minister has indeed served very strong tea to the people. But it is essentially spoiling the taste buds of those who had in many ways legitimised the illegitimate. While the stories of people struggling in long queues have made the headlines, those who were never part of these queues are intelligently concealing their pain. After all, their expression of dissent is illegitimate.

Representational image. PTI

Representational image. PTI

When did we last find a top ranking bureaucrat, a politician of some standing, a celebrity or a Porsche-driving businessman standing in the queue for an ATM? It was not that their absence ever made the news, rather it was the other way round.

It was always the common man who was seen standing there, in those long queues. Why is it that the ‘harassed’ lot who are smilingly bearing the brunt of the sudden demonetisation — with great dignity for the greater good — are projected as victims, when they are acting like dutiful soldiers in this battle against corruption?

Why instead we are not talking about those who are having sleepless nights, those who are calling their relatives and friends with generous offers of depositing Rs 2.5 lakh in their bank accounts.

While these people might not be profiled like the ‘60-year-old man who fainted standing the queue’, their numbers are no fewer.

Consider this:

Case 1: On a WhatsApp group of a family from Uttar Pradesh, with most of the members in white collar jobs and one in the civil services (details of the group were shared by one of the non-confirming members), a discussion progressed on 9 November around the topic of demonetisation. While most of the members discussed both pros and cons of the move, one among them was all resentful and dissenting. He was the one who wore the white collar with all ‘civility’. The reason was clear to all the members but no one spoke of it.

Case 2: A marriage venue was shifted from a fancy and expensive heritage site in Rajasthan to a modest banquet hall in Delhi. Nobody asked the reason for the change but everyone who was informed about it could not help a wry smile.

Case 3: At an upscale eating joint in Central Delhi, a man swiped his cards many times and the beads of sweat increased on his forehead with each declined transaction. He had heard the very same morning that the income tax (I-T) department had been instructed to monitor bank accounts and report any ‘abnormal’ transaction. He called a friend and informed him about declined transaction and asks him to ‘do something’.

These are the people who are finding this attack on their accounted wealth absurd.

These are the people who are hit hardest, but then they are using all their sophistication to hide their angst.

In a country where upari kamaai is seen as an achievement and ‘just salary’ is frowned upon, who in his right senses can argue against the existence of huge amounts of black money?

In August last year, CID officials raided a flat in Bengaluru owned by a Karnataka cadre IAS and found cash worth Rs 4.37 crore. Last year in a raid at the premises of former Noida chief engineer Yadav Singh, CBI sleuths found, along with documentary proof of 38 properties, Rs 10 crore in cash. A long list of such cases can be put forward to stress how corrupt government officials and politicians have hoarded crores of rupees in cash, by selling out the entire system.

The common man might be having a tough day in dealing with the cash crunch, but it is the corrupt who are having sleepless nights. And it is evident in memes and jokes on demonetisation doing the rounds on WhatsApp and Facebook.

The best humour is often designed by sad realities.

On 8 November, former Indian cricketer Virender Sehwag supported Modi’s decision and tweeted:

In this context, it is fairly ironic that the real victims are not talked about. Sehwag’s wonderful homour was designed by the reality that the corrupt were having a gala time till 8 November.

Abhishek Waghmare, an analyst with IndiaSpend, in an article published on Firstpost,wrote, “The sudden announcement will directly affect black money hoarded by Indians, and will possibly present them two alternatives: either deposit the money after identifying themselves to banks, or exchange the money by 24 November, 2016. According to basic calculations, with a daily limit of Rs 4,000 a day, a maximum of Rs 60,000 can be exchanged by a person, in 15 days from 10 November to 24 November. From 24 November onwards, the exchange process will be eased for convenience, meaning the exchange limit will be increased. However, there is no limit on deposits”.

He added, “As the deadline for Indian individuals to declare undisclosed income — the Income Declaration Scheme — ended on 30 September, 2016, no ‘unaccounted for’ money can be declared now. It ceases to be money; instead it will be a ‘worthless piece of paper’, as (Modi) termed it in his speech”.

