New Delhi: Congress vice-president Rahul Gandhi put forth a charter of demands to Prime Minister Narendra Modi, asking him to lift restrictions on cash withdrawals immediately and pay Rs 25,000 to every family below the poverty line.
Gandhi took to Twitter to highlight his demands ahead of Modi’s second television address to the nation on Saturday, after his surprise 8 November announcement, where he announced the demonetisation of Rs 1,000 and old Rs 500 currency notes.
The Congress vice-president, a staunch critic of the government’s decision to demonetise the notes, listed out his eight demands to Modi as the 50-day period asked by the prime minister to normalise the situation expired on Friday. and there still isn’t seem to have some issues with the availability of notes.
He has dubbed the move the single most arbitrary decision in the history of the world affecting 1.3 billion people. Besides asking Modi to “lift restrictions on withdrawal of money with immediate effect”, Gandhi demanded the prime minister to deposit Rs 25,000 in the account of one woman in each Below Poverty Line (BPL) family.
He advocated immediately abolishing charges on digital transactions and called for income and sales taxes rebate of 50 percent to small-scale shopkeepers and businesses. Gandhi demanded the prime minister to compensate all bank account holders with special interest rate at 18 percent per annum for the “time restrictions are in place”.
He also urged doubling of number of guaranteed workdays and wage rate under Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA) for a year and a special one-time bonus of 20 per cent over and above the Minimum Support Price
(MSP) of all rabi crops.
Another of his demands was that rate of ration under public distribution system (PDS) be halved for a year under the provision of Food Security Act. In one of his tweets, Gandhi said, “Destroyed in the last 50 days: trust in the Prime Minister’s word. Weekly cash withdrawal limits must go.”
First Published On : Dec 31, 2016 17:30 IST
ATMs will dispense a maximum Rs 4,500 per day per account holder beginning 1 January, said a circular from the Reserve Bank of India (RBI) on Friday. Friday marked the end of the 50-day period Prime Minister Narendra Modi promised he will take to bring back normalcy after the demonetisation of Rs 500 and Rs 1000 notes on 9 November. Earlier, daily limit was Rs 2,500 per day. An enhanced limit is a relief for citizens and will help to shorten queues further, but only in areas where ATMs are dispensing cash.
The problem is only a third of the total ATMs in the country (around 2 lakh) are dispensing cash and most of them are in urban centres with the periphery areas continuing to run dry, according to reports (read here and here). In other words, the enhanced ATM withdrawal limits would not help the people in non-metros much.
Banks are unable to fill their ATMs on account of an acute cash shortage, especially lower denomination notes that is persisting even after 50 days of demonetisation and the situation is unlikely to get better soon, said a few bankers this writer spoke to.
“We are looking at February-March before things become normal,” said one of the bankers. This is the reason banks have asked the government to extend the curbs on cash withdrawals beyond 30 December till the time there is adequate quantity of new currency infused in the banking system. Ultimately, it is the banker who has to face the angry customer.
The RBI has retained the weekly cash withdrawal limit of Rs 24,000. But, the problem is that banks are unable to honor even that amount and the customer is forced to often settle for what is available at the moment at the bank counter. Of course, this situation will ease further in the weeks ahead, but much depends on the ability of government mints to churn out sufficient units of new currency. Until 19 December, the RBI has infused Rs 5.92 lakh crore of currencies into the system, which is less than half of what the public has deposited in the form of invalidated notes (Rs 12.44 lakh crore as on 10 December).
On Friday, PM Modi launched a new payment app, BHIM, that allows anyone to transfer money to any bank accounts. The PM stressed on the need to embrace cashless payment modes at the earliest and elaborated on the incentives government planning to encourage individuals and merchants using electronic payment modes. A change into cashless economy is indeed good in an aspiring economy and government initiatives, such as UPI-supported BHIM app, are helpful to facilitate such a migration.
But, Modi’s immediate challenge remains to 1) normalise the cash situation in the economy; and 2) give a convincing cost-benefit analysis of the demonetisation exercise to 125 crore Indians. Modi has a major task of justifying his act that has pushed the economy into an economic standstill and has caused gross inconvenience to a large number of the population due to the lack of preparedness of the government to implement the currency swap.
When PM address the nation on the New Year Eve, there are questions he’ll need to answer on how did the note ban help the country to achieve the originally stated goals — black money, fake currency, corruption and terror funding. Also, most critically, the general public would expect clarity from the PM on when the cash crunch will end. The 50 days the PM sought has, for sure, eased the pain to an extent, but has not ended the cash crunch.
Another question the PM owes answer is clarity on the political funding. Though his government has repeatedly assured that rules will be same for all, there is lack of clarity on political funding since the government also says that provisions of existing laws will continue.
This would means that political parties will enjoy certain immunity from tax scrutiny since cash donations below Rs 20,000 do not require the source to be revealed. Can Modi score a point by stating that the government will work towards the necessary changes in laws to make all political donations through digital mode? If yes, that’ll be much bigger catalyst in the process of creating a cashless economy than announcing lucky draws.
For now, when the PM addresses the nation on the eve of new year, the big question common man probably would want to ask the PM is how long the current cash shortage will continue.
First Published On : Dec 31, 2016 11:28 IST
Sadhguru Jaggi Vasudev is known for speaking his mind on a wide range of issues. In his new book Inner Engineering: A Yogi’s Guide to Joy (Penguin Random House India Pvt. Ltd), he has redefined spirituality. He does not describe himself as the usual ‘guru’, which he once called a four letter word. Instead, he prefixes it with another four-letter word ‘sadh’ to complete his self-description. To talk to us, he walked into a central Delhi garden, kissed gently by the winter sun, in a turban that hides the colour of his hair and a cotton-candy beard that gives it away. Spirituality for him is not a straight jacket. He enjoys playing ball, flies choppers and wears jeans when not in loose cotton pants, and surprises you by calling spirituality a ‘technology’. Spirituality is neither detachment, self-abnegation nor being less worldly than anybody else. He engages with every contemporary issue and doesn’t hold back. Though not politically aligned with any party or leader, he discusses demonetisation and nationalism, the two hot-button issues of the day. With the disclaimer that he is not ‘nationalistic freak’, he says India needs to stand behind somebody who has taken a huge political risk (a reference to Narendra Modi and demonetisation), and that emotional commitment to a country is an essential ingredient for nation-building. Edited excerpts:
Your book revolves around your healing principle of ‘Inner Engineering’. Can you explain the concept?
This is not a teaching, preaching, philosophy, religion, this is a technology for wellbeing. Show me one person who doesn’t need a technology for wellbeing? In India, the book is leading across sections and doing even better than fiction and that is a statement from the people that it was needed. When it comes to other aspects of our life, we employ science and tech to make things work. When it comes to religion, we still have silly philosophies and ideologies. Why? This is a movement from religion to responsibility. Without turning inward, there is no way you will have yourself the way you want yourself to be. When you can approach medicine in a scientific manner, why can’t you approach inner-wellbeing in a logically correct and scientifically verifiable way, I ask?
The reason why somebody feels insecure and miserable is because they haven’t taken charge of their inward and out of insecurities and the bad experience of life, people may do many things in reaction.
Political developments across the globe in 2016 suggest that countries are closing their doors. Is there a way to go inwards into your culture and identity without pitting them against that of another?
Going inwards is not about culture, it is not about politics or the positions that we take in the world. Going inwards is because the source of your experience is within you. The reason why somebody feels insecure and miserable is because they haven’t taken charge of their inward and out of insecurities and the bad experience of life, people may do many things in reaction. Going inwards means you are in charge of how you experience your life, you can make it beautiful or ugly, blissful or miserable. Right now, because people haven’t turned inwards, there is much fear of suffering and anxiety, and anger against each other. We are trying to fix the reactions, when we should be fixing the source.
In the context of demonetisation, tell us if India is more critical of governmental decisions than before and do most believe that policies are designed to harm them?
We are critical of governmental decisions because we are used to governments that don’t take any decisions. Now when any decision is made, we think it is wrong. We’ve been a developing nation f70 years because we are simply unwilling to fix the fundamentals. There are certain serious problems in the country, do you want to take them head-on or do you want to pussyfoot around them forever? Demonetisation is a little bit of a confrontation with the problem that nearly 60 percent transactions are beneath the radar. How do you run a nation when a little over two per cent pay taxes? How does a nation’s administration function effectively without revenue? This is a system coming from a colonial era and the nomenclature still continues. Even today, district administrators are called collectors because in those days their job was to collect taxes. Earlier, whoever didn’t pay tax was a hero. We are still in that hangover. We can’t live in little nations of comfort and wellbeing, it’s time that we work for the wellbeing of the nation as a whole and for that some painful steps have to be taken. Right now, the issue is that if I have to start my own business, I have to build my own road, generate electricity, and manage sewage. This is not an excuse to not be in the tax net. Only if we pay, we can demand services. Democracy is not a spectator sport, we can participate through various instruments on a daily basis and demand results. If 30 percent of the population doesn’t come in the tax net in the next 10 years, we won’t have a developed nation. Nothing significant happens without some pain.
That said, do you think the present government is doing a good job?
The present government is doing a very good job by wielding a stick at those who are not being compliant with the nation’s goals. But the political game in a democratic country is nebulous. They will have to do a few populist things. When somebody takes a huge political risk to correct something, you have to stand with them. Once people have elected a government, all of us should simply support it. If you pull their leg, how will they function? I am not politically aligned with a party or a fan of any leader but believe in the wellbeing of a democratic nation. If you have any other commitment going against the nation’s growth, it is a crime. Those who are sitting in comfortable places are doing these things without understanding what we are denying to those who have barely eaten. You go to the remotest parts of Africa and you’ll find that the children are bouncy and healthy. Though there is experience and cultural strength in India, we are not doing well on the ground.
Do we define nationalism too much? Why has it become necessary to prove that we are Indian?
Right now the big issue is that of playing the national anthem in theatres. Because you have popcorn in one hand and cola in the other, you can’t stand up. If there is no pride about the country, how do you build a country? Nationalism is not an ultimate goal, but an immediate need to move the people in one direction, otherwise everybody has their own caste, creed, religion, all kinds of things. We are talking about nuances of liberal freedom when half the people have not eaten. Right now, we’re in the basics, let’s understand this. I am not a nationalistic freak, my work is beyond national, racial and religious borders, and my idea of humanity is 7.3 billion people. But the nation is the largest mass of people and to bind it together and take it forward, national identity is important. Emotional commitment to the country is needed.
Is this the era of collective rage, clashing opinions and a lack of action?
The rage is limited to the media. There is a big sense of satisfaction and fulfilment among the poorest of poor in this country, because they feel that for the first time somebody has hit the rich. I only wish this digitisation process had started a year earlier, and 30 to 40 percent of the population had moved into a cashless economy. People are protesting all the time. There is more activism in the country than activity, we need activity. We have inherited this from a pre-independence era where we call for a bandh, shut down electricity, rasta roko, rail roko. Gandhi’s technology was fine when someone else was ruling us. How do we shut down our own nation? I am not for mad fanaticism at all but I am asking, how do you move people without getting them emotionally identified with the nation?
Not all mental ailments are because of pathological causes, but also happen because of social causes. In the West, one of the biggest problems is loneliness. In India, there is no room for loneliness because someone is always walking over you.
A recent Bollywood movie Dear Zindagi discussed the subject of mental health. Does everybody secretly like to believe they are depressed or that they need to be rescued? Is the youth ready or nation building, if they are self-absorbed?
In India, the self-absorbed youth is only a small segment coming from affluent families in urban centres. The rest of them are not like that. The population is largely community-oriented, so people are not depressed on the same scale as Europeans are. Not all mental ailments are because of pathological causes, but also happen because of social causes. In the West, one of the biggest problems is loneliness. In India, there is no room for loneliness because someone is always walking over you. This may look like an irritant at some point but it helps people stay mentally healthy. We are slowly withdrawing from that and moving toward a different mode, and there will be a price to pay.
Is spiritualism now a capitalism-driven material need, just like a bag or a pair of jeans?
There is substantial medical and scientific evidence to prove that only when you are in a pleasant state of experience, your body and brain works at its best. If you want to succeed in the world, it is only a question of harnessing your body and brain to the fullest. If you do this successfully, will you become unsuccessful in the world? Miserable people are not successful. The spiritual process is a self-realisation. You can use a phone better if you know more about it. The same thing applies to the brain, the greatest and most sophisticated gadget on the planet. Spirituality is not a disability, it is the greatest empowerment you can receive, your body, mind, thought, emotions and energy will function for you and not against you if you know the nature of your existence fully. It’s just like you can either open up the cosmos with a phone, or just use it in a rudimentary way to SMS your friend.
Is social media leading to a rise in depression because one has constant access to other people’s achievements? Are we in a state of constant denial?
Every gift given to you is becoming a problem because you are trying to extract happiness from the world. You need to understand that all human experience happens from within. If you’re seeking joy from Facebook, you’ll be miserable because you’ll see wrong faces. Every technology that comes to you has come to enhance your life and not take away your joy. You have to move from compulsiveness to consciousness. Your very mind is the source of your misery. People want the brain of an earthworm? Why? It took us years of evolution to get here. Those who are joyful in their own way, by their own nature, their genius will unfold. Right now, the fear of suffering has cramped you up, you are blaming Facebook, blaming the phone, blaming technology. This is because your own intelligence has turned against you. If the source of your existence is in your hands, you will choose pleasantness.
Over 18,000 children have committed suicide in 2015, if we don’t accept that we are doing something fundamentally wrong, we have not gotten life properly. The entire world looked toward Indian culture for guidance when it came to life.
Why do we have to lose our peace and then find ways to bring it back?
Our schooling system is a leftover from the British times. They designed it mainly to demand obedience. This was her majesty’s requirement. We should have seen what kind of schooling we need for a free India. We need free human beings with a free-ranging mind. A large segment of population has been in extreme poverty and it all became about how to get a job. So, nobody could be trained about anything that concerns life. Over 18,000 children have committed suicide in 2015, if we don’t accept that we are doing something fundamentally wrong, we have not gotten life properly. The entire world looked toward Indian culture for guidance when it came to life. We are not making use of anything we know and are reinventing India from a western perspective. If you say anything Indian, people say mad nationalism is happening. There are 120 weaves in this country, we were the greatest textile nation in the country. But we are killing it totally because our brains are still in Greenwich Mean Time (GMT). At the same time, our Indianness shouldn’t be rigid, history shows us that we have been able to absorb anything that comes our way without resistance and still retained our culture. This is a nation that has explored the interiority of the human mechanism like none other, we have the USP for how a human being can be joyful. This is a methodology we can offer the entire world. First, at least a majority in India has to get this.
So, economic wellbeing isn’t enough for development?
Economic wellbeing alone will not translate into human wellbeing. For instance, in the export town of Tirupur in Tamil Nadu, almost everybody earns two to three times more than those in neighbouring towns. Last year, on Diwali, Tamil Nadu sold 36 crore worth of alcohol and in this about 24 to 25 crore was from Tirupur. It is a town of merely 8 lakh people. Wherever economic wellbeing has happened, 40 per cent has become diabetic. This is why we’re talking about yoga nation.
Can spiritual leaders take a political stand?
If you can stand for an election, why can’t I? I won’t but that’s my choice. I have as much right as you have to stand for elections.
What kind of India do you envision for in 2017?
Right now, 60 percent of the population is undernourished, we are producing half and substandard human beings. The next thing is empowerment. We can educate people toward better agriculture, skill people in different ways; human beings must be empowered to do whatever they want. The next thing is ecology. This is a very serious problem that has gone unattended. Some studies show, on an average, all Indian rivers are depleting by 8 percent per year. This means, in 15-20 years, rivers will become seasonal. For instance, Kaveri doesn’t reach the ocean for two and a half months. What are we going to leave for our children? Barren land? Fly from Delhi to Chennai and every five minutes you will see large patches of brown. When sunlight continuously falls, bio-activity sinks deeper and deeper; what you think is soil today will become sand tomorrow. The per capita potable water you had in 1947, today you have 19 – 20 percent of it. In 2020, you’ll have only 7 seven percent of it. We need drastic ecological policy steps, which people will hate like they hate demonetisation.
First Published On : Dec 31, 2016 10:09 IST
The Reserve Bank on Friday late night increased the withdrawal limit from ATMs to Rs 4,500 per day from the current Rs 2,500 from 1 January. However, there has been no change in the weekly withdrawal limit, which stands at Rs 24,000, including from ATM, for individuals (Rs 50,000 in case of small traders).
“On a review of the position, the daily limit of withdrawal from ATMs has been increased (within the overall weekly limits specified) with effect from January 1, 2017, from the existing Rs 2,500 to Rs 4,500 per day per card,” the central bank said in a notification.
The Reserve Bank’s notification further stated “there is no change in weekly withdrawal limits” and such disbursals “should predominantly be in the denomination of Rs 500”.
Earlier in the day, the RBI had permitted White Label ATM Operators (WLAOs) to source cash from retail outlets.
Most of the White Label ATMs are running dry since demonetisation as the operators were facing difficulties in sourcing cash from their sponsor bank(s).
Friday was the last day to deposit the invalid currency notes in banks. However, people still have time to exchange the currency notes at designated RBI counters till March 31 after giving valid reasons for not depositing defunct notes in their accounts by December 30.
However, it remains to be seen whether the relaxation in cash limits will be of any help to the customers as, according to media reports, banks do not yet have enough cash to supply to the ATMs.
A report in The Indian Express on Friday said only 40 percent of the 2.2 lakh ATMs in the country have cash to serve the public.
The report quotes Ramaswamy Venkatachalam, managing director, India and South Asia, Fidelity Information Services (FIS), as saying that banks are not meeting the “full cash requirement” to operate ATMs round the clock.
The RBI and the government also seem to be clueless about when the cash situation will return to normalcy, though they insist there is enough notes to dispense.
Even on the 50th day of demonetisation they have not been able to provide the update the details of the new currency issued and also the deposits of old notes received.
The last press release on the cash situation was on 21 December from the RBI. As of 19 December, the banks have issued Rs 5.93 lakh crore to public either over the counter or through ATMs. That is a nearly 40 percent of the cash sucked out of the system on 9 November, when the demonetisation came into effect.
In this backdrop, while the public and the authorities are remain clueless about when the cash situation will improve, the increase in withdrawal limit from ATMs would mean little for the customers.
First Published On : Dec 31, 2016 09:41 IST
New Delhi: Insisting that the Opposition’s concerns on demonetisation have been found correct, former Finance Minister P Chidambaram said Prime Minister Narendra Modi should now make a categorical announcement of an end to all restrictions on cash withdrawals.
“When the prime minister addresses the nation, the people expect that he will make a categorical announcement that all restrictions on money have been ended,” Chidambaram told reporters at AICC headquarters on Friday.
The senior Congress leader said that the woes of demonetisation should come to an end by Friday evening as the prime minister had asked for time till 30 December. Noting that Modi had recently said at a rally that “through the note ban, in one stroke, we destroyed the world of terrorism, drug mafia, human trafficking and underworld”, he said that it was therefore, fair to expect that these objectives would be achieved by the end of today.
“It is fair to expect that beginning Monday, 2 January, 2017, all restrictions on money imposed on 8 November, 2016 will be removed and the people will be able to withdraw the money in their bank accounts. It is fair to expect that there will be no queues outside bank branches and ATMs. It is fair to expect that all ATMs will be open round the clock and fully stocked with
currency notes,” he said.
Chidambaram said that the only person who can assure the people on these matters is Modi himself, because the government has “dubbed all of us in the Opposition as supporters of black money hoarders and tax evaders”.
On the government’s claim that people are happy and there have been no incidents of rioting, he said people are patient. “But please don’t mistake patient people for happy people,” he had said.
Seeking to debunk government’s claims on the benefits of demonetisation, he said, “Events of the last 50 days have proved us correct. Hoards of black money in new Rs 2,000 notes have been found.”
He further said that bribes have been given and taken in new Rs 2,000 notes and there is “no guarantee” that black money will not be demanded or generated in future or that bribes will not be given or taken in future in the new currency.
Dubbing the way the demonetisation was announced and implemented as a “single biggest case of total mismanagement”, he regretted the most momentous decision has been taken “without consulting key officials”.
Making a strong pitch for compensating people for the hardships they faced, he lamented that the government has “not uttered a word” about compensating the people for the economic losses heaped upon them by demonetisation.
He also demanded that the agenda note and the minutes of the meeting of the RBI board of directors held on 8 November, 2016, along with the Note for Cabinet on demonetisation placed before the Cabinet on 8 November, 2016, should be made
First Published On : Dec 30, 2016 20:03 IST
Union finance minister Arun Jaitley is a good communicator. Well articulate and sophisticated in his arguments to convincingly present a case to any audience. On Thursday, Jaitley demonstrated this ability yet again when he listed out the gains of demonetisation to the economy citing data to say why the critics of note ban are wrong. Following is the main points Jaitley made in his address yesterday.
In all the categories (of indirect tax) till 30 November, there has been a significant increase in tax collection. Till 19 December, direct tax mop-up rose 14.4 percent, indirect tax grew 26.2 per cent, central excise is up 43.3 percent percent and service tax by 25.7 percent, Jaitley said.
Secondly, life insurance and mutual fund sales, tourist arrivals and fuel consumption have gone up. The flow into mutual funds was increased by 11 percent. “Assessment can be unreal but revenue is real,” the FM said.
Jaitley is missing the point here or is simply being selective in choosing his data to assess the impact of demonetisation over the last 50 days.
First of all, the above sets of numbers do not reflect the segment that has been hit badly by the demonetisation — the small traders/ service providers and those in informal economy.
Small traders with annual turnover less than Rs 1.5 crore and service sector with turnover of less than Rs 10 lakhs are not reflected in the indirect tax net. If one talks about impact on account of demonetisation, shouldn’t the segments that got hit most be factored in first?
Second, November typically shows a spike due to festive season. This will reflect in the indirect tax numbers too, including the excise duty. The full impact of the demonetisation will come with a lag.
Already there has been a slowdown in indirect tax collection in November, when the kitty swelled by 21.8 percent as against 34.6 percent in October. Similarly, growth in excise duty collection declined to 31.8 percent in November against 40.9 percent in October. Now , look at the monthly data on service tax. The growth in November slipped to 13.3 percent from 66.5 percent in October. (see the table below).
Third, the sudden spike in fuel consumption at a time when the overall economic activities are slow is dubious. Part of the reason could be that black money hoarders were smartly using the government-permitted window to dump the old notes in petrol pumps.
Fourth, FM Jaitley ignored the pessimistic GDP forecasts from various forecasters, including that from the Reserve Bank of India, which has lowered the full year forecast to 7.1 percent from 7.6 percent even while stating that it hasn’t fully taken into account the full impact of the demonetisation resulted cash crunch. Private forecasters are even more pessimistic.
Fifth, the spike in mutual funds and insurance premiums isn’t a good set of data while discussing the impact of demonetisation. According to the Insurance Regulatory and Development Authority of India’s (IRDA) 2015-16 annual report data, the life insurance penetration in India is 2.72 percent. Similarly, as a share of GDP, mutual fund penetration in India is still around 7 percent. The section of the population in the cash economy who are affected by the demonetisation has nothing to do with spike in life insurance premiums and mutual funds. Also shouldn’t the spike in insurance premiums also take into account the digital incentives rolled out by the government?
Sixth, Jaitley was also silent about the number of jobs lost in the informal sector post demonetisation. There is no official estimate for this. But, various estimates say about 4 lakh jobs could be lost due to the note ban.
According to the Centre for Monitoring Indian Economy (CMIE), unemployment rates rose to 6.1 percent in the week of 4 December and further to 6.6 percent in the week ended 11 December and then to 7 percent in the week ended 18 December. The impact comes with a lag and we need to wait for fresh numbers. The full impact of the demonetisation resulted cash crunch will only unfold in the next few months. If the cash crunch prolongs, things can get worse .
Seventh, Jaitley missed crucial indicators such as PMI data when assessing the economic situation. The consumption story has taken a hit. The services sector PMI sharply fell to 46.7 in November from 54.5 in October — that is the biggest monthly drop since November 2008, just two months after the global financial crisis hit the economy following the US investment bank Lehman Brothers going bust in September. The manufacturing PMI too fell with the index shrinking to 52.3 in November from October’s 22-month high of 54.4. These signals are hard to ignore. Here again, one need to wait for further data.
The bottomline is this: Full impact of demonetisation on economy will be visible only with a lag. May be next few months should offer more clarity. What FM Jaitley has done is presenting selective set of data and use that to prove demonetisation critics wrong and, finally, conclude that demonetisation has helped the economy in 50-days. This is too early an assessment and an incorrect presentation.
(Kishor Kadam contributed to this story)
First Published On : Dec 30, 2016 15:30 IST
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?
Loosely-edited and only slightly embellished excerpts of the interview follow:
Hello,… 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
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.
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?
First Published On : Dec 30, 2016 14:53 IST
For a nation that loves cricket, the demonetisation drive launched by Prime Minister Narendra Modi on November 8 to pull out 86% of the cash floating in India’s economy has been like a one-day match, with roughly 50 days to the core deadline set by the government to swap bad cash with good resembling the number of overs in a game full of twists and turns.
As Modi gets ready to address the nation on December 31 in a stock-taking speech, sober watchers of the game may find no nail-biting finish or clear winner. We might need to use something resembling the Duckworth-Lewis method that cricket scorers use when rains or disruptions mar a match.
We can expect the prime minister to announce on Saturday some populist handouts that would make the headlines on the New Year Day as he declares partial victory in a long-term war on black money that he will vow to carry on. But the real ammunition may be held back until the February 1 budget.
What is clear is that there is no fairy tale El Dorado of a huge pile of unambiguously wasted black cash as it was being made out soon after the government pulled the plug on old 500 and 1,000-rupee notes. There was talk of a fiscal bonanza for the government through a windfall dividend from the Reserve Bank of India then. The RBI has since virtually ruled out such a possibility.
Of the Rs 15.4 lakh crore worth of scrapped currency, some Rs 14 lakh crore has been deposited in banks or exchanged already. Some more money may trickle in through the ambiguous Pradhan Mantri Garib Kalyan Deposit Scheme window over the next three months or in last minute deposits on Friday. Clearly, there is no winning shot in this match in sight.
What we can expect next is a patient round of bean-counting in the Finance Ministry as taxmen zero in on high-value cash deposits. Some 60 lakh depositors have put in deposits totalling Rs 7 lakh crore since November 8 in instances exceeding Rs 2 lakh each. But toothcombing these and actually calling the bluff on tax evaders may take months or years and in cases involving big fish, involve appeals to income tax tribunals or even high courts.
However, we can reasonably expect Finance Minister Arun Jaitley to announce a very comfortable fiscal deficit situation for the 2017/18 financial year when he rises to present the budget on February 1. This would be largely though anticipated income tax gains from the deposits made in banks. The minister is already setting the mood by pointing to robust growth in tax collections..
A low deficit will give the government enough elbow room to play shots – be it in the form of lower taxes for citizens, populist schemes, recapitalising banks scarred by bad loans or fresh spending on infrastructure.
A Robin Hood-like transfer of a big chunk of fiscal gains to the poor holders of Jan Dhan Yojana may be the most romantic outcome of the demonetisation drive.
This, in fact, may become a political necessity because the government has been bitten badly on two fronts. A fall in the current year’s GDP growth resulting from the demonetisation is an economic scar, while stories of millions of industrial workers and farm hands suffering due to the cash squeeze resulting from demonetisation spell political wounds ahead of state elections in UP and Punjab.
To this we may add the image damage caused by a slew of ad-hoc measures linked to the drive – the latest of which is a Quixotic ordinance to fine those who may be caught with more than 10 outlawed notes. The international media has hit Modi where it hurts.
The government also faces a 5-judge bench of the Supreme Court on the Constitutional validity of the demonetisation. In the judiciary and in election rallies, the after-effects of demonetisation may drag on – long after the queues in front of ATMs vanish. That would make it seem like a drawn test match, not a one-day sizzler.
(The writer is a senior journalist. He tweets as @madversity)
First Published On : Dec 30, 2016 07:56 IST
New Delhi: Why were Rs 1000 and Rs 500 notes demonetised by the government? Fifty days after the government announced that these notes would cease to be legal tender, Reserve Bank of India feels that the reasons behind the sudden announcement cannot be made public.
The monetary policy regulator also refused to give any details about the time it will take to replenish the currency notes.
“The query is in the nature of seeking future date of an event which is not defined as information as per Section 2(f) of the RTI Act,” RBI said in response to an RTI query. The Bankers’ Bank refused to disclose reasons behind the demonetisation of about Rs 20 lakh crore of currency in the country citing Section 8(1)(a) of the Right to Information Act.
The section states, “Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence.”
Denying the information sought in the RTI application, the RBI did not give any reasons as to how exemption would apply in the given case
as the decision was already taken and there was no way that disclosure of information would have fit in any of the reasons cited in section
8(1)(a) of the RTI Act.
“The clause of public interest would apply where exemption clause applies on the information sought by an applicant. In the present case,
the information sought does not attract any exemption clause,” former Central Information Commissioner Shailesh Gandhi told PTI.
He said law is very clear that when a public authority rejects to disclose an information it must give clear reasons as to how the exemption clause would apply in the given case.
Recently, it had refused to allow access to minutes of meetings held to decide on the issue of demonetisation of Rs 1000 and Rs 500
notes announced by Prime Minister Narendra Modi on November 8.
Responding to an RTI application filed by activist Venkatesh Nayak, the Banker’s Bank refused to disclose the minutes of the crucial
meetings of Central Board of Directors on the issue of demonetisation citing section 8(1)(a) of the transparency law.
Nayak said he will appeal against the decision, adding, while confidentiality prior to the making of the demonetisation decision is
understandable, continued secrecy after the implementation of the decision is difficult to understand when crores of Indians are facing
difficulties due to the shortage of cash in the economy.
He said the refusal to disclose the minutes of the board meeting where the decision was taken is perplexing to say the very least.
Former Information Commissioner Shailesh Gandhi also underlined that RBI has created an inhouse “disclosure policy” which is against
the letter and spirit of the RTI Act.
Gandhi has also filed a complaint before Central Information Commission against RBI for adopting the policy.
First Published On : Dec 29, 2016 20:03 IST
New Delhi: Union Finance Minister Arun Jaitley on Thursday said that the impact of demonetisation is clearly visible with tax collection figures seeing double-digit growth.
“The impact of demonetisation on tax revenue and collection is already visible. There has been a 26.2 percent increase in central indirect tax collection till November 30,” he said at a press conference here, adding till 19 December, direct tax collection increase has been to the extent of 14.4 percent against a growth rate of only 8.3 percent previous year.
Till 19 December, the net increase in direct taxes has been 13.6 percent after factoring in the refunds, he said.
“In the central indirect taxes there is an increase of 26.2 percent till 30 November. Excise duty is up by 43.5 percent, service tax by 25.7 percent and custom duties up by 5.6 percent,” Jaitley said.
“Notwithstanding the critics, it is a very significant increase in all indirect taxes till November 30,” he added.
Life insurance, tourism, petroleum consumption, flow of mutual fund investment have all increased during this period, the Finance Minister said.
Jaitley said demonetisation has brought a large part of money into the formal banking system which has increased the ability of the banks to lend.
On the liquidity situation in the markets, he said that a major part of the demonetised currency has been replaced with new notes and circulation of Rs 500 has increased.
First Published On : Dec 29, 2016 16:51 IST
The NDA government’s surprise demonetisation of Rs 500 and Rs 1,000 notes has hit both leading and struggling sectors of the Kerala economy hard, pulling the state’s economy down and affecting potential resource mobilisation, a study by a panel has found.
The committee, set up on 23 November, is headed C P Chandrasekhar of the Centre for Economic Studies and Planning of the Jawaharlal Nehru University.
“Cash-intensive sectors such as retail trade, hotels, and restaurants and transportation account for over 40 percent of the Kerala economy, and the primary sector accounts for another 16 percent of the economy. Thus, 56 percent of the economic activity of Kerala is immediately affected by the withdrawal of specified bank notes,” an interim report submitted by the five-member committee has said.
According to the report, the impact of demonetisation in terms of the cash deficit and its consequences has been particularly severe in the state also because of the distinct character of its banking sector, where the cooperative sector and the primary agricultural cooperative societies (PACS) play a central role.
Prime minister Narendra Modi on 8 November announced the decision to demonetise Rs 500 and Rs 1,000 notes, sucking out about 86 percent of Rs 15.44 lakh crore currency in circulation. As the RBI was not ready with the replacement currency, this resulted in a cash crunch, which has negatively impacted the daily lives of common people across the country and in turn the economy.
People have been given time until 30 December to deposit their old notes at banks and RBI counters. The government had also allowed exchange of these notes during the period, but did a U-turn and withdrew the facility from 25 November.
According to the Kerala government panel’s report – the first study on demonetisation and its impact – the notifications issued by the RBI, particularly the one that was issued on 14 November, which kept the cooperative banks and societies out of the note exchange process, were particularly damaging for Kerala.
The study estimates that there are about 14,000 co-operative societies in the state, including the state co-operative bank, the state agricultural and rural development bank, district co-operative banks, urban banks, primary agricultural and rural development banks and primary lending societies. These institutions are central to financial intermediation and inclusion in Kerala, the report has said.
Around 60 percent of all deposits are in the co-operatives in the state, according to the report.
Rolling out the figures, the report said besides not being allowed to exchange the notes, the access of PACS to currency was cut off. This forced these institutions to shut down their operations.
As far as the fisheries sector is concerned, cash crunch has hit the payments for fish auctioned at the point of landing, payments of wages by boat owners, supply to wholesalers and retailers, etc.
“As business has declined, workers get less work and lower earnings, and have had to get into debt to meet their daily expenses,” the report said.
In the tourism sector, the report estimates that the domestic tourist arrivals in November fell by 17.7 percent on year and foreign tourist arrivals by 8.7 percent. In October, the tourist arrivals had seen 5.2 percent and 6 percent increase respectively.
First Published On : Dec 29, 2016 15:48 IST
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.
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
It’s been only a few hours since his name was announced as the new deputy governor of the Reserve Bank of India (RBI) in charge of monetary policy, but Viral Acharya is already a star. Media reports describe him as ‘Poor man’s Rajan’, picking the phrase from one of his old interviews, while some wrote about how the cricketer, singer and poet Acharya also has a music album to his credit.
The newfound stardom and fanfare accompanying Acharya in Indian media reminds one the initial days of Raghuram Rajan, former RBI governor, who was often called as a ‘rock star’ governor of Mint Street and James Bond who’s put the “sex” back into the Sensex’. At 42, Acharya, is the youngest deputy governor of the RBI. One needn’t be surprised if he morphs into a ‘junior rock star’ in media.
But once the welcome party is over, there is a trial by fire awaiting Acharya, who is entering the RBI at a time when the economy is fighting a self-imposed demonetisation crisis and the central bank itself is fighting a major trust deficit and credibility crisis, due to the way it has handled the Modi government’s decision on the evening of 8 November to demonetise Rs 500 and Rs 1,000 currency notes.
Acharya needs to hit the ground running making the RBI’s voice heard in the monetary policy committee (MPC) on the course of interest rates in a challenging economic scenario. Since there is already an MPC with experts in place, Acharya’s task wouldn’t be too tough as in the old days when the monetary policy was solely the central bank’s responsibility.
Nevertheless, there is likely to be pressure from the ruling political dispensation for steeper rate cuts in the backdrop of a sharp decline in economic growth due to the demonetisation-induced cash crunch.
The RBI itself has lowered the GDP forecast for the fiscal year 2017 to 7.1 percent from 7.6 per cent while forecasters have gone even more pessimistic forecasts (one even predicted 3.5 percent for current year).
Acharya isn’t a big fan of ultra-loose monetary policies though. He believes such a policy stance ,when introduced in a weak banking system, can turn out to be disastrous. In an interview given to Bloomberg Quint, Acharya had said, “We are yet struggling to figure out what the global economies are from the ultra-loose monetary policy. Whereas, now we are seeing emerging evidence of the unintended consequences that these policies have had. So, the biggest problem that I worry with low interest rates is when parts of your banking sectors aren’t healthy; it’s a recipe for disaster.” This was in the global context, but applies to India as well.
On the bad loan issue, one of the big headaches for India’s policymakers, Acharya had made two important remarks in the same interview.
First, to hive off bad loans into a separate entity. Acharya had said that Indian banking system need to create a bad-loan bank to separate the good assets from the bad. “I am absolutely proposing, either explicitly or implicitly, that we separate the unhealthy parts of the troubled banks from the healthy parts,” Acharya said.
Secondly, he warned that taking profit from the RBI and using it for the recapitalisation of state-run banks is a solution to the capital problems of India’s PSU banks.
“I don’t think half-baked solutions like taking the RBI’s profits and putting them into public sector banks is the way to go. I think that is just like putting on a band aid and actually it’s a pretty bad band aid in my opinion, because it, kind of, distances the fiscal authority from the monetary, it reduces the distance of the two. It, kind of, almost says that central bank should generate profit because you have to recapitalise the public sector. Everything smells wrong about it.”
Interestingly, one of the thought processes within the Modi government when it announced demonetisation was that the exercise will create some fiscal boost in the form of a ‘windfall’ profit from the RBI when its currency liability goes down.
The idea didn’t work since most of the money demonetised returned to the banking system and RBI governor Urjit Patel clarified that there is no such plan to transfer a one-time surplus to the government on the cards. India’s PSU banks are reeling under heavy bad-loan burden (totalling Rs 6 lakh crore as on September) and need huge capital to meet their Basel-III credit requirements, credit expansion needs and bad loan provisioning.
In a research paper co-authored with Krishnamurthy V. Subramanian of Indian School of Business — State intervention in banking: the relative health of Indian public sector and private sector bank — Acharya had said that many of the problems faced by Indian public sector banks are due to their lack of efficient human resources (he cited the P J Nayak committee report here), their inability to adapt to a rapidly changing technology and the issue of dual regulation of these banks by both the RBI and finance ministry. In the paper, Acharya strongly advocated that in the due course some of the public sector banks will have to by privatised.
“Over the long run, some of the public sector banks can be privatised or their assets reallocated. Some of them could be acquired by the relatively well-capitalised private sector firms; the ones with worst asset quality could be wound down; and, greater entry of smaller and newer banks can be enabled to yet maintain healthy levels of competition,” Acharya said.
As Patel’s deputy in charge of monetary policy, there is no clarity whether Acharya will have a say in the bad loan resolution issue. But, if he continues to argue for some of the above recommendations in the past, he may run into trouble with the government, especially on the issue of using RBI profit to recapitalise state-run banks.
But, beyond these two issues — monetary policy and banking sector NPAs — what one needs to watch is whether Acharya can offer a solution to the communication block the Reserve Bank is suffering ever since Patel took over as RBI governor. Over the years, especially during the tenure of Raghuram Rajan, the RBI has taken serious efforts to improve the central bank’s communication to the public also using public engagements of the RBI top brass to converse and clarify key policy decisions with various stakeholders. This was done with the assessment that effective communication is equally critical for a central bank as much as taking policy decisions.
But, arguably, the RBI under Patel has been a failure to carry forward this effort, especially during the demonetisation rollout. Former RBI deputy governor, Usha Thorat, in a column in The Indian Express, criticised the RBI for not communicating to the desired extent on certain critical aspects of demonetisation. “The RBI top management must communicate more through the media and speaking opportunities. This is necessary in the interest of transparency and credibility. It generates confidence that the RBI believes in honest communication,” Thorat said. Governor Patel’s prolonged silence since 8 November, despite uncertainty on cash crunch gripping the public, had attracted strong criticism.
Can Acharya, an articulate academic, fill the void of the effective communicator in the central bank? “Perhaps he can,” said Gaurav Kapur, an independent economist. “ Not just on the demonetisation issue, but on other policy decisions as well. Acharya can be the person to communicate the RBI’s policy decisions more effectively, which was largely missing during the demonetisation episode,” Kapur said.
Over to you Mr Acharya.
First Published On : Dec 29, 2016 12:38 IST
It’s misplaced, but it exists. We have this inordinate cynicism about the removal of corruption. With the central government’s demonetisation drive about to complete its second anniversary next month, the army of doom and gloom is increasing its numbers.
We hear people saying Prime Minister Narendra Modi cannot eliminate corruption, and how his whole exercise is not worth a spit in the wind, because the crooks and the charlatans, the hundis and the hawalas, the gangsters and the hoarders will all be back collecting bribes in a couple of months, just wait and see.
The “wait and see” is said with a certain ill-concealed glee, as if we would be disappointed in case the fruits from the poisoned tree were actually squashed.
I am not pro-Modi or anti-Modi, but I have just been thinking, what the heck, why are so many of us detracting from the herculean effort? No one else ever did it.
Though there are many hiccups and flaws, and we can point to all of them and exult in the mess, the fact is that the man has gone out on a limb and done something. Look at it this way: World War II lasted five years; many a battle was lost before the Allies pushed the Axis powers into a corner; many strategies were changed mid-way, campaigns reworked, troops repositioned. Nothing happened according to some preordained master plan.
Often they bumbled along, hoping for a break. England was one night away from considering surrender after the brutal Battle of Britain, Rommel thought his Afrika Korps would singlehandedly destroy the Allies, Japan blasted Pearl Harbor and let the US into a war it did not want to enter.
Modi too is at war. In a way, all of us are the troops. It is a massive undertaking and he needn’t have done it at all. But he has set the ball rolling and it is gathering speed.
That his PR machinery is weak and rickety and totally eclipsed by the mainstream media is a tragedy. Large sections of this mainstream media has found comfort in projecting Modi’s mission as having failed. If the prime minister has failed at anything, it’s in his inability to share the message effectively with the public. When you do something so drastic, you don’t put timelines on it. That was the one big mistake, because it was easily exploitable. Every time a correction has been made or a deadline reworked, we have screamed foul and mocked this as evidence of the BJP frontline groping in the dark.
“They do not know what they are doing, they have changed the deadline again!” This is now a mantra.
No one second guessed when the Vietnam War would end. Nobody in 1971 said we will have Pakistan surrender in the East by 16 December.
But we are doing the death dance over the 31 December deadline and getting all pointy fingered again.
Be fair. Public suffering and long queues have reduced; the discomfort is abating. Even at the worst of times, Indian resilience kicked in and the poor whose suffering has been sculpted into a sledgehammer hung in there. The anger that we, the media, showcase is only triggered by our highlighting scuffles. If things were indeed that bad, there would have been riots across the board.
The public took it on the chin; they are nowhere near being stirred into a rebellion, so lets not exaggerate their rage.
Point two: Millions of jobs have been lost. Really? Greedy bosses may have closed down their small scale and cottage industries and not paid their labour force by shrugging and claiming no cash, but they are going to open doors again and the slack will be pulled in because now that the cash flow has commenced, there is no cause to shut the companies. So, millions of jobs are not lost, just temporarily frozen.
Finally, point three: The filthy rich are happy bunnies. They have escaped the net. Not true. They may not confess it or even show it, but the underground is hurt, mortally hurt. The rich have been slapped in the fiscal face. This money did not fall from the skies, it belonged to someone who had concealed it. Hidden wealth has been discovered, so let’s not make it less than it is.
Oh, these guys are so smart they will make it again? Fine, let them start from zero, and if you want the truth, they can get going if you and I let them get going. If we become customers to the corrupt, what price on Modi or anyone else winning the war?
He will lose. Thanks to us.
Like I said, why are so many of us so confident that corruption is in our DNA and why do we speak of it with such misplaced pride.
First Published On : Dec 28, 2016 17:54 IST
Hyderabad: Posing as CBI officials, five unidentified persons looted 40 kg gold from a Muthoot Finance officer here on Wednesday, the city police said.
The con men escaped with gold ornaments valued at about Rs 10 crore after first gaining access through the CBI pretence and then threatening the staff with weapons at the Ramachandrapuram office of the company on the outskirts of the city.
Cyberabad Police Commissioner Sandeep Shandilya said they also looted Rs 1 lakh cash.
Initially police had stated that 46 kg gold was looted.
According to police, five persons came to Muthoot Finance branch in the morning and told the staff that they were Central Bureau of Investigation officials and wanted to check records and gold in the lockers as they were investigating a case of theft.
When the branch manager said he was not in a position to show the lockers without permission from top officials, the unidentified men threatened action against him for disobeying orders of CBI officials.
When the lockers were opened, the intruders started collecting the golden ornaments in their bags. As the employees raised objection, one of the men whipped out a gun, threatened the branch manager and other employees and locked them in a bathroom.
The robbers also took away the hard disk of CCTV cameras with them.