The extent of unaccounted wealth and black money is vast and it is no secret. Given this fact, just focusing on the problems faced by the people in the implementation of the demonetisation, and calling for its withdrawal is a perfect case of throwing the baby out with the bathwater.

First Published On : Nov 15, 2016 13:01 IST

Demonetisation: Narendra Modi has burnt down a forest to find a few black sheep

If you can’t trace money parked in Panama,
Target those who keep it in folds  of pyjama,
If you can’t scare a Vijay Mallya or a Lalit Modi,
Ensure every trader wets his vest and dhoti,
Can’t stop owner of Kingfisher Airlines from flying?
Haul up drivers of autos, ricks and Bluelines,
If you can’t identify and catch a thief,
Scan everyone right down to the briefs,
If you can’t win polls  with a surgical strike,
Let everyone experience financial strife.

This essentially is new Modinomics for you, defined by his monetary policy of demonisation and victimisation–of almost every Indian.

Its defining moment came two days ago in Tokyo, when ecstatic NRIs chuckled at the misery of “corrupt” Indians.

File image of Prime Minister Narendra Modi. PTI

File image of Prime Minister Narendra Modi. PTI

Kal ghar main shaadi hai, par ghar mein paise nahin hai (there’s a wedding in the family tomorrow, but there’s no money),” Prime Minister Narendra Modi said, slapping his palm with the other. On cue, those earning presumably in Yen began chanting ‘Bharat Mata Ki Jai‘. The thought of a poor Indians running out of money on the eve of their daughter’s marriage must have been really cathartic.

Convoluted catharsis — that’s the phrase that comes to mind as the narrative on demonisation unfold. It seems everyone unhappy about financial restrictions is happy that everybody is in agony, especially those who use notes as mattresses and pillows.

Like the prime minister said, those who made money in the 2G scam are queuing up for Rs 4,000. Yes, look around. See that rickshaw-puller, see that woman in her 70s. See that mother running around for cash to buy medicines for her hospitalised child.

No, don’t get me wrong. All of us are completely in favour of curbing corruption, strict action against tax evaders and weeding out counterfeit currency and kaala dhan. Being part for the past 20 years of the one percent of Indians who actually file their income tax returns, I am all for widening the network, lightening the burden of those who shoulder it.

But, to burn down a whole forest to find a few black sheep is not the way to do it. To make everyone miserable, turn an entire country upside down could be dramatics and Modinomics, not economics.

How much currency is currently floating around in the market? Some estimates suggest we have currency notes worth around Rs 17,000 billion in circulation at the moment. Of this, around 85 percent is made of Rs 500 and Rs 1,000 notes. Let’s presume half of this is kaala.

What is India’s GDP? Around $1.9 trillion (~Rs 128.7 lakh crore) in 2013. So, this means Rs 500 and 1,000 notes are 12 percent of the GDP and the black component in cash around six per cent of it.

So, are we to believe India’s parallel economy is just five to six percent of the GDP? Certainly not. It is much bigger and has been so for several decades.

But, the real problem is that most of the unaccounted wealth is either parked in real estate or bullion in India or has been stashed away in offshore accounts.

So, it is the poor and the middle class that would be harassed more because of the demonetisation instead of the rich.

Look around. See those queues again.

There is another practical problem with the directive to deposit the old currency notes in banks. What if the currency was kept at home, saved for years, after paying tax on it? How will the tax authorities distinguish genuine income kept at home for several years from black money, especially by housewives and farmers, whose income has always been tax free?

Obviously, the poor would pay for the rich, who either have just a small proportion of their unaccounted wealth in currency notes or have enough resources to launder them.

In the end, the new instrument of Modinomics will hit everyone — rich, poor, middle class, evaders and payers. Ultimately, except for loose change, nothing would come out of it. So, those seeking solace in the presumed misery of the corrupt are actually laughing at themselves.

The government’s intention is right. But its execution, as many economists have pointed out, is faulty.

Real corruption lies in the processes that are entrenched in the system:  Electoral funding (parties do not open it up for public scrutiny), real estate transactions, the loot by private schools and hospitals, corrupt bureaucracy, crony capitalism and lack of action against loan defaulters and financial crooks.