Police have launched a massive hunt for the robbers, who escaped in a black coloured Scorpio.
The police commissioner said 16 teams have been formed to track down the culprits. Police were trying to identify the con men by analysing the footage from CCTV cameras around Muthoot Finance branch.
The policemen were searching vehicles along Hyderabad-Mumbai highway from Ramachandrapuram to Zaheerabad town in Sangareddy district.
Meanwhile, dozens of account holders who had kept their gold in Muthoot Finance branch gathered outside and wanted to know from the officials as to when will they get back their gold.
The officials told the people that their gold was completely insured. They said nobody should be worried as Muthoot Finance has 160 tonnes of gold at 4,500 branches spread across the country.
First Published On : Dec 28, 2016 17:21 IST
Demonetisation has shown its many faces to various stakeholders since 8 November. A bold, high-risk reform experiment for the Narendra Modi-government, a big learning for 125 crore Indians on what a disruptive reform actually means to their daily lives and, finally, a trial by fire for the Reserve Bank of India (RBI) that is now fighting to save its image and credibility. The demonetisation episode has inflicted severe damage to RBI’s integrity–something that hasn’t happened in the past even when the central bank had to walk a tight rope through multiple economic crises that originated both in India and abroad.
As Usha Thorat, a former Reserve Bank of India (RBI) deputy governor writes in her Op-ed for Indian Express: “There have been times when the Old Lady of Mint Street was criticised for being too conservative and cautious — for not being able to keep up with innovation and markets — never has she been accused of not knowing her job. Never has she been the butt of as many jokes as in the last few days.”
Thorat is probably the only voice, so far, among former RBI top brass to speak up openly on the issue of RBI’s eroding credibility. As far as the demonetisation issue is concerned, the RBI has been in a sad state clearly overshadowed by the Modi-government in all respects.
Beginning with the decision-making, the roll out and repeated U-turns on rules, all along it appeared that the North Block is in command, rather than Mint Street, when 86 percent of the currency in the country was scrapped in one go by PM Modi in a televised statement. The RBI has remained on the sidelines since then.
The RBI, one of the most reputed institutions in the country, known for its credibility and independence (operational) is now reduced to an object of jokes on social media. Thorat acknowledges this in her Op-ed when she wrote, “it is indeed a sad day to see one of the most respected public institutions in India becoming an object of ridicule and scorn”.
It appears that the RBI remains clueless at a time the common man is exposed to such massive disruption in his daily life as a result of an executive decision, making it largely inaccessible for him to draw his own money on account of curbs.
What was the turning point? Demonetisation has probably been only a trigger to expose the change in the working style of the central bank post the Raghuram Rajan era. The RBI leadership under Urjit Patel has so far been a near-failure to carry forward the virtues the central bank has guarded over several decades. There have been major shortcomings on many accounts, some of which Thorat has mentioned in her piece.
These can be summarised mainly into two issues — lack of transparency and absence of effective communication.
Beginning late evening of 8 November, government functionaries have dominated the demonetisation scene with the RBI largely reduced to an agency whose job is to only notify what is already there in public domain. At a time when the common man was gripped with panic seeing closed ATMs/ bank branches, long queues (which continues to an extent even now) and uncertainty regarding how long the cash crunch situation will continue, the RBI should have addressed the public to calm nerves and offer firm guidance, but Patel chose to remain silent for a long time. About 60-circulars in just one month of demonetisation doesn’t give a sense to the public that the RBI had any plan or conviction about the demonetisation rollout.
Thorat talks about the pressing need for more transparency and effective communication in RBI’s functioning. “The RBI top management must communicate more through the media and speaking opportunities. This is necessary in the interest of transparency and credibility. It generates confidence that the RBI believes in honest communication.”
Further, the former deputy governor tells RBI management. “Be transparent. It is good that the RBI has started giving some information on the notes issued and deposited periodically. Doubts have been expressed on the double counting of old notes returned to the RBI. There are press reports that the data furnished by the RBI on notes issued between December 10 and December 19 do not tally between the pieces and values. Data on notes returned to the RBI after December 12 has not been officially released — this is generating enormous speculation whether the notes returned exceed the notes issued.”
Transparency has been an issue all along. This was true for the timely availability of information on the amount of old currency deposits returned to the banking system or regarding the break-up of the new Rs 500, Rs 2,000 denominations infused. As far as the total chunk of currency infused, the last available data is as on 10 December, which was released on 13 December. According to this, banks have garnered Rs 12.44 trillion (Rs 12.44 lakh crore) in banned notes till 10 December, while they have issued Rs 4.61 trillion.
According to Thorat, “The RBI would do well to release every week, say, every Monday, data on the notes issued, denomination and value-wise, as also on old notes returned, to set all speculation to rest.”
There are two other instances worth mentioning that gives clues on a break from the past in the central bank’s mode of functioning and preparedness. One is RBI’s decision (read the Firstpost column here to not invite a number of journalists for the policy presser, the first after the Modi-government announced demonetisation. The second is its major flip-flop on the decision to cap deposits in old currency at Rs 5,000, which was later withdrawn due to public anger. On 19 December, the RBI issued a notification imposing restrictions which it had originally promised time till 30 December (as also the Prime Minister) to accept old currency deposits without any limit. “Could it (the RBI) not have refrained from issuing the circular of December 19 that clearly went against earlier assurances and had to be rescinded immediately?,” Thorat asks.
It is unfortunate to see an institution of RBI’s repute, which is regarded as one of the best central banks in the world, fighting a trust deficit of this magnitude. The loss of central bank’s credibility will have disastrous impact on Indian economy and lead to bigger problems. There is an immense responsibility on governor Patel, whose credentials for the role at RBI are second to none, to get his act together and take control of the situation, thus regaining the lost image of India’s central bank.
Here, Patel would do well to pay heed to Thorat’s caution.
First Published On : Dec 28, 2016 13:50 IST
Demonetisation and “cashless” are currently the hot topics for discussions at the shopfronts in Kashmiri villages, where people gather every evening and morning to discuss and debate all sundry things.
The Kashmir Valley along with rest of India is still reeling from the aftereffects of demonetisation which Prime Minister Narendra Modi announced on 8 November. Now, there are reports emerging from the region that some of the villages in the valley have gone completely cashless.
Manzigam is one such village which has been recently declared cashless in Kashmir. It is around 25 kilometres from the main town of Anantnag.
On 20 December, the village of Manzigam received a team of state government officials from the Common Service Centers (CSC) e-governance division. As part of central government’s “Digital India” campaign, CSC provides various services, mostly electronic, to the general public along with training them on how to use those services. The CSC team trained about 20 villagers for cashless transactions and provided information on various digital payment systems.
But going cashless is a slow process, more so, because some habits are hard to change.
A week since the training, most people in the Manzigam village are yet to understand the idea of cashless payments. They are still carrying cash in their pockets and it is evident that there is no implementation of cashless transactions on ground.
In one of the morning gatherings at a shopfront, few of the villagers described their experience when the government team visited.
Most of the villagers still look confused when they hear about their village becoming cashless. Many have heard the term cashless, but they have no idea about what exactly it is. Yet, they are quick to point out its effects. “Now we have to carry ATM cards like we used to carry our identity cards in the early 1990s to prove our identity to the security forces,” said one of the villagers who got in the middle of the discussion to offer prayers in a nearby mosque. However, another man in the early 30s said, “It would be beneficial.” Many nodded.
Some have no idea what payment swipe machines are or what was taught in the training. While talking to Firstpost, a villager named Arif Ahmad said, “Shopkeepers have to submit some forms (not knowing what exactly) to get the machines. I was busy and couldn’t attend the training class.”
He said that only around 30 people among the 300 families in the village attended the CSC camp.
Shopkeepers are the key enablers for implementation of the cashless monetary system in any village. Manzigam has around 10 shops which are yet to install payment swipe machines. They have been told to open Current Accounts so that they can accept payments through the machines. But many are reluctant, so they are still insisting on cash payments.
These problems aside, there are other logistical challenges too.
Manzigam has few smartphone users, poor internet connectivity, fluctuating electricity and the only broadband internet connection is at the only Khidmat centre.
Hamid, a 20-year-old shopkeeper from Manzigam doesn’t have a 4G-enabled smartphone which is the foremost priority for using mobile wallets in Kashmir these days as prepaid 3G mobile internet services are yet to resume after the 8 July killing of militant commander Burhaan Wani.
“I don’t have the internet on my phone yet, as I have a 3G phone. I somehow connect to Wi-Fi hotspots of my friends’ phones to access the internet.”
Hamid is, however, optimistic of having his own internet as he is expecting that Reliance Jio, a 4G service provider, may introduce internet services on 3G phones in near future. When asked about the internet speed in his village, he is quick to answer: “There is a cellular network in our neighbouring village. We go in the fields for faster internet speed, otherwise, it is frustrating.”
It’s a similar story with Lanura village in Central Kashmir’s Budgam district, which was the first village in Kashmir to go cashless. Various media reports say that the village has only got the tag of cashless, but on the ground, its implementation is zero.
The story repeats in other such villages of Kashmir which were declared and tagged as cashless villages. There seems to be no solid sign of practical adoption of cashless payment mechanisms by the villagers so far.
Talking to Firstpost, district manager of the CSC, Rayees Ahmad admitted that it is not easy to make villages go cashless. “It’s really hard to say how much time it will take to go cashless. No one can say,” he said.
Ahmad also pointed out the problem of poor internet connectivity and ban on prepaid mobile internet services. “Mobile network is not that good. Reliance Jio has brought some relief. But everybody cannot afford a 4G smartphone. It is necessary to lift the ban on prepaid mobile internet for going digital,” he added.
Many Kashmiris are of the opinion that it is not easy to implement and promote cashless transactions in the Valley as long as internet access remains susceptible to the law and order situation in Kashmir.
Mohammad Ishaq who hails from Anantnag while talking to Firstpost said, “In Kashmir, where prepaid internet is banned for more than five months, how can the government claim to have cashless villages.”
“If it is possible to go cashless amid these prevailing circumstances, then it will take no time for the whole Kashmir to go cashless,” he remarked sarcastically.
The author is a freelance journalist based in Srinagar. He focuses on the socio-political issues of the Kashmir Valley.
(Firstpost is from the same stable as Reliance Jio)
First Published On : Dec 28, 2016 13:10 IST
The Enforcement Directorate on Wednesday morning arrested a manager of the Kotak Mahindra Bank for his alleged links with hawala trader Parasmal Lodha and Delhi-based lawyer Rohit Tandon.
Sources in the ED said that Ashish Kumar, the manager at the Kasturba Gandhi Marg branch of the bank, was arrested for allegedly converting over Rs 25 crore in demonetised notes linked to industrialist J. Sekhar Reddy and lawyer Rohit Tandon.
On 23 December, the income tax department had carried out raids at the branch.
Ashish, a resident of Haryana, would be produced in a Delhi court on Wednesday afternoon.
Lodha, a leading businessman with interests in real estate and mining, was intercepted at the Mumbai airport while he was trying to flee to Malaysia.
Meanwhile, the bank said in a statement that it has already suspended the services of the employee and that it proactively informed the Financial Intelligence Unit (FIU) about the suspicious transactions.
“The Bank on its own, on observing the nature of transactions in these accounts, proactively filed a report with FIU for further investigations well in time. On subsequent investigation by the Income Tax authorities, the Bank, as per their instructions, has deposited the entire amount that was credited with these accounts with the Income Tax department,” the bank said in a statement.
First Published On : Dec 28, 2016 12:14 IST
Banks have asked the government to extend the curbs on cash withdrawal beyond the deadline of 30 December as there is not enough currency notes in the system yet to meet the demand from customers.
After the demonetisation of Rs 500 and Rs 1,000 notes 8 November, there has been a cash crunch in the country as printing of replacement notes at the government and RBI-owned presses have not been able to keep pace with the demand. The demonetisation had sucked out about 86 percent of the currency in circulation.
In order to help banks, the government had restricted the withdrawal at Rs 24,000 per account per week from the branch and Rs 2,500 per card at ATMs. According to a report in The Indian Express, now the banks want the curbs to stay until there is sufficient currency notes available in the system. The government had earlier indicated that the limits will be revoked after 30 December, when the deadline for depositing old currency notes with banks ends.
The report says there is a growing consensus among bankers that the restrictions would have to continue even in the New Year so as to maintain orderly working at the banks. According to a banker quoted in the report, these restrictions are necessary as otherwise the public might flock to the ATMs and banks to withdraw cash, while there is no currency notes available. “That will become a problem,” the banker has been quoted as saying in the report.
The Indian Banks’s Association (IBA), however, has said it has not given any written representation to the government on this.
Earlier PTI haad reported that the restrictions are likely to continue beyond 30 December.
Banks at many places are not in a position to disburse even the current limit of Rs 24,000 per week due to cash crunch and are rationing the valid currency depending on cash availability. If this limit is withdrawn for individual and businesses from 2 January, it is unlikely that banks would be able to disburse the higher demand for valid currencies given the current cash position.
“Most of us think that the withdrawal limit would not be completely withdrawn. It is a possibility that it could be relaxed if the cash situation improves,” said a senior public sector bank official.
At a time when banks are struggling to meet the demand of individual customers, it would be impossible to service MSME and big corporates which requires cash in large quantity, the official said, the practical way would be to relax it gradually.
Recently, SBI Chairperson Arundhati Bhattacharya had also indicated that restriction on withdrawals cannot be lifted entirely unless more cash is made available to banks.
After the demonetisation of high value Rs. 500/1000 notes, the government has fixed a limit of Rs. 24,000 per week on withdrawal from bank accounts and Rs. 2,500 per day from ATMs in view of the currency crunch that followed.
The government and the RBI has not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be will be reviewed after December 30.
Even bank unions are also of the opinion that the restrictions cannot be done away with in one go.
All India Bank Officers’ Confederation (AIBOC) General Secretary Harvinder Singh had also said that in all likelihood the restriction on withdrawal would continue for some more time in the best interest of banks as well as customers at large.
The situation of currency supply is known to everyone and it would be difficult to lift the limit from January 2, Singh said, adding that SME and small businesses are waiting for cap to go so that they can withdraw as per their requirement.
Reserve Bank of India has infused Rs. 5.92 lakh crore in the banking system between November 9 and December 19 against Rs. 15.4 lakh crore of scrapped notes.
According to RBI, banks had got deposits of Rs. 12.4 lakh crore defunct notes by December 10.
First Published On : Dec 28, 2016 10:03 IST
Much before economists like Jagdish Bhagwati and Arvind Panagariya weighed in favour of Prime Minister Narendra Modi’s policies as Gujarat chief minister, Bibek Debroy stirred a hornets’ nest by praising the Gujarat development model. Debroy was then working in the Congress’ think tank — Rajiv Gandhi Institute of Contemporary Studies. Needless to say, Debroy had to quit. But that did not stop him from speaking his mind. Debroy drew close to Modi prior to the 2014 Lok Sabha elections and played a critical role in shaping up his economic policies. He was drafted as a member of the Niti Aayog after the extinction of the Planning Commission. In the mean time, he was tasked with reviewing the functioning of the Indian Railways.
At the moment, Debroy wears many hats — one of them as a defender of demonetisation. He has been valiantly defending the government’s move to make currency notes of the denomination of Rs 500 and Rs 1,000 illegal tender. He says that it is just a beginning to clean up the entire economic ecosystem. In a wide-ranging interview, Debroy explains the rationale and long-term impact of the move.
Here are some edited excerpts:
Since the demonetisation drive is coming to a close, can you explain for us the objectives, benefits and travails that the exercise entailed? As an economist and policy analyst, how do you sum it up?
One should not look at 8 November (the date on which Modi declared currency notes of Rs 500 and Rs 1,000 as illegal tender) in isolation. The reason I am mentioning this is because there are various other things that have happened outside 8 November and will continue to happen outside 8 November. And the day should be considered from this broader perspective. Let me give some example of that. The creation of this new black income and I am deliberately using the phrase ‘black income’ because we are talking about specifics. And there is wealth which from an economist’s point of view is stock, and there is income which is of flow.
So far as the issue of creating fresh black income is concerned, 8 November was not meant to address that. There are other instruments to take care of that, like negotiating and re-negotiating agreements with Mauritius. This has already happened. Take for instance the restriction on cash transactions above Rs 20,000. Take something like the Real Estate Bill, which among other things promises that it would transform the real estate sector from unorganised to organised. It will not happen overnight but over the period of time. The prime minister has already indicated that many such measures will be introduced. And remember in the background of this the income declaration scheme has already happened.
There was a greater scrutiny of people who might have had black income. So when people are criticising the demonetisation it should be understood that there are other measures which are meant to check the creation of new black income and nobody is saying that this is the only way all the issues can be addressed.
Let’s take a new target and let me define the term ‘black’. There are two different uses of the term black. They are not quite the same. The first is when the activity is illegal like crime or drugs. The other type of black is when the activity is not illegal. So the income generation is perfectly illegal but the tax that ought to be paid was not paid. Nobody is denying that black exists in non-cash forms like gold or property. There are instruments that have been introduced to tackle this and will continue to be introduced. Just because the substantial part of this black income is in other forms does not mean that it (the matter of black cash) should not be addressed.
Let’s take the third point. In India, cash is used substantially. And it is obvious as India is not a developed country. No one is expecting the use of cash in India to disappear overnight. But look at the ratios. The GDP-cash ratio in India even till last year was 13 percent. Some 15 years ago it was nine percent. Someone needs to explain how this ratio increased from nine percent to 13 percent. Even if I assume that we need cash, it should be understood that when a country develops, the use of cash reduces. Then how and why did we witness this increase?
I look at countries like Bangladesh, Sri Lanka and Pakistan. What is the GDP-cash ratio in Bangladesh and Sri Lanka? It is five percent or three percent. Even in Pakistan, it is nine percent. So let us accept that there is too much cash around. Let us also accept that there have been deliberate compulsions to use cash. Take for example the Payment of Wages Act. Section 6 of the Act, which has been there for years, has said you must pay wages in cash unless you have concurrence from the employee not to do so. Who will do so? Why should we have such a rule in this age? It is only now that things have changed; it should have been done years ago.
And take for instance the high fees on non-cash modes. Someone should have objected to the rates they charge. So let us also recognise that there have been disincentives not to use cash. Let us also remember that Jan Dhan Yojana accounts have already been made. So we have now more than 260 million accounts and many have RuPay cards. But sadly for them it is just a piece of plastic that will be used at ATMs as they have not been still educated and convinced that these RuPay card can be used for something else also.
Someone will come along and say, “Look at the unbanked population in India” and add that he doesn’t believe in Jan Dhan figures. So my response is that you shouldn’t believe in these figures. But here is the survey conducted in August — not by the government, but by a private institution, and it states that 97 to 98 percent of both rural and urban populations have bank accounts. Now, if one says that all of them are not using bank accounts, I may agree. But don’t say that they don’t have bank accounts.
How much exactly do the currency notes of Rs 500 and Rs 1,000 account for in the economy? And how much of it have we got back?
There is a lot of confusion around as people are using two different bases. One is the RBI balance sheet figure which is slightly old and which puts the number at Rs 14 lakh crore. The other one is the figure on 8 November. It is the latest figure and it puts the number at almost Rs 16 lakh crore. Let’s stick to the Rs 16 lakh crore base. Now out of this how much was black? How much is going to come back into the system? To the best of my understanding, no one in the government has predicted or projected anything.
How much has already come in? We don’t really know. There are all kinds of figures floating around. These figures may not always be final.
Let’s take the example of fake currency. The fake currency check goes through three different layers. Once it has gone through all three it is very unlikely that it will be deposited in the banking system. But today when you are looking at the figures it is perfectly possible that fake currency was deposited earlier. Alternately, you go and take old notes at petrol pumps. It may be showing up in the accounts that petrol pumps maintain with the bank. It may also be showing up with the report that BPCL is giving to the government. So until the figures are final, one really does not know.
But the last figure I have is Rs 12 to 12.5 lakh crore. Which means, I personally think, that most people who were going to deposit it have already done so. Even if I accept that Rs 14 lakh crore comes in by the end of the month, the remaining Rs two lakh crore is not the indicator of success. A lot of criticism is happening that only Rs two lakh crore will be left. To the best of my knowledge, no one in the government has said that it is the criterion of success. And that’s because the money that is coming to the system has not become white. It will invite taxes and penalties if required and will have deeper scrutiny. Just because it is in the banking system does not mean it is legitimate.
I mentioned earlier that people who are holding cash are being dissuaded to do so. So it is good that it comes into the system. I think it is a success as people are realising that this initiative is a serious one. So there is not much point in my hanging on to cash. To my understanding, it is an attempt at cleaning up the entire system. So if I look at it narrowly just from an economist’s point of views, I am missing the true picture. This is the beginning of an attempt to clean up the gold market. I am not talking about jewellery market, which is different. It is also an attempt to clean up the financing of capital market transactions and real estate. And also, one has got electoral reforms as part of the debate agenda.
I am not saying that something substantial has happened, but it is part of the discourse. It should be seen as part of the broader process. You can dispute the survey figures. One survey says that 60 percent of the people are supporting you, another says that 80 percent back you. What you find across all surveys is that a large number of people are supporting the measure and it is because, I feel, they have realised that 8 November was just a small piece in the process.
My last point is when you are doing something like this you can plan perfectly. But when you do plan perfectly, it becomes impossible to preserve secrecy. To preserve secrecy, I may take some decisions, you in the same position may take some other decision. It cannot be the case that my decision will be perfect as I may not be able to assess all eventualities. But if you are in my place, you might also take decisions that might not have been perfect.
Obviously, there was inconvenience.
Let me divide it into different parts. One, the task was to get enough new notes to banks; two, naturally when there is a shortage there will be rationing. So in this scenario it is decided to take smaller denomination notes to rural areas; and three, it is one thing to get the notes to the bank and it is another to take it to ATMs. As a government you do not have much of control on how the banks take the money to the ATMs because it is outsourced. So there is a problem with banks and ATMs. I think, purely anecdotally as there is no data, that bank problem has decreased day-by-day even in Delhi and Mumbai. ATMs? Yes, there are still problems. I have no idea how long it will take.
From where did the word “windfall” gain currency in this entire exercise?
Right from the beginning, I have followed what the finance minister and the finance ministry have been saying. I have seen that there was a recognition that there are three different channels through which money will come. One is the money that does return. This reduces the liabilities of the RBI. When liabilities of the RBI are reduced that is not automatically the money that in any fraction has gone to or will go to the government. It is for RBI and finance ministry to take decisions. Today, sitting here we do not know how this part will be handled.
The second part is that there will be some money that will come into the banks, mostly public sector banks. It will ease their stressed assets problems and to that extent, it enables them to lend better. But again, the banks, even if they are public sector banks, are not the government. The third is the money that actually comes into the consolidated fund of India through taxes, penalties and other means.
Now I have two things to say on this. First, I have already mentioned the income declaration scheme. Over and above this, action has been taken by the income tax department. It has resulted in a lot of money coming in. Second, when I declare Rs 100 as additional income then those Rs 100 are not revenue to the government. Only the taxes and penalties are revenue to it. It is this money that the government can use for different purposes. How the government chooses to use it we will know partly on 1 February (Union Budget). I said ‘partly’ because we will not know the figure till the end of March, which is when the window shuts. As far as windfall gain is concerned, I don’t think the government has ever used this word.
When the prime minister announced demonetisation, he laid down certain objectives: Eliminating black money and fake currency, and tackling terrorist activities. But over time it seems that goalposts have changed.
No, I don’t think they have changed. There were multiple objectives. I will give you an example. On this issue, I have been giving interviews to different people. Somewhere, I would have said something to one person responding to specific questions and I would have said something different to another, but that does not mean that my focus changed. You see it is not a single objective. Lot of people are only referring to what the prime minister said after 8 Novembe. My request is that you look at what he has been saying earlier in his monthly radio broadcast Mann Ki Baat. This has been figuring in his speeches for quite some time. It is not fair to say that goalposts are changing.
Take the case of fake currency. I don’t think that the issue is absolute amount of fake currency. In 2014, the Indian Statistical Institute (ISI) put the number at Rs 400 crore. There is an Intelligence Bureau (IB) figure of Rs 2,400 crore. It is not about what the exact value of fake currency is, but to understand that it does not take a lot of money for a terrorist attack with a lot of undesirable consequences. Even Rs 10 crore is good enough to cause enough damage. If I am destroying the counterfeit apparatus today there is no surety that it will not reappear in future. It has to be a continuous process.
So you are saying in a way that this talk of changing goalposts is not valid.
I think so. I have been listening to Modi. I think the most important objective here was to clean up the system.
Now the next strike in all probability will be on benami property. How do you think the government will be able to do this? How much impact will it have on real estate? Is there any assessment?
People have been complaining that real estate sector has been destroyed because of demonetisation. I ask what has been destroyed. Is it the value of the property? Is it the registered value of the property? There is a big difference between the two. Is it the black component or the white component? And the invariable reaction of anyone I speak to on this is that what has been destroyed is the black component. In Delhi, 50 percent of transactions use to be in black and 50 percent in white. Right now the system is in shock but I am certain that when it is stable, it will no longer be 50 percent black and 50 percent white. All of it may not go, but the amounts will reduce. Whenever the Goods and Services Tax (GST) is introduced, it will bring a lot more into the net. So it is part of the entire thing and not just 8 November.
The political part — the elections etc — requires a debate. It is not easy. And you have to also see that because of this a lot of poor people have started using non-cash means. So what I am seeing, though it is difficult to get it quantified, is that in many ways middle men are getting eliminated from the system.
How do you think it will impact the tax base?
Indirect tax will increase because of GST. There is a difference between tax avoidance and tax evasion. Tax avoidance is legal whereas tax evasion is illegal. So to broaden the direct income tax net, you need to take care of exemptions. Today, when a chartered accountant is not paying his taxes it is not always the case that he is evading. Rather he might have legitimate exemptions of which he can avail. I have a feeling that in future there will be a greater degree of enforcing that for certain transactions you cannot pay in cash. The segments that will be then made more accountable will be lawyers, chartered accountants and doctors.
There is another difficult issue that is linked to it: Taxing people in rural areas. Technically taxing agricultural income is a state subject but taxing non-agricultural income of the farmer is not a state subject. There is an issue there that is more about enforcement. So part of it is broadening the base, but also simultaneously ensuring that tax department, both direct and indirect, does not unnecessarily cause harassment to honest tax payers and I feel that we will see something on this line in the budget.
How do you react to reports of people illegally exchanging money? Do you feel that banks did not behave in the manner they were suppose to?
One of the channels that was misused quite a bit was exchange, which is really an RBI thing. I think there were three problems with banks. First, they were not very vigilant about the functioning of the ATMs. They were talking about whether the ATMs were calibrated, but I am talking about how many ATMs were working. Second, from the second day we knew from newspapers that bank officials, though they worked really hard, connived. How do we know that they connived? Because they have been caught. So there is a positive way also to look at this.
I am a little confused about the third as there is lack of information about it. There is a shortage of notes. When there is a shortage, there is a certain principle on which distribution is done. What is the principle that RBI follows in distributing notes to different banks and what is the principle that banks follow in distributing to different ATMs? I don’t have any information about this but I don’t think that this was done in a very rational kind of way. If a bank like SBI has many ATMs then the bank should have information on which ATM is used to what extent and the distribution should have taken place accordingly. Am I (as a bank) doing this with efficiency? I don’t think so.
Even in case of honesty, I am not very sure that it was very efficiently followed. But this is my analysis and is purely anecdotal. I often take this route between Khelgaon and Aurobindo Marg (in Delhi) and there are roughly 20 ATMs. Two days ago I found that 10 of them were working. If there is a general shortage then all should not be working. So I think it should be probed how they allocate money.
But there were so many news reports about how old currency was exchanged for a commission of 10 percent and 15 percent, which later came down to five percent.
If they have got less money, there is some destruction. There has been some tracking of this at aggregate level. Initially, when it happened, it was happening at 35 percent. It has not come down to five percent. It has come down to a 10 or 14 percent level. There is still destruction.
How do you react to the opinion emerging from the world around on demonetisation, some of them are calling it an ‘immoral act’?
I don’t understand what is immoral here. Let us get the principles clear.
Your money is in bank. No one said that you cannot use that money. All that has been said is that there is a limit on withdrawal.
You want to pay through cheque, you can do that freely. You do digital transactions, you are free to do that. So the first principle of criticism that I am being deprived of my property is factually incorrect. Please understand that someone who is based abroad does not know what is happening on ground here. They are forming their opinion on what you people are writing here in the Indian media.
First Published On : Dec 28, 2016 09:40 IST
Days after the Income Tax Department raided the house of the former chief secretary of Tamil Nadu P Rama Mohana Rao, he addressed the media on Tuesday and raised several questions about the “unconstitutional” raids. Speaking to the media, Rao, who was removed from the post of the chief secretary on 23 December, said that he still holds the post and authorities have no evidence against him.
“After 32 years of service, if this is the condition of a chief secretary, how can CRPF enter my house? Why did they not transfer me? This is political vendetta. I was under house arrest for over 26 hours. They (Centre) have no respect for the state government,” Rao said.
Rao thanked West Bengal chief minister Mamata Banerjee and Congress vice-president Rahul Gandhi for “supporting my cause” and also alleged that his life was in danger. “They did not have any search warrant against me. The search warrant had name of my son. They have found nothing — no incriminating documents were found during the raids,” Rao said. Pointing towards a room that was alleged to be a secret chamber by the income tax authorities, Rao said that it was the store room. “What secret chamber?” he asked.
Alleging interference from the BJP-led Centre, Rao also said that the Central government has no business raiding the house of a chief secretary of a state. “Where is the state government? What role or business does Government of India and CRPF have to enter a chief secretary’s chambers? Did they get the chief minister’s permission? Isn’t this a unconstitutional assault? Where’s the state govt? On whose permission did CRPF enter my house. If they wanted to search my house, they could have transferred me. How much time does it take for a chief minister to transfer a chief secretary?” asked Rao.
Remembering former Chief Minister of Tamil Nadu J Jayalalithaa, Rao said that if she were here, this would have never happened. “If Honourable Madam (Jayalalithaa) was here today, this would not have happened. I managed Madam’s funeral and handled when Chennai was battered by the cyclone. My reputation precedes me. I am a big hurdle to many. I am a hardcore man and they fear me,” said Rao, adding that he feared for his life.
On 21 December, Income Tax authorities raided the house and office of Rao after a tip-off. The premises were searched by officials, who claimed to have recovered Rs 30 lakh in cash in new notes and five kilograms of gold besides getting “disclosure” about Rs five crore of unaccounted income. The raids were carried out at 15 places, including the office and the residence of Rao, his son Vivek and some relatives in Chennai and Chittoor in neighbouring Andhra Pradesh, I-T sources had told PTI.
Rao was appointed as the Tamil Nadu chief secretary in June 2016.
Rao also refuted claims that he had any business links with mining baron Shekhar Reddy. A senior I-T official had told The Indian Express that the raids at Rao’s home and office were linked to the seizure of Rs 132 crore in cash (including Rs 34 crore in new notes) and 177 kilograms of gold from mining baron J Sekhar Reddy earlier this month. “Documents seized from Reddy’s premises were the major evidence, as they had details linked to Rao. It was a matter of ascertaining locations before launching the raid,” the official told the paper. Rao, however, on Tuesday said:
Within 24 hours after the raid, Girija Vaidyanathan, an officer with a no-nonsense work ethic, was appointed as Rao’s successor. The political class reportedly wanted to wait till an FIR was filed but was advised that the raid had already dented the image of the government and any delay would only reflect poorly on the AIADMK.
With inputs from agencies
First Published On : Dec 27, 2016 11:49 IST
Chandigarh: Black money holders will have to bear taxes and penalties amounting to as high as 137 percent if they do not admit to or fail to explain the source of undisclosed income after being raided, the income tax department said on Monday.
However, the total levy can touch 107.25 per cent if the undisclosed income is admitted during search operations and that income substantiated, the department said in a release, adding the tax dodgers can come clean by paying 50 per cent on bank deposits post demonetisation.
If one fails to admit his unexplained income during the course of search and in case, taxes are not paid and he does not substantiate the manner in which income is earned, then the tax incidence will be 137.25 percent, the tax department said in a release.
However, if undisclosed income is admitted during search, taxes are paid and return is filed before the specified date declaring this income and assessee substantiates the manner in which income is earned, then the tax rate will be 107.25 per cent, the release added.
“We are asking people to declare their undisclosed cash deposits in banks, post offices which have not been subject to tax earlier under Pradhan Mantri Garib Kalyan Yojna, 2016 (the scheme),” Principal Chief Commissioner of Income Tax (NWR) Rajendra Kumar said in Chandigarh on Monday.
This scheme which has come into effect on 17 December shall remain open for declarations up to 31 March, 2017, he said.
If the income is not admitted during search and the assessee is not able to substantiate the earning, it will attract 60 per cent tax, 60 per cent penalty, 15 per cent surcharge, 3 per cent education cess surcharge — amounting to 137.25 percent.
In case, the income is admitted during search and the assessee is able to substantiate the earning, it will attract 60 percent tax, 30 percent penalty, 15 per cent surcharge, 3 percent education cess surcharge — totalling to 107.25 percent.
The Taxation Laws (Second Amendment) Act, 2016 has amended the penalty provisions in respect of search and seizure cases, the release said.
The existing slab for penalty of 10 per cent, 20 percent and 60 per cent of income levied under section 271AAB has been rationalized to 30 per cent of income, if the income is admitted and taxes are paid. Otherwise, a penalty at the rate of 60 per cent of income shall be levied, the department said in the release.
First Published On : Dec 26, 2016 22:15 IST
Rajkot: Two persons were arrested on Monday with counterfeit currency in the denominations of newly introduced Rs 2,000 and Rs 500, having a face value of Rs 26,10,000, police said.
“Acting on a tip-off, the city crime branch sleuths intercepted a car at Hanuman Madhi area and arrested two persons with fake currency notes of Rs 2,000 with face value of Rs 26 lakh, and of Rs 500 with face value of Rs 10,000,” Rajkot Commissioner of Police Anupam Singh Gehlot told mediapersons here.
The arrested persons were identified as Hruday Jagani and Lakshman Chauhan, both hailing from Ahmedabad, he said.
The notes were kept inside the speaker box of the car in which they were travelling, Gehlot said.
He said a high quality colour printing machine was also seized from their possession which was used to print the currency notes.
The cover of notes’ bundles bore the tag and seal of a public sector bank to make them look like original, he said.
“Hruday used to work as a printer and has a sound technical know-how of printing and cutting notes with perfection so that they look like original,” Gehlot said.
“The mastermind was identified as one Jignesh Shah, who is a land broker in Ahmedabad. Jignesh would find customers looking to exchange their old currency notes, and would order printing of notes after he struck a deal with his customers,” the senior police officer said.
A search is on to nab Shah.
He said the accused might have supplied several such notes since demonetisation came into effect on November 9.
“They would bring such notes into circulation in different ways. They’d hide duplicate notes in the bundle of original notes so that it was supplied easily, and would earn around Rs 15,000-20,000 on supply of Rs 2 lakh,” Gehlot said.
“Another modus operandi was to hide blank notes below the Rs 2,000 lookalike duplicate notes,” he said.
Gehlot said ever since demonetisation came into effect, around Rs 2 crore worth of old notes and Rs 70 lakh of new notes were seized from Rajkot alone.
First Published On : Dec 26, 2016 15:48 IST
Crop losses, mounting debts and a spate of pest attacks apart, the cotton farmers of Telangana and Andhra Pradesh now have to deal with the demon of demonetisation as well.
“The note ban has been a worse epidemic than the white fly or pink bollworm for cotton farmers,” says Konda Surekha, a former minister from Warangal, one of the most prominent cotton-growing areas in Telangana. These farmers are sour that Prime Minister Narendra Modi had picked a wrong time for banning big currency notes — the harvest period of the Kharif season for cash crops like tobacco, tomato, groundnut, sugarcane and cotton. Now prices have fallen by 20 to 30 percent and they are unable to clear loans due to the ushering-in of the cashless regime in agricultural markets.
“My cotton stock withered at the market yard as traders said they had no cash to pay and offered cheques,” said Jagarlamudi Anil Babu, a cotton farmer of Prakasam district. Farmers say that banks would rather adjust cheques towards loans and interest than disburse cash.
A variety of issues abound for the cotton and textile industry like the non-implementation of the promised loan waiver, the delay in institutional credit and fall in global demand.
Cotton farmers in five districts of Telangana and six districts of AP are wringing hands in distress as cotton prices crashed to Rs 4,100 per quintal from Rs 5,600 per quintal in the pre-demonetisation period. “Adding to our woes, the traders are asking us to accept payments in cheques or scrapped notes of Rs 500 and Rs 1,000,” says a cotton grower from Inkollur in coastal Andhra who deferred cotton-plucking for a week due to demonetisation.
The RBI decision to allow scrapped notes circulation among farmers in marketing their produce and also purchase of seeds and fertilisers has given them temporary relief, but Telangana’s farmers say that Modi should have chosen mid-January to February for demonetisation. A cascading impact is evident from the distress on cotton farmers — weddings, house warming functions and thread ceremonies are either low-key affairs or deferred. Besides cotton, the tobacco industry is dominated by 70 percent cash transactions in the vicious circle of growers, lenders, commission agents and exporters.
Andhra Pradesh and Telangana contribute to one-third of the country’s cotton trade. Chirala in Guntur and Siricilla in Karimangar are popular for their handloom and lungi markets and concentration of looms – they are considered the biggest in Asia for exports to Sri Lanka and Bangladesh.
According to the US-based International Cotton Advisory Committee (ICAC) the currency crunch in India has created shortages in domestic textile market and also hit exports to global markets. Cotton exports from Australia, Mali, Burkina Faso and the US could fill up the gap caused by Indian cotton in 2016-17. The ICAC report also blamed the note ban as an ‘untimely move’ detrimental to the Indian cotton market, which could have a domino effect for the next two years.
Officially 21 cotton farmers had committed suicide in 2016 from June to December. Unofficially though, 61 farmers have committed suicide since June and 12 more in the months of November and December.
Since its birth as a new state in June 2014, Telangana has recorded 1,269 suicides. The Hyderabad-based Centre for Sustainable Agriculture (CSA), estimates farmer suicides in Andhra Pradesh in the past 20 years (1995-2014) at 38,000. Lack of access to institutional credit and low crop insurance add to farmers’ woes. “Besides, in anticipation of loan waivers, a large number of farmers did not repay loans last year, and banks have refused loans this year,” points out GV Ramanjeyulu, executive director of CSA.
“They take up crops in Kharif with high interest loans and high expectations to wipe off old dues but often end up adding to their debts and consequent suicides,” says K Changal Reddy, a farmers’ representative.
Local common sense
In many parts of Telangana and Andhra the crisis has been tackled with local common sense. “Farmers are deferring payments to daily wagers but pay partly in the form of rice and also stood guarantee to small loans taken by them in the local grocery shops,” says Palaparthi Srinivasa Rao, a cotton farmer of Srikakulam. Traders linked payments to fertilisers and seed suppliers for the benefit of farmers. “We also tied up with lorry operators and hotels to pay their dues from the amounts due to them,” says Gopalakrishnaiah, a cotton exporter in Guntur market.
Kuvulu Rythu Sangam (Andhra Pradesh Tenant Farmers’ Association) state secretary N Ranga Rao says that for the Kharif crop season, farmers needed Rs 3,200 crores to take up harvesting in about 40 lakh acres. Another Rs 2,400 crores is needed for the Rabi season. “Since private money lenders also do not have valid currencies now, we depend on government to release crop loans early,” he said.
The monthly report of the Cotton Corporation of India (CCI) said the cotton market in Andhra Pradesh, one of the major producers in the country, has plunged into a deep crisis in the aftermath of demonetisation, as trade and export transactions have almost come to a halt and cotton prices have slumped by Rs 1,000 per quintal from Rs 5,000 to Rs 4,100 in just 40 days. Though the CCI has opened over 40 purchasing centres and offered cash payments in Rs 2,000 notes, the farmers are unwilling to sell and choose to suffer rather than sell at the current prices.
Arrears in loan waiver payments
Although both Andhra and Telangana government announced farm loans waiver as a poll promise, they have been paying dues to banks in installments. Telangana government had pegged arrears at around Rs 18,000 crores and Andhra had reduced the burden to Rs 36,000 crores. Banks were advised to issue new crop loans with the promise that loans as of June 2013 would be borne by the government. However, the RBI had opposed the bulk farm loan waiver initiative of both the states and advised banks to release only crop loans in a guarded manner and ensure that until clearance of arrears, farmers’ slates would not be cleaned.
As a result, banks refuse to give fresh loans until old loans are either paid by the farmer or by the state government. As a result, farmers had to take up farming with savings and loans from private money lenders. “My money lender wants cash and not cheque,” says Bharatakka, a cotton farmer of Ibrahimpatnam in Nalgonda district.
Cotton crop grown in Andhra is sent to the ginning mills of Guntur district which supply cotton to textile mills in Maharashtra, Tamil Nadu, Gujarat and Karnataka. According to market sources, almost 70-80 percent of transactions have come to a halt and the market has been hit hard. This has meant the denial of wages to over two lakh people engaged in cotton trading, spinning, ginning and harvesting activities in the state.
In Telangana too, the situation is similar. Traders are offering farmers sops now to get them to sell their cotton and accept cheques — trips to Mumbai, Shirdi and Tirupati are being offered. “If we deposit the cheques in the banks, the bankers will adjust it against loans and interest and the government will not reimburse it,” said Muthyala Reddy of Warangal.
“Cotton trade is always cash and carry activity and bank operations are hardly 10-15 percent. If we offer to pay online or through cards, our suppliers of seeds and fertilises will just reject,” says a cotton farmer, K Samaiah at Enumamula market yard in Warangal. “The ceiling on withdrawals had also made us delay payments. The government cap on withdrawal at Rs 24,000 per week has sandwiched the farmers,” says Phani Raj, a cotton trader at Chilakaluripeta.
Continuing trouble for cotton
The cotton crisis since 2014 in Telangana and Andhra Pradesh had led farmers to shift to other crops due to delay in institutional credit and an unending wait for farm loan waivers. The total area under cotton declined by 12 percent to 10.5 million hectares this year against 11.88 million hectares in 2015-16.
In 2015 and in early 2016 the crop was hit by the white fly and pink bollworm leading to 30 percent drop in yields. “We are asking the farmers not to use non-Bt cotton seed as refuge crop and reduce area under cotton,” says K Dhananjaya Reddy, commissioner for agriculture (Andhra Pradesh).
First Published On : Dec 26, 2016 15:21 IST
Three speeches over the weekend within barely 24 hours, two by Prime Minister Narendra Modi and one by Finance Minister Arun Jaitley sandwiched between the two, appear to give contradicting signals on the war against black money. Does this mean that South Block and North Block are working at cross purposes? Certainly not, in principle, but there are finer details that would make it appear that like the demonetisation drive that Modi launched on 8 November, there may be holes in the process that may invite more criticism than praise.
Modi said on Saturday at a function organised by the Securities and Exchange Board of India (Sebi), the capital markets regulator, that those who gain from capital markets must contribute to nation building. Jaitley was forced to clarify that this was not a hint that long-term capital gains taxation, which currently stand at zero for equities, was set to be raised or strengthened.
Then again, on Sunday in his weekly “Mann Ki Baat” speech, Modi officially declared a war on “benami” property — assets held in the name of front persons or fictitious persons — citing a 1988 law given fresh lease of life earlier this year through suitable amendments.
It is quite possible that both these gentlemen are ignoring not one but quite a few elephants in the room.
The first is that the illegal act of tax evasion may be only a small portion of the legal business of tax avoidance in which de-facto evasion takes place without much of a fuss. This happens through religious and charitable trusts or seemingly public entities. The most glaring one in the public’s eyes has been the case of the Board of Control for Cricket in India (BCCI) that merrily lords over hundreds of crores of rupees. Efforts were made during the UPA rule in 2009 to check this, but it is worthwhile to ask whether there has been any progress on the issue. On the face of it, it doesn’t seem so as illustrated by how temples and charities abuse donations to game the system.
Sadly in India, God is drawn in as an accomplice in tax evasion and money laundering. It seems more than a coincidence that Tamil Nadu business baron J Sekhar Reddy, from whose premises income tax officials unearthed more than Rs 100 crore in cash, was also a prominent member of the Tirupati temple board.
Between cricket and religion, India’s most popular activities, there is a lot for the taxman to worry about. Add to this the complicated abuse of family trusts, which the National Institute of Public Finance and Policy has discussed at length, the game becomes murkier.