Instead of acting against them in a systemic manner, the government has struck against the poor, farmers, traders, housewives and unorganised labour in this country.

Instead of going to Panama, he has picked the pockets of those in pyjamas and dhotis.

First Published On : Nov 15, 2016 10:36 IST

Demonetisation, ATM chaos: Why should the poor pay to divest the ‘rich’ of their dirty wealth?

When banks reopened on 10 November after a day’s shutdown, following the demonetisation of Rs 500 and Rs 1,000 notes by the Modi government on 8 November, the crowds thronging them were a forbearing lot. It was for a good cause they said – enabling a freeze of counterfeit currency and black money – while waiting for their turn to swap, deposit or withdraw money.

But that public sentiment is now fading. The middle class’ positivity around the demonetisation has all but evaporated for a simple reason – its inefficient implementation. They had collectively exulted in the fact that all bad money was being rendered useless, and that they would benefit from the demonetisation over time. But just a day later, a feeling of despondency took over as the realisation dawned that the common man was the real victim.

The government's plan to curb black money through demonetisation has clearly gone awry, if not haywire. PTIThe government's plan to curb black money through demonetisation has clearly gone awry, if not haywire. PTI

The government’s plan to curb black money has clearly gone awry, if not haywire. PTI

To make matters worse, they heard on the grapevine that the so called black money hoarding ‘big fish’ were in fact already making plans to convert their stash into white, thus legitimising the illegal. Then the analysts began to say that most, if not all, of the black money was either salted away in benami properties or stashed in tax havens overseas.

Reports of touts buying the demonetised Rs 500 and Rs 1,000 notes at a discounted price, to enable black money holders to convert their money into white by December-end, only added to the ire. The plan to curb black money was clearly going awry, if not haywire. Then why conduct such an elaborate exercise at all?

Why should the common man be penalised; forced to stand in long queues to attain the new, crisp currency notes? Especially, since they cannot even spend it, as most stores/outlets have already run out of the smaller denominations needed for change. Even the ATMs have not been stocked with Rs 100 notes, despite the repeated promises by the government.

The common man was pushed into a vortex of confusion and anger. “Why us?” has been the common refrain. The frequent assertions by the Finance Ministry that there wasn’t any reason to worry as there was enough cash, did not find much traction either. As merely printing cash is not the same as putting cash into people’s wallets.

The system, unlike the banks, is not overburdened with the mad rush to attain the new currency. Inefficacies on their end cannot be tied up with the banks’ problems. If the government is unable to supply money to the banks because of a botched operation, then their promise to restore the cash flow is clearly notional.

The banks have been working overtime, including on a second Saturday and a Sunday. The fact that Monday was a public holiday has become another irritant.

Visiting ATMs has not been a pleasant experience either. After standing in long queues, the public has to face the same sorry realisation – that most were not functioning for want of cash refills or were not recalibrated. And the ones that were functioning ran out of cash soon enough.

It is hard to console a person who is left with no money in his/her wallet, as even if it is not spent immediately, it provides for a sense of confidence.

The poor are now being hunted by the so-called elite, as their empty bank accounts work perfectly as a money laundering system – their zero-balance accounts are loaded with Rs 2.5 lakhs and then withdrawn for a commission. Their Rs 500 notes are being traded for as little as Rs 300 to Rs 400. This then leads to a pertinent queston: Why should the poor pay the price to divest the rich of their dirty wealth?

First Published On : Nov 14, 2016 19:12 IST

FICN and terror-financing: New considerations in view of demonetisation

The recent robust steps in demonetisation undertaken by the Government of India to unearth black money, inter alia, also throws up impediments to those external hostile quarters who are actively engaged in paralysing Indian economy and financing Fake Indian Currency Note (FICN) chiefly for terror-financing. These steps are expected to deal a severe blow to such actors and their machinations.

The modus operandi of terror financing has hitherto been to use formal and non-formal banking channels, money value transfer services, NPO or NGO sectors, real estate, government funds etc.