Now, long-term capital gains are also an easy way to launder money for many. India did this year sign a double taxation avoidance agreement with Mauritius, which has been for years a source for money laundering but the changes take only prospective effect from 2017 in a limited way. Nothing can be done about the laundering that has been legitimised for decades through what is called “round-tripping” of local black money.
Without going into such international routes — which usually helps only foreign investors and the big boys of crony capitalism — even the local exemption from long-term capital gains tax can be used smartly to avoid taxes. Curbing the use of penny stocks to evade tax has been discussed within the government but Jaitley’s clarification over the weekend suggests nothing can be done about it or is being done about it. Indeed, there are serious issues on how penny stocks can be seen as a separate category for tax computation. Price-rigging — very easy when one person sells shares to another in a volatile market, is the key issue and it is not an easy one to police for the government.
In essence, we could say that the government faces a benami tsunami — and a lot of the measures taken by the NDA government can at best check prospective tax evasion. Maybe Sebi can crack the whip on some transactions but it is not an easy game. Modi’s war cry is welcome, but what he faces is not a battlefield but a labyrinth. When wars are announced from the South Block but battles have to be fought from across the street, the game is complicated.
(The author is a senior journalist. He tweets as @madversity)
First Published On : Dec 26, 2016 14:49 IST
New Delhi: Vowing to carry forward the war against corruption and black money post-demonetisation, Prime Minister Narendra Modi said on Sunday that the government will soon operationalise a strong law to effectively deal with ‘benami’ properties and this was just the beginning.
Making his last monthly address this year in his “Mann ki Baat” programme, he defended the frequent changes in the rules of demonetisation, saying these have been done to reduce the people’s problems and defeat such forces who are out to thwart his government’s fight against black money and corruption.
Modi sought the cooperation of public in making the “war on corruption” a success and said the wrongdoings of some are being caught only with the support of common people who are coming forward with concrete information about hoarders.
“I assure you that this is not the end. This is just the beginning in our fight against corruption. We have to win this war against corruption and black money. There is no question of stopping or going back in this fight,” he said.
The Prime Minister also lamented the logjam in Parliament that evoked displeasure from the President and the Vice President besides all-round public indignation and ire, saying he wanted a good discussion on this campaign as well as on political funding, had both Houses run properly.
He said some people who are spreading rumours that political parties enjoy all concessions and exemptions “are wrong and all are equal before law” and they have to abide by it.
“It was my earnest wish that the ongoing campaign against corruption and black money, including the realm of political parties and political funding, be discussed extensively in the Parliament. Had the House functioned properly, there would have been comprehensive deliberation.
“Some people are spreading rumours that political parties enjoy all kinds of concessions. These people are absolutely in the wrong. The law applies equally to all. Whether it is an individual, an organisation or a political party, everyone has to abide by law and one will have to,” he said, adding that people who cannot endorse corruption and black money openly resort to searching for faults of the government relentlessly.
Giving a push to his plea for cashless economy, Modi also launched two new schemes for traders and customers that will dole out 15,000 prizes every day to those making digital transactions.
Defending the frequent changes being made in rules after demonetisation, Modi said “the government, being a sensitive government, amends rules as required, keeping the convenience of the people as its foremost consideration, so that citizens are not subjected to hardships.”
Terming this war against corruption as “an extraordinary one”, he said the forces involved in “this murky enterprise of perfidy and corruption” have to be defeated as they are devising new tactics to thwart government’s efforts every day.
“To counter these new offensives, we too have to devise appropriate new responses and anti-dotes. When the opponents keep on trying out new tactics, we have to counteract decisively since we have resolved to eradicate the corrupt, shady businesses and black money,” he said.
Lauding the public for their support in exposing the wrong-doings of some, who are devising “newer wily ways and means” to counter the fight against corruption, the Prime Minister sought more public support.
“Everyday many new people are being taken into custody, currency notes are being seized, raids are being carried out. Influential persons are being caught. The secret is that my sources of such information are people themselves.
“Information being received from common citizens is many times higher than that being obtained through government machinery,” he said, adding that people were taking risks to expose such elements. He asked them to share such information on e-mail address of the government as also on the MyGov App.
Modi also talked about the Benami Property law that came into being in 1988, but neither its rules were framed, nor was it notified and laid dormant for years.
“We have retrieved it and turned it into an incisive law against ‘Benami Property’. In the coming days, this law will also become operational. For the benefit of the nation, for the benefit of the people, whatever needs to be done will be accorded our top priority,” he said.
The Prime Minister, however, lauded both Lok Sabha and Rajya Sabha for passage of the Disabilities Bill to secure the rights of disabled and also their honour and dignity. The new law, he said, is in consonance with the spirit expressed by the United Nations.
He also wished the people on Christmas and remembered former Prime Minister Atal Behari Vajpayee on his birthday while wishing him good health and long life.
Modi also congratulated the Indian Cricket team for its emphatic 4-0 victory over England, as also the performances of some young players like Karun Nair who scored a triple century, K L Rahul for scoring a brilliant 199, besides the leadership provided by Captain Virat Kohli and off-spin bowler R Ashwin. He also complimented the Junior Hockey Team for lifting the World Cup and the Indian Women’s Hockey Team that won the Asian Champions Trophy.
First Published On : Dec 25, 2016 13:41 IST
Prime Minister Narendra Modi on Sunday wished the nation on Christmas and said it was a day of service and compassion.
“I wish you all a Merry Christmas. It is the day when people should serve with compassion,” Modi said in his monthly radio addres ‘Mann Ki Baat’.
Modi said Jesus not only did serve the poor but he “has also appreciated the service done by poor, this is real empowerment”.
Lucky draw schemes for digital payments
He announced lucky draw schemes for people who use digital payment methods including e-banking, mobile banking and e-wallets.
In his monthly radio address to the nation ‘Mann Ki Baat’, Modi on the occasion of Christmas said 15,000 people who use digital payment modes will be given a reward of Rs 1,000 each by a lucky draw. This amount will be transferred to their accounts.
“This scheme will last for 100 days (from Sunday). As such lakhs of people will get crores of rupees,” Modi said.
The Prime Minister said there will be one big draw every week with winning price in lakhs.
“On the occasion of Ambedkar Jayanti — April 14 2017 — we will be conducting a bumper draw in which the winning price will be in crores.”
Thanks people for enduring demonetisation ‘pain’
Modi thanked people for enduring the “pain” caused by the government’s November 8 decision to spike 500 and 1,000 rupee notes that has caused an unprecedented cash crunch across the country.
“I congratulate people for not only enduring pain but also for giving appropriate answers to those who were trying to mislead them,” Modi said in his monthly radio address to the nation ‘Mann Ki Baat’.
The Prime Minister said people faced hardships and inconvenience but “answered back those who publicly tried to mislead them”.
The move to recall 86 percent of the total currency in circulation was ostensibly aimed at to curb corruption and black money in the country.
However, it has led to people in large number queuing up to withdraw or deposit cash in overcrowded banks and ATMs.
Lauds India’s sportsmen, sportswomen
He also lauded the country’s sportsmen and sportswoman who have “made us proud”.
Modi praised the Indian cricket team for its performance in a recently concluded Test series against England. “It has been phenomenal this year, congratulate the team for beating England 4-0.”
He also congratulated the junior hockey team of India for winning the hockey World Cup. “After 15 years, our junior hockey team has won the world cup. I congratulate all the young players.”
“Our sportsmen and sportswomen have made us proud,” Modi said in his monthly radio address Mann Ki Baat.
First Published On : Dec 25, 2016 12:27 IST
New Delhi: Regional Transport Offices in the national capital are set to go cashless from January when fees for all services including driving licence, auto permit and fitness certificate can be paid electronically.
The Transport Department has started installing Point of Sale (PoS) machines at its zonal offices and the trial run of the cashless transaction system is being carried out at some places.
“From January, people coming to RTO offices can pay fee of various services — permits, driving licence, fitness certificates – using their debit, credit cards. Applicants won’t be required to make payments in cash,” a senior government official said.
There are 14 zonal offices of the Transport Department in the city. The official said that the move would ensure hassle-free services for the people of Delhi.
The step is in line with the Delhi government’s plan to bring all departments under cashless transaction system.
“At present, e-PoS machines are being installed at all zonal offices. Besides, computer software of the department is also being updated in view of the cashless transactions,” the official said.
Earlier this month, Transport Minister Satyendar Jain had directed his department to start accepting fees and payments in the form of bank drafts and pay orders for all transport services in view of cash crunch after demonetisation.
First Published On : Dec 25, 2016 12:24 IST
Kannur (Kerala): Unaccounted cash to the tune of Rs 51.86 lakh, almost all of them in Rs 2,000 denomination, was seized on Sunday by Kerala Excise officials from two passengers of a bus coming from Bengaluru at nearby Irrity, in the second major haul of currency in the last three days in the state.
They found Rs 51.80 lakh in Rs 2,000 notes and Rs 100 notes for Rs 6,300 in the bags of Ranjith Salangi (24) and Rahul Adhik alias Rahul Ghatoo (22).
The duo, in their early 20s and hailing from Maharashtra, were found carrying the cash without any supporting documents after which they were detained. The haul came just two days after police seized Rs 39.98 lakh in Rs 2,000 denomination at Tirur area in Malapuram district.
Excise officials said Sunday’s seizure was made when a special Excise squad, acting on a tip-off, intercepted the Kerala State Road Transport Corporation (KSRTC) bus heading to nearby Payyanur around 3.30 am.
They were taken into custody and would be questioned by Income Tax officials in Kerala.
Busting a currency exchange racket involving Rs 2,000 notes, police had on Friday seized Rs three lakh from Shoukath Ali, already facing a hawala case, and, based on information provided by him, recovered Rs 36.98 lakh from the residence of a businessman.
First Published On : Dec 25, 2016 12:13 IST
The key takeaway from Prime Minister Narendra Modi’s speech at the National Institute of Securities Markets (NISM) campus near Mumbai on Saturday is his reiteration that the NDA-government doesn’t think that demonetisation is an accident.
The government is willing to pursue it till the end irrespective of the difficulties it may face in dealing with the after effects of this massively disruptive exercise and what the critics say. “Let me make one thing very clear: This Government will continue to follow sound and prudent economic policies, to ensure that India has a bright future in the long run. We will not take decisions for short term political point scoring. We will not shy away from taking difficult decisions, if those decisions are in the interest of the country. Demonetisation is an example. It has short-term pain, but will bring long-term gain,” Modi said at the inaugratin of the NISM campus.
This is a clear message to his political opponents and critics that the government wouldn’t go back from what it has begun on 8 November. PM Modi’s comment comes not long after severe criticism on demonetisation from known global names such as Steve Forbes called it an “immoral and sickening move” and “a massive theft of people’s property” and Wall Street Journal, which dubbed demonetisation “India’s bizarre war on cash” and essentially cautioned the government that it shouldn’t force cashless transactions on its people.
Modi has faced criticism at home as well. But, his speech on Saturday tells us that the prime minister isn’t perturbed with any of these. He is willing to risk the after effects of the note ban including a severe cash crunch that is persisting even after a month and half of the currency ban, negative impacts on the economy and reported job losses in the informal sector, as well as signs of public patience diminishing faster than in the initial days.
As the prime minister said in his speech, the government is willing to face the risks and is betting big on the long-term gains of the demonetisation. The prime minister’s statement isn’t difficult to understand given that he has invested too much of personal and political goodwill in the decision to pull out 86 percent of currency in one go on 8 November. There is no going back from this decision since it can become the admission of a political defeat.
Since 8 November, the note ban has been presented as a bold, personal political move to the public by the prime minister rather than as an economic reform originating from the government or the central bank, Reserve Bank of India. But, the other side of this is that by not admitting the serious flaws in the implementation of a well-intentioned move and harping on a 50-day deadline to end the pain of demonetisation, the PM is also running a risk of inviting more public anger should he fails to keep his promise of 50-days and keep ignoring the ground realities.
The fact is that there is still considerable pain on the ground which might last very well beyond the “short-term”. No one, including RBI, seems to have a clear idea of how long will the cash crunch last. Till now, the RBI has managed to infuse only a fraction of the Rs 15.4 lakh crore currency demonetised by the scheme. It might take a few more months before things turn normal. As Indiaspend points out in this article, Modi’s 50-days deadline is likely to fail. Here, instead of repeating that the pain is only for short-term, the prime minister would have done well if he admitted that the impact of currency ban will probably last longer than the government had initially anticipated, thus giving a realistic assessment of the current situation. Such a move would have helped him gain more public support.
In his speech Modi also touched upon some crucial, but long-discussed, issues concerning capital market reforms such as deepening the municipal corporate market, routing long-term funds from the bond market to fund long-gestation infrastructure projects and ways to translate the growth in capital markets to gains for rural India. The remark on deepening the municipal bond markets should be seen in the backdrop of government’s smart city programme, which requires large revenue sources one of which is tapping the municipal bond market.
Modi also hinted at tweaking laws concerning gains from capital market gains. “Those who profit from financial markets must make a fair contribution to nation-building through taxes. For various reasons, the contribution of tax from those who make money on the markets has been low. To some extent, it may be due to illegal activities and fraud. To stop this, SEBI has to be extremely vigilant. To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income.”
Similarly, the mention on reinventing the derivative product segment to benefit farmers is a message to the market regulator, SEBI to think of ways of working on new products. “People say that derivatives can be used by farmers for reducing their risks. But in practice, hardly any farmer in India uses derivatives. That is the fact. Unless and until we make the commodity markets directly useful to farmers, they are just a costly ornament in our economy, not a useful tool…SEBI should work for closer linkages between spot markets like e-NAM and derivatives markets to benefit farmers,” Modi said.
The prime minister yet again made it clear his idea of reforms when he said that his “aim is to make India a developed country in one generation”. In other words, what this means is that his government believes in massive disruptions to bring about large changes in the country rather than following the method of gradual transformation. It tells us that one should expect more big bang announcements in the remaining two and half years of his tenure. For sure, demonetisation wouldn’t be the last surprise.
First Published On : Dec 24, 2016 16:46 IST
Prime Minister Narendra Modi, who is on a day-long visit to Maharashtra, once again stressed that his government won’t make any decision for “political gains”. The BJP-led government at the Centre has been crticised by opposition parties for its decision to demonetise high value currency notes of Rs 500 and Rs 1,000 denominations, and it has caused a lot of public inconvenience. But, speaking at the inauguration of the National Institute of Securities Markets (NISM) campus on Saturday, he stressed upon the need for greater vigilance in the securities and exchange markets. Modi also spoke of the need for markets to work for the benefit of the agriculture sector.
Here’s the full text of his speech:
It is a pleasure for me to be here today to inaugurate this new campus. This is a time of slowdown in the global economy. Developed countries and emerging markets are both facing slow growth. Against this background, India is being seen as a bright spot. Growth is projected to remain among the highest in the world.
India’s place as the fastest growing large economy has not come about by accident. To see how far we have travelled, we should look back to 2012-13. The fiscal deficit had reached alarming levels. The currency was falling sharply. Inflation was high. The current account deficit was rising. Confidence was low and foreign investors were turning away from India. India was considered the weakest of the BRICS nations.
In less than 3 years, this government has transformed the economy. We have cut the fiscal deficit target every year, and achieved it every year. The current account deficit is low. Even after the redemption of loans taken under the special currency swap in 2013, foreign exchange reserves are high. Inflation is low, running at less than 4 percent compared to double digit inflation under the previous government. Public investment has increased largely, even while the overall fiscal deficit has been cut. A new monetary policy framework has been introduced by law with an inflation target. The Constitutional Amendment on Goods and Services Tax had remained pending for years. It has been passed and the long awaited GST will soon be a reality. We have made progress on improving the ease of doing business.
As a result of all these policies, foreign direct investment has reached record levels. By claiming that demonetisation has stopped a fast moving car, our critics too have acknowledged the speed of our progress.
Let me make one thing very clear: This government will continue to follow sound and prudent economic policies to ensure that India has a bright future in the long run. We will not take decisions for the short term political point scoring. We will not shy away from taking difficult decisions, if those decisions are in the interest of the country. Demonetisation is an example. It has short term pain but will bring long term gain.
Financial markets can play an important role in the modern economy. They help in mobilising savings. They channel the savings towards productive investments.
However, history has shown that financial markets can also do damage, if not properly regulated. It is to ensure good regulation that the Securities and Exchange Board of India (SEBI) was established by the government. SEBI also has a role to promote the development of healthy securities markets.
Recently, the forward markets commission has been abolished. SEBI has been given the task of regulating commodity derivatives also. This is a big challenge. In the commodity markets, the spot market is not regulated by SEBI. Agricultural markets are regulated by states. And many commodities are purchased directly by the poor and the needy, not by investors. Hence the economic and social impact of commodity derivatives is more sensitive.
For financial markets to function successfully, participants need to be well-informed. I am happy to note that the National Institute of Securities Markets is performing the role of educating various participants and providing skill certification. Today, our mission has to be a ‘Skilled India’. Indian youth should be able to compete with their counterparts in any corner of the world. This institute has a vital role to play in such capacity building. I have been told that around one lakh fifty thousand candidates undertake NISM examinations every year. More than five lakh candidates have been certified by NISM till date.
India has earned a good name for its well-regulated securities markets. The spread of electronic means of trading and the use of depositories have made our markets more transparent. SEBI as an institution can also take pride in this.
However, there is still a long way to go for our securities and commodity markets. When I see the financial newspapers, I often read about the success of IPOs and how some smart entrepreneur has suddenly become a billionaire. As you know, my government is very keen to encourage start-ups. Stock markets are essential for the start-up ecosystem. However, it is not enough if the securities markets are considered successful by international investors or financial experts. Wealth creation is good, but for me that is not the main purpose. The real value of our securities markets lies in their contribution:
• to the development of the nation,
• to the improvement of all sectors, and
• to the welfare of the vast majority of citizens.
So, before I can consider financial markets to be fully successful, they have to meet three challenges.
Firstly, the primary aim of our stock market should be to help in raising capital for productive purposes. Derivatives have a use in managing risk. But many people feel derivatives are dominating the markets and the tail is wagging the dog. We should ponder as to how well the capital market is performing its main function of providing capital.
Our markets should show that they are able to successfully raise capital for projects benefiting the vast majority of our population. In particular, I am referring to infrastructure. Today, most of our infrastructure projects are financed by the Government or through banks. The use of capital markets for financing infrastructure is rare. For infrastructure projects to be viable, it is very important that the borrowing should be of long duration. It is said that we do not have a liquid long term bond market. Various reasons are given for this. But surely this is a problem which the financial brains in this room can solve, if you really put your minds to it. My call to you is to find ways to enable the capital markets to provide long term capital for infrastructure. Today, only the Government or external lenders like World Bank or JICA provide long term money for infrastructure. We must move away from that. Bond markets must become a source of long term infrastructure finance.
You are all aware of the huge capital requirements for improving urban infrastructure. This government has launched an ambitious Smart Cities programme. In this context, I am disappointed that even now, we do not have a municipal bond market. There will be problems and difficulties in creating such a market. But the true test of an expert innovation is when it solves a complex problem. Can SEBI and the Department of Economic Affairs ensure that at least 10 cities in India issue municipal bonds within one year?
Secondly, the markets must provide benefits to the largest section of our society — namely our farmers. The true measure of success is the impact in villages, not the impact in Dalal Street or Lutyens’ Delhi. By that yardstick, we have a long way to go. Our stock markets need to raise capital in innovative ways for projects in agriculture. Our commodity markets must become useful to our farmers, not just avenues for speculation. People say that derivatives can be used by farmers for reducing their risks. But in practice, hardly any farmer in India uses derivatives. That is the fact. Unless and until we make the commodity markets directly useful to farmers, they are just a costly ornament in our economy, not a useful tool. This Government has introduced e-NAM – the electronic National Agricultural Market. SEBI should work for closer linkage between spot markets like e-NAM and derivatives markets to benefit farmers.
Thirdly, those who profit from financial markets must make a fair contribution to nation-building through taxes. For various reasons, the contribution of tax from those who make money on the markets has been low. To some extent, it may be due to illegal activities and fraud. To stop this, SEBI has to be extremely vigilant. To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. I call upon you to think about the contribution of market participants to the exchequer. We should consider methods for increasing it in a fair, efficient and transparent way. Earlier, there was a feeling that some investors were getting an unfair deal by using certain tax treaties. As you know, those treaties have been amended by this government. Now it is time to re-think and come up with a good design which is simple and transparent, but also fair and progressive.
I know that financial markets attach a lot of importance to the budget. The budget cycle has an effect on the real economy. In our existing budget calendar, the authorization of expenditure comes with the onset of the monsoon. Government programmes are not active in the productive pre-monsoon months. Hence, this year, we are advancing the date of the budget so that expenditure is authorized by the time the new financial year begins. This will improve productivity and output.
My aim is to make India a developed country in one generation. India cannot become a developed country without world class securities and commodity markets. Therefore, I look forward to a growing contribution from all of you in making the financial markets more relevant to this new era. I wish the NISM all success. I also wish everybody a merry Christmas and a very happy new year.
First Published On : Dec 24, 2016 14:30 IST
Former prime minister Manmohan Singh, a distinguished economist and former RBI governor, has raised one more pertinent question: Was the Reserve Bank of India given enough time to discuss the demonetisation before the announcement was made?
According to a report in The Indian Express, he has raised the question at a meeting of the parliamentary committee on finance, which is studying the government’s decision to demonetise Rs 500 and Rs 1,000 currency notes from 8 November.
The committee met on Thursday under the chairmanship of Congress leader M Veerappa Moily. Singh is a member of the panel.
The report quoting a panel member said Singh citing a note from the central bank said the government took the decision on 7 November and the RBI board on 8 November. Singh was of the opinion that the panel should be first listening to the government and then the RBI governor.
Governor Urjit Patel was to brief before the panel on 21 December. This was postponed and, according to a PTI report, the briefing will now happen on 19 January. The decision to postpone is probably in keeping with Singh’s advise.
Singh had earlier criticised the demonetisation in the Lok Sabha saying that demonetisation is “organised loot”, “legalised plunder” and “monumental failure”.
“It is no good that every day, the banking system modifies rules and conditions. This reflects poorly on the office of the PM, finance ministry and the Reserve Bank of India. I am very sorry that the RBI has been exposed to this criticism,” Singh had said then.
His views assume significance in the backdrop of criticism that the RBI has failed in anticipating the problems that is likely to crop up after the note ban and also handling the situation effectively. Many experts are of the view that this has affected the credibility of a key democratic institution that has remained autonomous and largely escaped arm-twisting by the political class of the country.
The RBI and the finance ministry together have put out more than 60 notifications and orders in about 45 days of demonetisation. This in itself is a proof that the central bank was unprepared for a move with such large scale ramifications. The frequent rule change has not only put the banks in difficulty but has aggravated the pain of the common man.
However, even more shocking is Singh’s revelation at the panel meeting that the RBI was given just one day to take the decision on demonetisation. This claim raises many questions.
Does this mean the government took a hasty decision and forced the RBI to do so ? If that is so, it means the government or the RBI had not done any ground work before announcing the decision. Or was it just a last-minute hurry after taking most of the decisions earlier? When was the RBI first informed about the impending note ban? Was it kept in dark too about the decision until the end?
If it is so, it flies in the face of the government’s claim that it has been preparing for demonetisation for many months. In fact, prime minister Narendra Modi had in a speech (watch here) claimed that it started 10 months back and had to be kept a secret fearing the tax cheats would have found ways to whiten their ill-gotten wealth.
The public has been going through unprecedented difficulties due to the cash crunch, a direct consequence of the demonetisation. While the ban sucked out Rs 15.44 lakh crore worth of currency notes in circulation, the government and the RBI have been able to pump only about one-third of the money back into the system. The public has a right to know why there is still a cash shortage. It is to be noted that the central bank or the government has not yet given a status report of the printing of notes, especially that of Rs 500.
If the RBI was given only a day to take a decision, as Singh has said before the panel, that probably explains why the authorities were not prepared for the move. The note from the RBI has to be made public at the earliest.
In fact, the government and the RBI should make public all documents and files related to the decision. It is all about transparency of governance, which PM Modi is committed to.
First Published On : Dec 23, 2016 10:31 IST
It has been more than a month since the Narendra Modi government decided to demonetise high-denomination notes of Rs 500 and Rs 1,000 and even though queues outside banks and ATMs might have shortened from how they used to be, income tax officials have been busy with several high-profile seizures of cash and gold. Some of the seizures reflect poorly on the government — in a few instances new currency notes were seized as well which in turn raises questions about the BJP government’s decision.
Since 8 November, the Income Tax department has detected Over Rs 3,185 crore of undisclosed income, while seizing Rs 86 crore worth of new notes, as part of its country-wide operations against black money hoarders. Official sources said the taxman carried out a total of 677 search, survey and enquiry operations under the provisions of the Income Tax Act since the note ban was declared on 8 November, even as the department has issued over 3,100 notices to various entities on charges of tax evasion and hawala-like dealings.
The I-T department, they said, has also seized cash and jewellery worth over Rs 428 crore during the same period.
The agency has also referred over 220 cases to its sister agencies like the CBI and the Enforcement Directorate (ED) to probe other financial crimes like money laundering, disproportionate assets and corruption as part of their legal mandate.
Here are some of the biggest raids conducted by tax sleuths since the high-profile cleanup of the Indian economy began:
Kolkata businessman raided
Kolkata businessman Parasmal Lodha was arrested by the Enforcement Directorate for allegedly converting over Rs 25 crore in demonetised currency notes into new ones, reports News18. According to the report, Lodha has links with industrialist J Shekhar Reddy, who was arrested along with his associate K Srinivasulu on Wednesday.
Chennai airport raid
In the latest development, the Directorate of Revenue Intelligence busted a hawala gang and seized Rs 1.34 Crore in Rs 2000 notes & $ 7000 from five persons in early morning hours, near Chennai airport, reported ANI.
Tamil Nadu chief secretary, his son under taxmen scanner
The house and office of Tamil Nadu chief secretary P Rama Mohana Rao was on Wednesday searched by Income Tax officials who claimed to have recovered Rs 30 lakh cash in new notes and five kgs of gold besides getting “disclosure” about Rs five crore of unaccounted income.
On Thursday, tax sleuths raided his son, Vivek Rao’s office in Chennai. Sources told NDTV that the taxmen are probing the source of funding for the six companies that Rao established in 2012.
Continuing raids in Chennai
On 20 November, taxmen raided the premises of a prominent engineering college after reports arose of the owner depositing Rs eight crore in unaccounted cash in the accounts of employees. IT officials later found that the amount was deposited in over 400 bank accounts.
According to The Indian Express, on 8 December, the IT department busted a money exchange racket in the Tamil Nadu capital, seizing Rs 90 crore in cash, of which 70 crore were in new notes, along with 100 kgs of gold.
The Income Tax officials on Monday seized demonetised currency notes worth Rs 10 crore and a few kilogrammes of diamond and gold jewellery during a raid in the house and showroom of a jeweller in Chennai.
BJP leader arrested with new notes
On 6 December, the Special Task Force arrested former West Bengal BJP leader Mahesh Sharma, after Rs 33 Lakh in form of Rs 2,000 notes was confiscated from him.
New notes found in ‘secret chamber’
In a surprise raid at a hawala operator’s residence in Hubballi led to the Karnataka and Goa taxmen unearthing Rs 5.7 crore in new cash, The Times of India reported. The stash of new cash, interestingly, was found in a secret chamber in the bathroom.
Post note ban Rs 30 crore seized in Maharashtra excluding Mumbai
Post demonetisation of Rs 500 and Rs 1,000 notes, the Income Tax department seized about Rs 30 crore in cash, including Rs 12.32 crore in new bills, from Maharashtra, excluding Mumbai.
The cash was seized during 57 surveys and search operation carried out since the decommissioning of the old Rs 500 and Rs 1,000 notes, I-T department said in a release in Mumbai.
CBI raid at Hyderabad post offices
The CBI conducted surprise raids after the note ban. During one such search at the Himayatnagar Post office, the invetigation agency found Rs 40 lakh. The raid took place on reports of irregularites in phasing out of old currency notes.
Bahubali producer raided in Hyderabad
The IT department raided the residences and offices of the producers of the multi-lingual blockbuster Bahubali, Business Standard reported. Shobu Yarlagadda and Prasad Devineni, the two producers, were at the recieving end of the taxmen, as Rs 60 crore worth of new notes were found during the raids.
G Janardhan reddy under IT scanner
On 21 November, within days after G Janardhan Reddy’s daughter’s lavish wedding grabbed headlines for its splendour, Income Tax Department raided the mining baron’s offices in Bellari.
A team of five I-T Department officials raided the former BJP lawmaker’s Obulapuram Mining Company (OMC) offices.
NGO linked to Pakistan singer raided
On November 18, Delhi police and the IT department raided the offices of a NGO, Routes of Roots, run by the managers of eminent Pakistani singer Shafqat Amanat Ali Khan, after it recieved reports of illegal conversion of black money.
IT raids in Chandigarh college
The Enforcement Directorate on Monday seized Rs 50 lakh cash, including Rs 46.80 lakh in new notes, after raids at the premises of an educational institute’s owner. Acting on a tip-off, the ED sleuths swooped down on the premises of the owner of Swami Devi Dyal Group of Institutes in Chandigarh.
Over two crores seized from Meerut engineer
Cash worth more than Rs 2.67 crore in both old and new notes, and 30 kilograms of silver were seized from an engineer, working in the irrigation department, by the Income tax sleuths on Tuesday.
With inputs from PTI
First Published On : Dec 22, 2016 14:26 IST
There seems to be no end in sight to the woes of private sector Axis Bank. According to a report in India Today, the bank’s Ahmedabad branch has now been raided and the Enforcement Directorate (ED) has put transactions worth Rs 89 crore under scanner.
The raid was conducted at Mayamnagar branch of the bank and the ED scrutinised 19 accounts, the report said.
According to I-T officials quoted in the report, these accounts, which allegedly have lax KYC compliance, saw Rs 89 crore worth of investment after the demonetisation announcement, and the amount was later transferred to beneficiary accounts. Four bank officials are also under the scanner, said the report.
The bank had been in the news in the last few days after authorities found certain branches had opened fake accounts to help tax cheats to launder their ill-gotten wealth.
The ED has already registered a money laundering case in the alleged forging of a customer’s identity to conduct huge illegal transactions in the branch of Noida for conversion of black money into white post demonetisation.
The individual, identified as N Paswan, in his complaint filed with the police has claimed that his identity has been forged and a current and a savings account was opened in his name in the said branch which was allegedly used to launder crores of rupees post demonetisation.
The bank branch, in sector 51 of Noida, is also under scanner of the income tax department owing to alleged dubious transactions using shell companies.
In the Noida case, the ED probe involves a laundering of Rs 60 crore. The officials of the agency had told PTI that they are probing more than two dozen accounts in the bank there which could have been used to perpetrate the crime of money laundering.
The bank, according to a PTI report, had suspended 24 employees and 50 accounts after the I-T raids unearthed such illegal activities.
“We are embarrassed that this has happened, but these are isolated incidents given that we have more than 3,000 branches and 50,000 employees.We have had many of our customers writing to us that the bank has done a great job and, therefore, it is disappointing that a handful of people have let us down,” MD and CEO Shikha Sharma had told The Economic Times in an earlier interview.
First Published On : Dec 22, 2016 14:02 IST
The government has a humongous task ahead driving transition into cashless economy as the public is forced to go cashless with inadequate infrastructure and security system in place. The lack of digital preparedness is already threatening to hit the consumption growth, data shows.
The data released in a State Bank of India report shows that value per card transaction has declined though the volume of transactions has increased post the surprise demonetisation of Rs 500 and Rs 1,000 notes on 8 November. India’s largest bank has pointed out that the reason for the decline could be the woeful shortage of PoS machines in the country. India has 15.1 lakh such machines, while it would need another 20 lakh to meet the demands of cashless transition, according to the report.
Another reason for the fall in transaction value is the general slowdown in spending as customers are holding on to whatever little cash they possess. If this trend continues, it is likely to hit the corporate earnings and in turn economic growth.
“Despite Government’s move to reduce the cash transactions in the economy, people are standing in queues to withdraw money from banks and ATMs. It is not easy to shift all the people to use digital mode in their day to day transaction, which may be due to a number of reasons like level of education, acceptability of technology, lack of infrastructure etc,” the SBI report has said.
The comment by the SBI should come as an eye-opener for the government and RBI officials, who have been insisting that enough cash is being dispensed to meet the demand from the customers.
Forty-four days have passed after the demonetisation announcement. People are still thronging the ATMs and bank branches to withdraw cash. According to the RBI, from 10 November to 19 December, banks have given away Rs 5,92,613 crore worth notes to the public.
The central bank has issued a total of 22.6 billion pieces of notes, of which 20.4 billion belonged to small denominations of Rs 10, Rs 20, Rs 50 and Rs 100. As much as 2.2 billion were higher denominations of Rs 2,000 and Rs 500. However, the bank has not yet given the data on how many Rs 500 notes have been dispatched.
The value of currency the RBI has released into the system is just about one-third of the Rs 15.44 lakh crore that was in circulation when the move was announced. This wide gap is the reason for the present cash crunch. What is making matters worse is the shortfall of PoS machines in the country.
The SBI report notes that over the last 6 years the average withdrawal from an ATM was around Rs 3,000 in a month. The bank calculates that this would mean around Rs 8,000 crore is required per day for smooth functioning of ATMs.
“This translates into Rs 3.7 lakh cash requirement per ATM per day to meet the customers requirements. This may be the amount of cash required for the daily transactions, a part of which needs to shift to digital,” it notes.
However, the immediate transaction value that needs to be shifted from ATM to other digital channels is a whopping Rs 46,000 crore per month, until the limit of Rs 2,500 at ATMs remains imposed, it said.
By this calculation, the bank doesn’t expect the government to withdraw the limit until January. However, that seems to be a very conservative estimate.
Govt needs to step up
In order to facilitate such a huge volume of transaction to digital, the government needs to step up. As the report notes, first and foremost a better ecosystem of incentives for the banks to deploy swipe machines has to be put in place.
“Simultaneously, the objective of the government should be very quickly bring on-board new merchants, particularly small and marginal traders, grocery shops, etc. on digital platform,” the report has noted.
As noted earlier, India has just 15.1 lakh PoS machines. In order to shift over to cashless, there is a requirement of 20 lakh more – that is more than double. When will this be met is anybody’s guess.
Along with it, there is an urgent requirement to invest in IT security systems, which also needs to be incentivised by the government, says the report.
This is a big challenge given the country has just been witness to one of the biggest ATM security breaches, in which lakhs of debit cards of various banks were compromised. The banks were then advising the customers to not use ATMs of other banks. Post the demonetisation which happened in a few weeks’ time after the debit card scare, this advise, interestingly, suddenly saw a reversal with the government itself asking the public to go to any bank ATM that has cash to withdraw money.
Clearly, in passing such an order to banks and customers, the government has just ignored the safety aspect completely. And that too at a time when the technological advance has rendered financial frauds boundary-less.
In a survey of 309 top corporate executives in India, consultancy firm Deloitte found 70 percent of the respondents expected frauds to increase in the next two years. And the survey was held well before the demonetisation started – during 1 October to 30 November.
Post the demonetisation, which has quickened the pace of transition to cashless, the possibility of frauds must have just increased.
“SMEs are struggling to mitigate even well-known frauds such as bribery and corruption. Given the inherent limitations of these organisations, there is need for government intervention to help tackle fraud,” said Rohit Mahajan, Deloitte India Head (Forensic – Financial Advisory), after releasing the sruvey resultes on Wednesday. According to him, the government start creating awareness about frauds and security systems among the small firms, which are all the more vulnerable to frauds.
The government, however, seems to be busy changing rules on a daily basis and making unsubstantiated claims, ignoring the pain that the customers, banks and companies are going through. It is high time it pulled up its socks and dealt with the emerging situation which seems to be already spinning out of control at least in some pockets.
First Published On : Dec 22, 2016 13:11 IST
Pradhan Mantri Jan Dhan Yojna (PMJDY) announced by the Prime Minister Narendra Modi from ramparts of the Red Fort on 15 August, 2014 was by all measure the most ambitious financial scheme launched post Independence. Goalpost set up by the Prime Minister was simple: bring the entire unbanked population under formal banking net by opening at least one bank account for each household in the country.
The initial target of opening 7.5 crore new accounts through regular brick-and-mortar branches was met before the deadline. In January 2015, in less than five months, 11.5 crore accounts were opened under Jan Dhan Yojana. The figures fetched the government Guinness Book of World Records entry for opening the maximum number of bank accounts in the shortest possible time.
But along with this motivating figure, serious concerns were also raised over the non-operational or zero balance accounts. Out of the total 11.5 crore accounts opened only 28 percent were operational.
At that time Finance Minister Arun Jaitley, while speaking on the issue of zero-balance accounts, had said that direct benefit transfer would ensure that non-operational accounts will be made opeartive in coming times.
That happened to a great extent. Although several accounts were made operational, the usage of core banking services were not instilled to a major extent among the people at large.
As of now under the scheme 25.98 crore accounts were opened till 14 December. According to official statistics 100 percent household coverage in majority of the states have been achieved.
Now consider this: According to an official data 23.22 percent of the accounts are still having zero balance. The problem with these large number of zero-balance accounts was mainly due to lack of constructive communication among bankers and its new clients.
As stated by the vision document of the PMJDY the plan envisaged “universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of Rs 1 lakh”. Another additional feature in the scheme was Rs 5,000 overdraft facility for Aadhar-linked accounts.
The reason for the persisting existence of the zero-balance accounts is simple: people still lacked banking habits and the government and bankers to a greater extent stressed on additional benefits PMJDY provided in the form of accident insurance cover of Rs 1 lakh and Rs 5,000 overdraft facility.
Talking to host of beneficiaries it became evident that in most of the cases they opened the bank account with an intention of getting additional benefits. Benefits being part of the formal banking structure was hardly a motivation in most of the cases. And to the greater extent it was in the manner in which bankers choose to motivate people for opening the bank accounts.
In the post-demonetisation period the same lack of communication and miscommunication is creating confusion among people. And it is being accentuated by the repeated change in rules regarding deposit and withdrawal of the demonetised currency notes.
Reserve Bank of India (RBI) in a circular on 19 December said in the remaining days of this month, one can make deposits in Rs 500 and Rs 1,000 notes in excess of Rs 5,000 only once per account and if anybody wants to deposit cash in the banned currency in excess of that amount, he will have to explain in the presence of at least two officers on why didn’t he do it earlier. Even if the deposits are made in small amounts multiple times, and add up to the magic number of Rs 5,000, the person stands exposed to questions.
A day after the RBI circular, Finance Minister Arun Jaitley clarified that no questions will be asked if any amount of old currency is deposited in one go, but repeated deposits may provoke queries.
The Business Standard report quoted Jaitley saying, “If they go and deposit with bank any amount of currency no questions are going to be asked to them and therefore the 5,000 rupee limit does not apply to them if they go and deposit it once. But if they are going to go everyday and deposit some currency, same person, that gives rise to suspicion that where is he acquiring this currency from. In that event a person may have something to worry about. Therefore everyone is advised whatever old currency you have please go and deposit it now”.
In spite of this clarification in many places banks are refusing to accept any amount exceeding Rs 5000. A report published in Business Line states, “Consumers across the country were complaining that banks were refusing to take deposits even after giving detailed explanations. The new rules say that banks should accept the demonetised notes in excess of ₹5,000 only once and that too after the depositor has been questioned by two officials”
Since the demonetisation banks across the country are defying the orders issued by the RBI. In many smaller towns and cities, banks were seen categorically rejecting the cheques even with the permissible Rs 24,000 withdrawal amount. Arbitrary rationing was a common place in banks. The exception that Rs 2.5 lakh could be withdrawn by the families organising a wedding, was in many cases not honoured by the banks.
While the launch and successful meeting of set targets under PMJDY was commendable, mistaking it for a resilient and robust banking system was a fallacy that lays exposed in the current demonetisation process. In PMJDY the opening of crore accounts was made possible because largely people saw it as a dole out, where they did not have to incur any expenses. The fact that business correspondents (BC) and bank branches through camps and awareness drive reached out to people in large number that helped PMJDY achieve its target. But then the lack of communication between the bankers and their new found clients rendered the entire exercise futile to a greater extent as majority of the people were not using their accounts as reflected in the large number of zero-balance accounts.
For any financial decision to succeed it is required that people understand its intent and its procedural implementation. In the current demonetisation drive while the intent is clear to any objective observer, it is its implementation that is creating confusion which in turn is getting accentuated due to lack of communication between bankers and its clients. Communicating in clear terms is the only way that post-demonetisation confusion can be tackled. Any miscommunication fails the very purpose of the most well-intentioned move as implementation of PMJDY proves.
First Published On : Dec 22, 2016 12:05 IST
Parasmal Lodha arrested by ED for allegedly converting Rs 25 crore from old to new notes
Dec 22, 2016 10:40 IST
Kolkata businessman Parasmal Lodha was arrested at Mumbai arrested by the Enforcement Directorate for allegedly converting over Rs 25 crore in demonetised currency notes into new ones, reports News18. According to the report, Lodha has links with industrialist J Shekhar Reddy, who was arrested along with his associate K Srinivasulu on Wednesday.
Reddy and Srinvasulu’s arrests were also in the context of illegally exchanging old notes for new ones and going against RBI guidelines.
News18 also points out that Lodha had earlier been detained from Mumbai’s Chhatrapati Shivaji International Airport after it was discovered that the sum of Rs 13 crore seized from the office of lawyer Rohit Tandon in Delhi’s Greater Kailash area, belonged to Lodha.
He is not believed to be related in any way to builder and BJP leader Mangal Prabhat Lodha.
More details as they emerge.
First Published On : Dec 22, 2016 10:40 IST
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New Delhi: It is being called Reverse Bank of India, Rozana Bungling of India or even Rollback Bank of India and customers as well as bankers were in a spot on Wednesday after the Reserve Bank of India (RBI) partially withdrew its earlier order that restricted deposits of over Rs 5,000 in spiked currency notes.
The partial rollback came after massive public anger over the central bank’s December 19 order allowing the deposit of over Rs 5,000 in now spiked Rs 500 and Rs 1,000 notes in bank accounts only once.
This too was possible only after a “satisfactory” explanation to at least two bank officials on why this was not done earlier since 8 November when Prime Minister Narendra Modi announced demonetisation ostensibly to curb corruption and black money in India.
But on Wednesday, the central bank made an exception for (Know Your Customer) KYC-compliant customers — meaning those who aren’t compliant with KYC norms will still be grilled.
The RBI order created an uproar because the government had earlier asked people to go easy because money in old denominations could be deposited till December 30 and there was no need to stand in long queues outside banks.
Bank employees and customers IANS spoke to said it has been a sea of confusion for them with the government’s and RBI’s ad hocism that has shaken the country’s faith in its banking system.
“I really don’t believe an institution like RBI, which is the trustee of our money, can do this,” Naresh Kumar Aggarwal, a chemist in south Delhi, told IANS.
Aggarwal had come to a State Bank of India (SBI) branch to deposit money in old currency notes. He said he was allowed to deposit but was still “interrogated by bank officials”.
“It is not about if I was able to satisfy them with my explanation. Of course, I did that. But why question me about my own money,” the chemist wondered.
An HDFC Bank employee in south Delhi, who didn’t wish to be named, said his office has dedicated one person for keeping check on RBI’s website to see if any order has been withdrawn or changed.
“I am not joking. There is so much confusion regarding what to do and what not do. We are under stress,” he said.
“Till Wednesday afternoon, we were doing what we were asked to do on Monday. People who came to deposit more than Rs 5,000 knew it was revoked and we were still waiting for a formal order. Arguments with angry customers was but natural,” Kumar said.
For many, anger gave way to sarcasm.
Vikas Sharma, a junior lawyer in Delhi High Court, said the central bank “needs an immediate name change”.
“Something that fits what it has been doing in the past six weeks. Call it the Reverse Bank of India. Afterall, it has been reversing its own decisions,” Sharma said standing in a queue outside an ATM outlet in Noida near Delhi.
Another man from the queue shouted: “Why not the Rollback Bank of India or even Rozana (daily) Bungling of India?”
Social media was also awash with criticism .
“Within two short months, the RBI has lost credibility and legitimacy built carefully over decades. Will take a long time to restore,” tweeted Sidharth Bhatia, a journalist.
Comedian Zakir Khan wrote about “59 new rules” in 43 days since demonetisation. “Bhai tum RBI ho ya boys’ hostel ke warden? (Are you the RBI or the warden of a boys hostel)”
First Published On : Dec 21, 2016 18:57 IST
A leading political ally of Narendra Modi has abruptly distanced himself from the Indian prime minister’s move to scrap high-value banknotes, as broad initial support for the radical monetary reform showed signs of crumbling.