It is hoped that the current measures to curb terror financing will prove as an effective deterrent and will contain the ongoing menace. FICN is smuggled via the land, sea and air routes. According to authoritative sources, the trend in circulation of FICN is principally from Pakistan to West Asian countries and Bangladesh. Also, from Gulf countries to Nepal, Myanmar, Thailand, Malaysia and Sri Lanka. FICN is further smuggled into India from these countries .

It’s interesting to note that value of FICN in circulation was estimated to be Rs 400 crore and importantly, the value had remained stationary for the past four years.

Meanwhile, attempts are being made by inimical forces to infuse FICN worth Rs 70 crore into the Indian economy annually. Out of this figure, a third of the FICN being infused is seized. The detection rate of fake Rs 100 and Rs 500 notes was around the same, and higher than the detection of Rs 1,000 notes by around 10 percent.

Representational image. PTI

Representational image. PTI

To contain this threat, the Indian establishment, seeking international cooperation, has aligned with Bangladesh forming a Joint Task Force through SoP and MoU. In 2015-2016, Bangladeshi authorities, in a major operational drive, arrested seven Pakistanis and seized FICN amounting to Rs 14,12,30,000. This is no mean statistic.

The NIA has been actively working towards reaching the bottom of the problem as as part its campaign. FICN kingpin Mozzamel Haque, a Bangladeshi, was arrested in December 2015 confirming the Bangladeshi nexus.

The most significant feature of the whole nefarious syndicated network is the role of Pakistan deserving universal condemnation.

Undoubtedly, Pakistan is the main source of printing of high quality FICN. Such super-high quality currency printing machines cannot be in the possession of an individual or with an organised group. These sophisticated machines are available only with an established government.

We can, therefore, safely infer that Pakistan, as part of its state policy, is printing high quality FICN aimed at undermining credibility of Indian currency notes, ostensibly to fund terrorism.

These arguments are further buttressed by the fact that a majority of those arrested in smuggling and circulating FICN in Southeast Asia and India’s neighbouring countries (especially Bangladesh) are Pakistani nationals.

Through a professional investigation carried out recently, there were unique similarities between FICN samples and Pakistan’s legal tender, strongly confirming Pakistan as the main source of FICN.

Bangladeshis and villages on the border with Bangladesh too have been active in these crimes. Out of 18 cases of FICN, eight cases are crucially traced to Bangladeshi borders. Three Bangladeshis involved in the FICN racket are still at large. Seizures of FICN have been mainly carried out at the borders of Bongaon (in West Bengal), Shillong, South Garo Hills and Malda among other points. These prove that India-Bangladesh borders are active conduits in this trade .

A quick glance at the trends in FICN circulation reveals that originating in Pakistan, it reaches Dubai and as per the criminal cases registered, the network was traced to Kerala and Hyderabad. Simultaneously, Dubai to Sri Lanka is also a favoured route. A Sri Lankan named Abdullah Mutsari was detained in Sri Lanka with FICN worth Rs 2 crore. From Bangladesh FICN was circulated to the states of Madhya Pradesh, Andhra Pradesh, Goa, Maharashtra and Karnataka. In addition to these, Indian investigators have successfully found out that from Nepal, FICN regularly reached Jamnagar (the police had seized FICN worth Rs 1.26 lakh there), Ahmedabad and Siddharthnagar among other locations.

Now that it’s proven beyond doubt about the Pakistani State’s complicity in engineering such a vast FICN network to subvert the Indian economy and fund terror, the government attempted to demonetise and introduce currency of newer denominations with changed hallmarks. It has to be closely monitored as to how Pakistan now moulds its blueprint to continue with the FICN flow.

Recent Indian steps must be a dampener, albeit for the time-being, to Pakistan’s Inter-Services Intelligence and its collaborators as they have been caught by surprise. Nevertheless, Indian agencies should not lower their collective guard and be prepared to foil any Pakistani designs to fund terror with FICN .

On Pakistan’s part, it is highly unlikely it will easily abandon its acts of terror-funding as it enjoys complete State patronage and its agenda to hit its adversary hard. Hence for India, it calls for more stepped-up intelligence.

The author is a retired IPS officer and a security analyst. Views are personal

First Published On : Nov 14, 2016 13:18 IST

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