The shift by N. Chandrababu Naidu, chief minister of Andhra Pradesh, came six weeks after Modi announced to a stunned nation that he would scrap 86 percent of the cash in circulation.
While Modi remains by far India’s most popular politician, any crack in his authority could have negative implications in state elections next year that will set the tone for his expected bid for a second term in 2019.
Naidu’s regional party is allied to Modi’s nationalists and he heads a central committee set up to find ways to soften the impact on ordinary people of the crackdown against tax evaders, racketeers and bribe takers who rely on so-called “black cash”.
“I am breaking my head daily but we are unable to find a solution to this problem,” Naidu told party workers on Tuesday in the city of Vijayawada.
Modi, announcing the reform on 8 November, cautioned that people would face temporary hardship. He promised to restore normalcy by the end of the year, when a deadline to deposit old Rs 500 and Rs 1,000 banknotes expires.
His announcement enjoyed popular support at first, with many people prepared to endure hardship as long as others are forced to give up their ill-gotten wealth or pay tax.
But continuing shortages of new Rs 500 and Rs 2,000 notes have caused tempers to rise as millions queue at banks and ATMs to draw money. With new Rs 500 notes, worth $7.50, in very short supply it is hard for people to buy necessities because of a shortage of change.
“Modi is now a one-man army, every political ally will blame him if the cash crisis does not come to an end in the next 10 days,” said P. Raja Rao, a political science professor in Hyderabad.
Furious over the lack of cash, mobs attacked six bank branches in Uttar Pradesh on Tuesday, forcing police to rescue bank staff.
The northern state, home to one in six Indians, is due to hold an election in early 2017 that is increasingly being viewed as a referendum on Modi’s demonetisation drive.
In the last 20 days, Modi’s Bharatiya Janata Party (BJP) has won several local elections in western and northern states. Party officials said the wins were a clear endorsement of the new cash policy.
“Each and every Indian understands the genuine intention behind the bold move. They trust the prime minister and we hope our political allies put an end to their doubts,” said BJP spokesman Siddharth Nath Singh.
First Published On : Dec 21, 2016 18:24 IST
The Reserve Bank of India (RBI) has done well by removing restrictions on deposits above Rs 5,000 for the remaining days of this month when the deadline to surrender old, invalidated currency expires.
Though Wednesday’s RBI notification is silent on the reasons for reversing the move, it is obvious that the decision is triggered by widespread criticism against its earlier directive that required anyone who wanted to deposit over Rs 5,000 in old currency to face questions by two bank officials on why he/she didn’t do it earlier.
Even if one makes multiple deposits that add up to more than Rs 5,000, the restrictions would have kicked in.
This was a breach of promise and lacked logic as this writer said in an earlier Firstpost column.
The new RBI notification, which says the old directive will not apply for KYC compliant accounts, would mean that almost all genuine customers will escape the unnecessary scrutiny, since majority of bank accounts are now KYC compliant. The only exceptions, perhaps, are Jan Dhan accounts which were opened with loose KYC norms and fraudsters.
The Rs 5,000 limit was absurd looking at the purpose (tackling tax cheats) from any angle. Any large deposit in any kind of account should naturally trigger scrutiny by bankers and taxmen to check likely money laundering. For this the government and the RBI didn’t need to trouble all customers and bank officials at a time when the common man is already feeling the pain of an artificial cash crunch.
Besides, such a restriction contradicted the repeated promises of Prime Minister Narendra Modi and Finance Minister Arun Jaitley that people do not need to rush to bank branches to deposit their old currency since there is time till 30 December.
In hindsight, the many flip-flops by the RBI and the government show the lack of planning and coordination among the top authorities who handle the demonetisation implementation. There are reasons to believe that the central bank isn’t in control of the situation and experts have pointed fingers at the erosion in the credibility of the central bank, an institution that is known for its ability to drive the economy through even worse phases with skill and conviction.
It was clear the Rs 5,000 deposit rules will hit the common man hard. Those who would have waited for the queues at the banks to get shorten to deposit their old currency savings, were taken by surprise with this rule. Remember, a number of time rules have changed for the common citizens on cash withdrawals and deposits. Last month, the government had abruptly stopped the currency exchange facility at bank counters after initially promising until 30 December. Bankers, at one point, even inked customers to ensure people don’t withdraw cash beyond certain specific limits, reminding one of war-time rationing. All this created more panic and confusion among the public.
Demonetisation, in the scale the Narendra Modi government has undertaken (pulling out 86 percent of the currency in circulation), has no parallel among major economies.
The entire world is watching this episode in India as a rare case study of a botched up economic reform plan. No one has a clue on where this is taking the Indian economy – the fastest growing major economy in the world – in the days ahead. In this backdrop, there is a closer scrutiny on the Indian central bank and government by global economy watchers and investors on each and every stage of demonetisation.
Here frequent flip-flops in rules only does damage to the credibility of the economy and its political and economic institutions.
As of now, there are a few missing links in the demonetisation plan that the central bank needs to clarify, including the number of new Rs 500 and Rs 2,000 notes printed, giving guidance to the public on until when the cash crunch will last and what is the cost of the exercise to the economy.
Except for assurances there is enough cash in the system, the RBI hasn’t offered specific details of the currency operation that is underway to ease panic. The RBI assurances do not reflect on the ground as still ATMs run dry and bank branches ration money. So far, since the 8 November demonetisation announcement, there have been 60 circulars issued by the finance ministry and the RBI. This points to a lack of planning and hold of the situation.
The RBI should make up its mind and guide the economy and the general public through this uncertain phase. Though demonetisation began as a political decision, the responsibility to ensure that this does not harm multiple spheres of the economy equally lies with the central bank which is the authority of monetary policy and currency in circulation. It’s high time the RBI came out of the trance and took control of the situation.
First Published On : Dec 21, 2016 15:24 IST
Finance minister Arun Jaitley’s clarification on Monday late night that banks will take more than Rs 5,000 deposits from customers without questioning if the amount is deposited in one go seems to have fallen flat as bankers are refusing to take such deposits without a written declaration, say various news reports.
According to a report in The Times of India, bankers are following the Reserve Bank of India’s notification issued on Monday in letter and spirit which has given rise to the difficult situation.
The RBI and the finance ministry on Monday morning put out notifications saying customers will be allowed to deposit old Rs 500 and Rs 1,000 notes worth more than Rs 5,000 only once before 30 December. Even then, they will have to satisfactorily explain to two bank officials why the deposits were not done earlier.
“Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed,” said the RBI’s notification.
The move, according to the ministry, was aimed at reducing the queues in front of the banks. However, two other unsaid reasons could be fear of money laundering through unsuspecting poor customers and also curbing the accrual of deposits at the banks which have already gone beyond expectations.
However, the directive came under criticism as customers felt the government has deviated from its promise made by Prime Minister Narendra Modi on 8 November that nobody needs to rush to the banks to deposit their cash as there is time until 30 December. After the backlash, the finance minister late night on Monday clarified that customers will be allowed to deposit any amount of old notes if it is done in one go. The clarification just compounded the confusion as it completely contradicted the RBI’s early morning notification.
It is to be noted that there has not been any notification yet on the clarification, which essentially remains a verbal communication to the media from Jaitley.
The bank staff are at the receiving end of the repeated policy flip-flops. A top bank official has told The Times of India that a memo based on the RBI notification has already been sent to the staff. That is the reason they are not ready to accept the deposit without questioning by two officials.
The new notification – 59th after demonetisation was announced on 8 November, according to The Indian Express – is likely to further worsen the relationship between the bank staff and customers. While front office staff are bound to follow the orders received from the RBI, customers on the other hand are going by the finance minister’s notification, prompting an increase in abuses on the banking staff.
What has compounded the situation is the clause that customers have to explain the reason for the delayed deposit to the satisfaction of the questioning bank officials. ‘Satisfaction’ is a subjective term, some of them pointed out to the ToI. What is satisfactory for customer may not be so for the officials. There can be difference between the two officials too.
As author and columnist Vivek Kaul says in his Facebook post, bank staff or officers can’t be blamed. They are neither experts in questioning nor in finding the source of funds.
The bank unions have many times earlier brought to the attention of the authorities the problems faced by the staff. In a letter to the finance minister and the RBI, they had said the central bank’s repeated reiteration that it is dispensing enough cash to the banks is aggravating the situation at the bank branches as customers feel the staff is hoarding the cash to serve the rich and wealthy and that the poor customers are being shortchanged.
Clearly, the new notification is only adding to pain of the customers and banks.
First Published On : Dec 21, 2016 10:23 IST
After coming out in support of demonetisation initially, Andhra Pradesh Chief Minister Chandrababu Naidu on Tuesday did a volte face saying that this is not what they wished for and said the solution to problems arising out of the note ban still remained elusive even 40 days after the step. The U-turn is significant as Naidu was one of the first non-BJP leaders to support the Narendra Modi government’s move.
“Demonetisation was not our wish but it happened. More than 40 days after demonetisation, there are still a lot of problems but yet there appears to be no solution,” Naidu said addressing a workshop of Telugu Desam MPs, MLCs, MLAs and other leaders in Vijayawada on Tuesday.
“It still remains a sensitive and complicated problem,” Naidu observed.
“The people who are supposed to manage the crisis are incapable of doing anything. The RBI has not been able to do anything about it. It still remains a sensitive and complicated problem,” he has been quoted as saying in media reports.
“I am spending two hours daily to review the situation and ease the problems caused by demonetisation. I am breaking my head daily, but we are unable to find a solution to this problem,” said Naidu, who heads the 13-member central committee to look into demonetisation issues.
Naidu had been a strong proponent of ban on high denomination currency notes of Rs 500 and Rs 1,000. In fact, he had written a letter to Prime Minister Narendra Modi on 12 October reiterating his demand.
On 9 November, hours after the Prime Minister came out with the demonetisation announcement, the Telugu Desam Party started claiming credit saying it was a “victory for Chandrababu” over his fight on corruption.
“This is a moral victory for the TDP,” it said on posts on Facebook and Twitter.
“Prime Minister Modi may have taken the decision now but Chandrababu had these thoughts even when he was in the opposition (2004-14). He had been fighting for scrapping of Rs 500 and Rs 1000 notes since then,” the TDP said in a Facebook post.
The party media cell dug out newspaper clippings dated back to 2013 June when Chandrababu raised the demand for the first time.
But as people started facing trouble in exchanging the scrapped notes as well as in withdrawing cash from their savings accounts, Chandrababu seemed to change his tone and started making critical remarks about the Centre’s move, particularly the introduction of Rs 2,000 notes.
“I am spending two hours daily to ease the problems caused by demonetisation. I am breaking my head daily but we are unable to find a solution to this problem,” the CM said on Tuesday.
“We could resolve the ‘August crisis’ (an internal party coup dating back to 1984) in 30 days but this (demonetisation) still persists,” he said.
He said banks were “not prepared” for a transition to digital economy. “They are unable to even register banking correspondents,” he added. Unless there were remedial measures, people’s woes would continue in the long-term, Chandrababu warned.
First Published On : Dec 21, 2016 08:00 IST
After the central government’s demonetisation drive started on 8 November, fruit seller Yamuna Sahni was one of the first people to put up a board urging people to pay using PayTM. About a month and a half later today, he uses it only as the last option to receive payments. Explaining his reluctance to use cashless transactions, he says, “I can transfer a maximum of Rs 25,000 from my PayTM account to my bank account every month. So if I sell fruits worth more than that, I have to wait an extra month just to transfer the excess amount back to my bank. Though I have money, it gets blocked for a month, which means my working capital is affected.”
Sahni mentioned that while he has head this limit can be increased, he doesn’t know how it gets done.
Digital payments have picked up across the country in the last month-and-a-half, but the many impediments mean that the signs aren’t very encouraging.
Raju Yadav, who sells paan on the streets of Noida, says he too had opted for digital payments, but is now facing hurdles. “The wholesaler from whom I get my daily supplies doesn’t accept digital money. So I need to first transfer the money to my bank account, then write a cheque to my wholesaler to clear my dues,” he said.
Market watcher Bimal Jain, who works as an office bearer in the Punjab Haryana Delhi Chambers of Commerce, told Firstpost that people have started using digital modes of payments. “But we have to wait some more time before digital becomes the first option as a mode of payment,” he said, adding that cashless transactions have proliferated in Tier-I and Tier-II cities on account of unavailability of cash in accordance with demand.
“Unavailability of cash has definitely pushed digital transactions in these cities. But it will take more time for digital payments to pick up in Tier-III and Tier-IV cities,” he added.
But the problems faced by these towns in the country’s hinterland are felt even in the National Capital Region. Many weekly haats in Noida are considered to be good places to buy cheap fruits, vegetables and foodgrains. Most of them do not accept digital payments.
Raghav Choudhury, vegetable seller in one of these markets, says he purchases in wholesale from farmers of Uttar Pradesh. While he gets his supplies from the farmers on credit, he has to repay them in cash. “If I accept payment through Pay TM, how will I pay them back, since they do not use such modes of payments?” he asks.
On the other hand, many traders also believe that online payments will decrease their competitiveness. “People buy from us because we provide goods at cheaper rates. But digital payments may include service charge, which will add to our cost price and selling price,” he added.
PayTM charges minimum a of 1 percent and maximum of 4 percent as service charge on transfers from wallet to bank accounts. Jain said one way to encourage more digital transactions is by making them completely bereft of additional costs. He said the government should take special precautions to acquaint people with digital transactions, especially to encourage people in Tier-III and Tier-IV cities.
The Finance Ministry had launched a PR campaign to popularise digital transactions. ‘Span Communications’, a PR firm that won the campaign to make India a cashless economy said in a press release that it has come up with an ambitious plan to carry on the aggressive plan forward.
CEO Naresh Khetrapal said, “We live in a country where cash is king. Considering the demographics of India, the campaign will help create awareness about cashless transactions among the masses and embrace the new methods of payments in the digital era.”
First Published On : Dec 20, 2016 22:10 IST
Vijayawada: After coming out in support of demonetisation initially, Andhra Pradesh Chief Minister Chandrababu Naidu on Tuesday appeared to do a volte face saying that this is not what they wished for and said the solution to problems arising out of the note ban still remained elusive even 40 days after the step.
“Demonetisation was not our wish but it happened. More than 40 days after demonetisation, there are still a lot of problems but yet there appears to be no solution,” Chandrababu said addressing a workshop of Telugu Desam MPs, MLCs, MLAs and other leaders in Vijayawada on Tuesday.
“It still remains a sensitive and complicated problem,” Chandrababu — who heads the 13-member central committee to look into demonetisation issues — observed.
It was Chandrababu who had been a strong proponent of ban on high denomination currency notes of Rs 500 and Rs 1,000. In fact, he had written a letter to Prime Minister Narendra Modi on 12 October reiterating his demand.
On 9 November, hours after the Prime Minister came out with the demonetisation announcement, the Telugu Desam Party started claiming credit saying it was a “victory for Chandrababu” over his fight on corruption.
“This is a moral victory for the TDP,” it said on posts on Facebook and Twitter.
“Prime Minister Modi may have taken the decision now but Chandrababu had these thoughts even when he was in the opposition (2004-14). He had been fighting for scrapping of Rs 500 and Rs 1000 notes since then,” the TDP said in a Facebook post.
The party media cell dug out newspaper clippings dated back to 2013 June when Chandrababu raised the demand for the first time.
But as people started facing trouble in exchanging the scrapped notes as well as in withdrawing cash from their savings accounts, Chandrababu seemed to change his tone and started making critical remarks about the Centre’s move, particularly the introduction of Rs 2,000 notes.
“I am spending two hours daily to ease the problems caused by demonetisation. I am breaking my head daily but we are unable to find a solution to this problem,” the CM said on Tuesday.
“We could resolve the ‘August crisis’ (an internal party coup dating back to 1984) in 30 days but this (demonetisation) still persists,” he said.
He said banks were “not prepared” for a transition to digital economy. “They are unable to even register banking correspondents,” he added. Unless there were remedial measures, people’s woes would continue in the long-term, Chandrababu warned.
First Published On : Dec 20, 2016 16:57 IST
On 8 November, when Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, it was projected and seen as a big blow to unaccounted wealth and black money. In the following weeks as the images of long queues across the country started emerging; challenging the “good intention” of the government, another narrative was put in place to soothe the common man who was at the receiving end.
On 13 November, the prime minister while speaking at the foundation stone laying ceremony of the Mopa airport in Goa, made an emotional appeal to the citizens to bear the “pain” for “50 days” to help him deliver the “India of your dreams”.
An emotional Modi had said, “I promise you, I will give you the India of your dreams… If someone faces a problem, I also feel the pain. I understand their problem but this is only for 50 days.”
A narrative was build: The pain that people were facing was short-term which will yield wondrous long-term results. As weeks passed, demonetisation which was essentially seen as an attack on black money, was gradually projected as an attempt to make India a cashless economy.
On 15 December Modi came up with two schemes named Lucky Grahak Yojana and Digi Dhan Vyapar Yojana to incentivise cashless transactions. In a series of tweets, Modi said the schemes “will further incentivise digital payments” and it would be a big boost in the move towards “cashless and corruption-free India”.
The two schemes would cover small transactions between Rs 50 and Rs 3,000 to encourage every section of the society to move towards digital payments.
India is now being seen as moving towards a cashless economy. It raises an important question: Are people prepared to embrace this new way of life?
Consider these scenarios of people juggling with their new life in a ‘cashless economy’ that also highlight the sticking points in our digital edifice.
Case 1: In Uttar Pradesh’s Gorakhpur district, a man enters a store selling VIP bags. After selecting his product, he asks the shop owner whether he accepts debit or credit cards. The store owner reluctantly replies in affirmative and takes the card from the customer. He swipes the card and punches the amount. The bill is produced and it is a happy ending.
Welcome to ‘Digital India’.
But the story has an anticlimax. As the man leaves the store, he is stopped by the owner. The store owner reveals to the customer that instead of the actual payment of Rs 6,600, by mistake he punched only Rs 66. The customer looks upset and amused at the same time. He asks a simple question: What if by mistake one extra zero was pressed?
The store owner replies, “This is new to us. You cannot expect us to learn all this in a day. It has been thrust upon us without giving us the time to get use to it.”
Case 2: Atul, who runs a canteen in one of the offices in Noida, Uttar Pradesh, is struggling daily to get stable supply. He says, “Paytm and all are good, but there are many issues. Firstly, while I can accept the payment through Paytm, not everyone, from a vegetable seller to the milkman, knows about this. They just want cash.”
He adds, “I too am facing problem with Paytm. It allows me to transfer up to Rs 25,000 in a month whereas I am receiving much more in my account. As I cannot transfer the rest of the money in my bank account, I am also incurring loss of interest (Paytm website confirms this cap)
Case 3: A person books a private airlines flight using Paytm wallet and his ICICI debit card. The flight gets cancelled due to bad weather. The man calls up the airlines for the refund. He is told that as he has made the booking through a travel portal, he should contact the portal for the refund. Fair enough. The man calls up the portal and is told by the portal that as he has made the payment through Paytm, he should contact Paytm for the same. The man calls Paytm and is informed that the payment was made using ICICI debit card so he should call the bank. The bank, in turn, asks the customer to call Paytm. After much of argument, Paytm accepts that the amount will be refunded in 72 hours.
A happy ending may be? No, this story too has an anticlimax. Four days have passed and the man is waiting for his refund, frantically making calls to all the parties.
All the above mentioned cases point to one thing: The unpreparedness of the economy to go the cashless way. And in this regard, sudden push by the government towards cashless economy has left great number of people; living in small cities clueless, for whom digital transaction is still a “thing of tomorrow”.
The Indian Express reported on 20 December that Arundhati Bhattacharya, head of the State Bank of India (SBI) has stressed that government “should find ways to disincentivise cash transactions, such as imposing a charge or levy above a specified limit or threshold, after normalcy is restored in banking operations following the demonetisation move.”
The report stated, “According to Bhattacharya, if India wants to de-emphasise cash, there should not only be an incentive for people to move towards a cashless economy but also a disincentive for transacting excessively in cash, while leaving out small-ticket transactions”.
While strong measures like the one suggested by the SBI chief or the limit on free cash withdrawal from ATMs have indeed pushed people to go for digital transitions, the problem faced by them in the last one month is due to the sudden and large scale change in their transaction behaviour that demonetisation demands.
The underlying fact remains that underestimating digital ignorance among people was a big mistake of the government and the same is posing challenge to its well-intentioned decision of demonetisation .
First Published On : Dec 19, 2016 19:48 IST
The government and the Reserve Bank of India have today come out with new rules to curb money laundering at bank counters. As per the new rules, if a customer is making deposit above Rs 5,000, he or she will face questions from the bank officials on why the deposits were not made earlier.
Stipulating that restrictive conditions will also apply on the cumulative deposit of such notes in a single account when it exceeds Rs 5,000, RBI said that defunct currency up to any amount can be deposited under the new black money amnesty PMGKY scheme.
Here’s the full text of the RBI’s rules in today’s notification:
i) Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till 30 December, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.
ii) Tenders of SBNs up to Rs 5,000 in value received across the counter will allowed to be credited to bank accounts in the normal course until 30 December, 2016. Even when tenders smaller than Rs 5,000 are made in an account and such tenders taken together on cumulative basis exceed Rs 5,000 they may be subject to the procedure to be followed in case of tenders above Rs 5000, with no more tenders being allowed thereafter until 30 December, 2016.
iii) It may also be ensured that full value of tenders of SBNs in excess of Rs 5,000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts.
iv) The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.
v) The equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.
vi) The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering, as indicated in Annex-5 of our circular cited above.
First Published On : Dec 19, 2016 16:29 IST
The finance ministry and the Reserve Bank of India have put in place new restriction on deposits of old Rs 500 and Rs 1,000 until 30 December in another effort to curb money laundering.
According to a finance ministry notification (read here), deposits of the demonetised notes above Rs 5,000 can be made only once until 30 December, the last date for banks to take deposits of old notes. However, there is no restrictions on depositing cash under the Pradhan Mantri Garib Kalyan Yojana, a black money declaration scheme under amended taxation laws.
“Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016,” the RBI said in a notification to banks posted on its website.
The central bank has also said in such cases the notes will be credited to deposits “only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation”.
“The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed,” the RBI has said.
However, banks can allow deposits of up to Rs 5,000 in value to be credited to bank accounts in the normal course until 30 December.
Moreover, if you have made deposits smaller that Rs 5,000 your account, and if such deposits taken together on cumulative basis exceed Rs 5,000 then they may still have to face the questions from the banks officials. In such cases, you may not be allowed to make more deposits thereafter until December 30.
Also deposits above Rs 5,000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant the limit for deposits stays at RS 50,000.
However, these rules are not applicable to deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana.
First Published On : Dec 19, 2016 13:53 IST
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.
“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
It is becoming abundantly clear that all the hoopla and about going after black money through demonetisation was more of a spoof. The media, particularly the social media, was hyper about how many stashes of black money political parties had lost, with names like Mamata Banerjee, Mayawati and Arvind Kejriwal figuring conspicuously.
Then there was plenty of news about politicians from various parties caught with lakhs or crores of cash. That the banks too were laundering cash without political involvement itself is questionable. But the fact remains that bulk of the cash seized as ‘black money’ is new currency. All this while frequent briefings including the current withdrawal limit of Rs 24,000 a week is not respected by many banks because they simply don’t have the cash unless you can stand in queues for days drawing Rs 4,000 or Rs 6,000 each day. Statements of more money being sent to rural areas, but then many news channels show chaos in rural areas as well.
So why not come clean and admit it will take 4-6 months to set things right, instead of 2-3 weeks which banks admit is impossible?
In the backdrop of the above, it was a shocker to hear revenue secretary Hasmukh Adhia telling reporters that political parties depositing the demonetised Rs 500 and Rs 1,000 notes in their account(s), will not face income tax investigation – so sky is the limit. Adhia was replying to in response to a question that whether the government is also investigation political parties/political treasuries depositing their own cash in banks. Adhia specifically said, “If a deposit is in the account of a political party, they are exempt. But if it is deposited in individual’s account then that information will come into our radar. If the individual is putting money in his own account, then we will get information.” But politicians are no fools in such matters; stash must’ve gone white already through accounts of followers, Jan Dhan, whatever. Sections 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income from house property, other sources, capital gains and income by way of contributions received from any person.
Significantly, Adhia’s statement came on a day winter session of Parliament ended with all the shouting and sloganeering about demonetisation, AgustaWestland helicopter scam, allegations, counter allegations – of which the end result remains a question mark in the same vein as over past decades. For that matter in the case of AgustaWestland, no defence deal or scam can happen without the express involvement of the defence secretary and the DG (Acquisition), who before signing defence deals, make sure that the bribes reach the intended beneficiaries. Even Gen VK Singh, former COAS and presently MoS (External Affairs) states clearly in his autobiography that the corruption pipeline goes right up to the PMO. So let us see how thorough this probe and prosecution will be and with what end result. Does this explain why AK Anthony is doing jumping-jack putting all the blame on the IAF, least CBI probes how much was his cut in the AgustaWestland scam and what route it followed?
The 1993 Vohra Committee report while establishing the nexus between governmental functionaries, political leaders and others with various mafia organisation and crime syndicates, enabling development of significant muscle and money power to operate with impunity, had finally opined that “leakage whatever about the linkages of crime Syndicate senior Government functionaries or political leaders in the states or at the centre could have a destabilizing effect on the functioning of Government.” So, naturally there was no follow up to this report. But in this era of digitisation and connectivity (no matter not complete) all you need is an opinion poll pan-India as to which cross-section has and makes maximum black money in India, the overwhelming majority will be the political parties and politicians, corporate-with-blessings of the polity, and the like. In fact, that is the talk in every nukkad, shop, bank, gatherings of any size. But then is not what the 1993 Vohra Committee Report was implicitly pointed out?
So, if the bulk of the black money and loot is with the political parties, even though bulk is not in currency, where do we go from here – what sort of black money recovery are we executing? Sure Sections 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income from house property, other sources, capital gains and income by way of contributions received from any person. But given that government has launched a war against black money and corruption, why could Sections 13A of the Income Tax Act, 1961 not be amended before the demonetisation drive was launched.
This should have been very much possible considering the surreptitious manner in which FCRA Act 2010 was amended, legalising foreign donations – from ‘unknown’ sources? Why couldn’t a limit be put on what the political parties can deposit in their account and beyond which what percentage would be taxed, and how steep? After all, there are financial limits laid on electioneering also. Leaving limitless deposits by political parties without any taxation actually amounts to a farce being played about fighting a war against black money and corruption through demonetisation, permitting other hoarders now to deposit any amount with 50 percent taxation notwithstanding.
When Modi recently remarked about ‘state funding’ of elections, he was aware that money matters in politics because parties need ever-increasing resources for administration and election campaigns. But he was possibly looking for solutions to problems like: how money should not be allowed to buy access to decision-making power; how to sanction illicit donations and prevent trading in influence; should the state impose limits on corporate donations; and, should parties receive public funding? But looking at the mammoth political expenditure in our country, would it be ethical to use public funds for elections, what will be the tax burden on the common man, and how will it affect development? If that is the reason for the impossible drive of going cashless overnight without adequate infrastructure and education, to simply tax every transaction, it certainly needs a serious relook. It doesn’t take any intelligence to realize that next couple of years, India will need a mix of cash and cashless. If we don’t want to admit it, that is a different issue. The litmus test for Modi, therefore, is how to draw the black money out from the political parties, without which the war on black money will be largely ineffective.
The author is a veteran Lt. Gen.
First Published On : Dec 17, 2016 20:21 IST
New Delhi: The Congress asked Prime Minister Narendra Modi to stop “insulting” former heads of government, a day after the Prime Minister cited a book to say Indira Gandhi paid no heed to the Wanchoo Committee’s recommendation to demonetise high-value currency notes in 1971.
“Stop insulting former prime ministers. Change the narrative and mindset. From Jawaharlal Nehru to Atal Bihari Vajpayee, Manmohan Singh to Indira Gandhi, it’s a long list. When you insult them you do not insult Indira and Nehru, you also insult Lal Bahadur Shastri and Morarji Desai who demonetised high-value currency in 1978,” the party’s deputy leader in Rajya Sabha, Anand Sharma, said at the FICCI conference.
Modi had cited a book to say that when the then Finance Minister YB Chavan went to Indira Gandhi in support of the exercise, she asked, “Only one question. Are no elections to be fought by the Congress party?”
Accusing the Congress of putting its interests before the country’s, he had said what should have been done in 1971 has been done now by his government and that the delay in launching demonetisation caused a lot of damage to the country.
Replying to this, the Congress leader said, “It is sad. 1971 was the year when India gave Indira Gandhi a massive mandate. The same year we were challenged by the then East Pakistan. India had 10 million refugees. Genocide was going on in what is now known as Bangladesh. China, siding with Pakistan, had moved troops to the border. India had the courage and strength to take the decision and the rest is history.”
The country had just celebrated Vijay Diwas on Friday to mark the win over Pakistan in the 1971 war. “It was a day to salute
Indira and not insult her,” Sharma said.
Taking a dig at Modi for calling himself a fakir, Sharma said, “I do not have that kind of a wardrobe but I will not call myself a fakir. We are public servants. We must serve people and understand their pain. We must have humility.”
Asked as to when Rahul Gandhi will make public the graft charges against Modi he claims to have proof of, Sharma said, “It will be done at the right time.”
He also alleged that BJP purchased land in many states before the prime minister announced the decision to scrap high-value
notes on 8 November and demanded the Centre bring a white paper on demonetisation. “Crores of rupees were deposited in banks and all that information should come through a white paper,” he said.
Sharma said the government in power needs to maintain balance “before issuing any narrative and for good governance. It is important to have a responsible opposition”.
First Published On : Dec 17, 2016 20:11 IST
New Delhi: The Enforcement Directorate (ED) has registered a money laundering case in the alleged forging of a customer’s identity to conduct huge illegal transactions in an Axis Bank branch in Noida for conversion of black funds into white post demonetisation.
The individual, identified as N Paswan, in his complaint filed with the police has claimed that his identity has been forged and a current and a savings account were opened in his name in the said branch which were allegedly used to launder crores of rupees post demonetisation.
Officials said the ED registered a criminal complaint under the provisions of the Prevention of Money Laundering Act (PMLA) taking cognisance of the police FIR on a complaint filed by Paswan, a resident of Delhi’s Pitampura area.
They said while the bank branch, in sector 51 of Noida, is already under scanner by the Income Tax department owing to alleged dubious transactions using shell companies, the ED has come into picture to probe proceeds of crime which were generated through use of various fake accounts which also have “fake or weak” KYC (Know your customer) details.
They said the amount under scanner of the central probe agency is over Rs 60 crore.
Officials added that the agency is probing more than two dozen accounts in the bank here which could have been used to perpetrate the crime of money laundering, in the wake of the scrapping of Rs 1,000/500 notes.
Meanwhile, the ED also conducted searches on the premises of four bullion traders in Mumbai on Friday in a similar probe.
The agency has also sought freezing of few bank accounts of these traders as part of its probe, they said.
First Published On : Dec 17, 2016 19:10 IST
New Delhi: CBI has arrested two employees of cash department of Reserve Bank of India in Bengaluru in connection with alleged conversion of Rs 1.99 crore of demonetised currency with specified bank notes of Rs 2,000 and Rs 100.
CBI sources said Senior Special Assistant Sadananda Naika and Special Assistant A K Kavin were arrested for unauthorised exchange of the currency and have been booked under charges of criminal conspiracy and cheating besides provisions of Prevention of Corruption Act.
Both the accused have been sent to four days of CBI custody by a special court in Bengaluru, they said.
“It is alleged that both the accused and other unknown officials of RBI, Bengaluru entered in criminal conspiracy with unknown others,” CBI spokesperson Devpreet Singh said.
She said in furtherance with the criminal conspiracy, the accused, along with other unknown officials, who were entrusted with the responsibility of new currency notes, “fraudulently” gave away new notes to the tune of Rs 1.99 crore to RBI officials and others.
It is alleged that the exchange was done in violation of exchange limits imposed by the Bankers’ Bank.
CBI had earlier arrested another employee of RBI in a separate case in which currency worth over Rs six lakh was converted by him using his influence over officials of State Bank of Mysore.
First Published On : Dec 17, 2016 18:39 IST
On a day the Narendra Modi government laid out the contours of new black money declaration scheme for tax cheats, it also left a big loophole that could potentially cause the entire exercise to fall apart— exempting deposits made by political parties from tax scrutiny and subsequent investigation.
This move is absurd, lacks logic and raises a big question on the very intent of the Modi government to unearth black money in the system at any cost.
Reason: The opaque political funding is the foundation of black money in any economy. It is that evil that feeds and nurtures all other forms of illegal cash in the system. Unless political funds are brought under tax scrutiny, everything else the government does in the name of black money hunt will be seen with suspicion.
The government move also show how there is a clear double standard for the common man and political parties when it comes to black money hunt. The aaam aadmi is supposed to bare it all, answer questions, face harassment even if his money is legit but politician enjoys a God-given immunity.
Take a look at what the revenue secretary Hasmukh Adhia told reporters.
“If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual’s account then that information will come into our radar. If the individual is putting money in his own account, then we will get information.”
The Section 13A of the Income Tax Act, 1961 is what gives immunity for political parties in respect of their income from house property, other sources, capital gains and income by way of voluntary contributions received from any person.
Political parties will merrily use this opportunity to put their black money (money for which there is no real source or income that is not taxed) on the table and would say that they got it all from small donors (cash donations less than Rs 20,000 does not need any source). It is not difficult to make backdated donation receipts. This defeats the entire purpose of black money operation.
Analysis by Association for Democratic Reforms (ADR) and National Election Watch in past few years shows that about 75 percent of the sources of funds to political parties remain unknown. Here is where the real problem lies.
When political parties arte party to accepting black money, how do one expect an honest action from them against the very same black money?
It is not a surprise that none of the opposition parties, including principal opposition party, Congress and its (occasionally) fiery leader Rahul Gandhi hasn’t uttered a word on political black money and hasn’t offered to give an example by daring to give own party’s financial details or declining any law-given immunity. That’s understood because all drinks from the same pot and it taste sweet.
But the larger question is why is it that always the common man suffer and the rich and powerful get away?
Why the double standard?
The ongoing demonetisation exercise, originally launched to counter black money and fake currency, has inflicted maximum pain on the poor, not the rich and powerful. The layman waits for hours in ATM/bank queue, face unemployment and financial loss, commits suicide because he couldn’t find enough cash for his daughter’s wedding amid the black money fight of the government, while the rich smiles all the way to the backdoors of banks.
Even in the post-demonetisation era, they have lavish weddings and joy of seeing bundles of new currency notes in their backyards, while it is a miracle for the aam aadmi even if he get hold of a few pieces of new currency.
PM Modi certainly owes an answer to 125 crore Indians, of which a good number are hard working middle class, on the government’s double standard to the common man and the political parties when it comes to the issue of black money.
First Published On : Dec 17, 2016 12:53 IST
New Delhi: Petrol price has been hiked by Rs 2.21 a litre and diesel by Rs 1.79 per litre, excluding local levies. The price revision was to come into effect from Thursday, but was deferred by a day, possibly to save the demonetisation-battered government from any blushes in Parliament. The revised rates will be effective from Friday midnight.
This increase excludes local levies. The actual hike after considering VAT would be Rs 2.84 per litre in Delhi for petrol and Rs 2.11 for diesel.
After the hike, petrol in Delhi will cost Rs 68.94 per litre from midnight as against Rs 66.10 currently, said Indian Oil Corp., the nation’s largest fuel retailer. Similarly, a litre of diesel will cost Rs 56.68 as compared to Rs 54.57.
IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise rates on 1st and 16th of every month based
on average international price in the previous fortnight. But an increase that was warranted because of a rise in international gasoline (petrol) price to $62.82 per barrel from $57.43 and that of diesel to $60.97 from $56.79 was not announced.
Industry sources said the deferment was because Parliament was in session and any hike would have added to the discomfort
of the government, particularly when it is facing heat over hardships caused by currency demonetisation. The Winter Session of Parliament ended on Friday afternoon.
Rates were last revised on 1 December, when petrol price was hiked by a marginal 13 paise a litre, but diesel rates were cut by 12 paise.
Prior to this price change, rates were hiked by Rs 1.46 a litre for petrol and Rs 1.53 per litre for diesel, excluding local levies, on 16 November.
“The current level of international product prices of petrol and diesel and Rupee-Dollar exchange rate warrant an increase in selling price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision,” IOC said in a statement.
It said the movement of prices in the international oil market and foreign exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes.
First Published On : Dec 16, 2016 22:31 IST
In order to fight black money that has been rampant in our economy, the government today announced that voluntary black money declaration under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) will begin starting tomorrow i.e 17 December. People with unaccounted cash can disclose it under PMGKY scheme by paying 50 percent tax and penalty before 31 March, 2017, said Revenue Secretary Hasmukh Adhia.
“We want people to join PM Garib Kalyan Yojana and through this scheme they contribute to welfare of the people. Unaccounted cash can be disclosed under PMGKY that comes with 50 percent tax and penalty starting from tomorrow till 31 March, ’17,” said Revenue Secretary Hasmukh Adhia.
In this regard, the President also cleared amendment to the taxation laws.
Meanwhile, CBDT chairman Sushil Chandra also said they have issued around 3,000 notices to people based on the details of deposits in bank accounts. Further, the tax department also conducted searches and seizures in about 291 cases and carried out surveys in 2915 cases, said CBDT chairman.
So far, the tax department through several raids have seized over Rs 316 crore, including Rs 80 crore in new notes besides jewelleries worth Rs 76 crore, taking the total to Rs 393 crore, added CBDT chairman.
The Lok Sabha, which passed the Taxation Laws (2nd Amendment) Bill, 2016, on 29 November, said it proposes to levy a total tax, penalty and surcharge of 50 percent on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85 percent await those who don’t disclose but are caught.
Finance Minister Arun Jaitley had said the bill was brought after it came to the government’s notice that some people were trying to illegally exchange the demonetised Rs 1,000 and Rs 500 currency notes. Jaitley said as per the amendment proposed, those caught illegally converting money will have to cough up 60 percent tax plus penalties, which will come to 85 percent.
Those who disclose black money to banks will have to pay 50 percent tax, including surcharge and penalty. While they will get back 25 percent immediately, the rest 25 percent will be returned after 4 years.
First Published On : Dec 16, 2016 17:43 IST
You know the country is hurting when even the prime minister’s best friend turns against him. Actually, let me rephrase that — the best friend is hurting, and so friendship be damned, hang it out to dry.
Baba Ramdev has spoken out against Prime Minister Narendra Modi‘s note ban, by hinting at a sinister conspiracy involving the banking sector, and even the Reserve Bank of India (RBI), saying that as much as Rs 3-5 lakh crores can be involved in this scandal.
Ramdev has clearly shrugged off his long-time support for Modi, as he adds economic insight to his quiver of authoritative arrows. The yogi-turned businessman and ayurveda champion, as adept at being spiritual guru as he is selling edible oil, but is having a rough time with sales of his consumer products probably dropping. To add to his dismay is the Rs 11 lakh fine levied on him for misrepresentation in manufacture of his products in the Hardwar factories where the ingredients are falsely marked.
Good reasons, don’t you think, for Ramdev to get a bit teed off; so this man for all seasons now decides to interpret the downside of the demonetisation process.
But, according to him, it isn’t the prime minister who’s the bad guy — it’s the banks, and they misled Modi with their chicanery and gave him the wrong idea of what could happen. They did not tell him, for example, that Patanjali branded items would not fly off the shelf, and if they don’t do that with alacrity, then surely something is wrong with the killing of currency notes.
But, whoa, wait just a minute. Why has it taken Ramdev all of 38 days to figure it all out and share his incandescent genius with us? How quickly people change when their bottom line is adversely affected.
There is also another reason for this economic epiphany. Ramdev has probably been feeling left out of the loop at not getting his quota of media attention this past month or so. That anonymity irks, so why not make some outlandish announcement in the manner of a teaser trailer and say a lot without saying anything concrete.
In one shot, he indicts Modi, then absolves Modi, then blames the banks, and finally tells us there is a seamier undisclosed dimension, even venturing to place a huge figure on it, although he doesn’t tell us what exactly is going on.
Now, is that fair? If Ramdev knows what this Rs 3-5 lakh crore hanky panky is all about, then why be cute about it? Come out and tell us the details, so we can decide if the banking sector plotted this grand larceny on the Indian people and took Modi for a ride. Yes, we know the banks are flush with cash. Where else would the money go. But that is not an indication of their being corrupt or in on the scheming.
To play mind games and make provocative statements is not only uncharitable, it is also a cheap shot. You can certainly criticise the fallout from the ban on currency notes and have an opinion, but if you point your flinty little fingers in accusations and suggest more than obliquely that the underbelly is dirtier than we know, then you are duty bound to show us the dirt.
Till you are ready to spill the beans, it’s time to use your own toothpaste because you are just being foulmouthed.
First Published On : Dec 16, 2016 15:35 IST
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.
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
It is slowly becoming a trend that may prove costly. Post the killing of Burhan Wani, militants are resorting to robbing banks in the Kashmir Valley, allegedly to deal with the cash crunch that has hit their ranks following demonetisation.
Within a month, at least two such incidents were reported, in which more than Rs 50 lakhs were robbed from different branches of the Jammu and Kashmir Bank. Cops are clueless, so are the bank officials.
The latest incident happened on Thursday when unidentified suspects targeted a J&K bank branch in Ratnipora of south Kashmir’s Pulwama district.
According to sources, the suspects rouged up the bank employees, including a physically challenged man, before escaping with Rs 11 lakhs cash.
“I tried to reason with a gunman that I was disabled and would do them no harm. But he twisted my arm and thrashed me, while the others rounded us up in a corner,” said Masoor Ahmad, a bank employee.
Although the J&K police was quick to cordon off the area in Ratnipora village, but the suspects managed to flee undetected and unharmed.
The incident took place exactly a week after unidentified suspects, again believed to be militants, decamped with more than Rs 8 lakhs from another branch of J&K Bank in south Kashmir’s Arihal on 8 December.
The suspects fired aerial shots to create panic before leaving the spot. No arrests have been made in the case. Police and other security agencies have linked the robbery to demonetisation.
This is the fourth such incident of bank robbery after Prime Minister Narendra Modi announced the scrapping of old Rs 500 and Rs 1,000 notes.
In the 8 November surprise announcement, Modi had said that one of the key targets of the move was to stop militants from using counterfeit Indian currency. But it had little bearing on terror networks. In two instances, J&K police recovered new currency notes from militants killed in encounters after 8 November.
A senior officer of the J&K Bank, speaking on condition of anonymity, said they have posted guards from private security agencies outside banks and ATMs, cops are posted outside bank branches in sensitive areas.
“The private security guards are armed with an outdated gun which makes the bank even more vulnerable to attacks. These attacks are of course unfortunate but we are helpless. How can one security guard deal with four men armed with AK-47 rifles,” he said.
On 21 November, a group of suspected Lashkar-e-Taiba workers, robbed a central Kashmir branch of the J&K Bank in Malpora village from where they took at least Rs 14 lakh. They have been arrested by the police.
A senior police officer said that faces of the bank robbers of Ratnipora branch have been captured in CCTV footage. “This is the same group of people who have also carried out other bank robberies recently,” Superintendent of Police, Pulwama, Rayees Mohammad Bhat told Firstpost.
“There is no doubt in our minds about who are behind these robberies, we will arrest them soon,” he added.
First Published On : Dec 15, 2016 18:35 IST
Hyderabad: The issues related to pending dues of farm loan waiver and students’ tuition fees reimbursement schemes, besides the welfare programmes of TRS government and demonetisation are expected to dominate the winter session of Telangana Legislature beginning from Friday.
The main opposition Congress, TDP and BJP have been demanding that the state government release the pending installments of its farm loan waiver scheme at one go and also clear the pending dues of fees reimbursement. Clearing the dues of the two schemes is important to help the farmers in distress and also poor students who are the beneficiaries of tuition fees reimbursement, the parties have pointed out.
Asserting that it has been taking pro-active measures for people’s welfare and development, the TRS government said it would like to seek active debate on its welfare programmes.
The TRS government is implementing welfare and development programmes in a way the previous Congress government never did, state Animal Husbandry minister T Srinivas Yadav said.
Referring to reports that the government would seek suspension of members who enter well of the House, Congress MLA M Bhatti Vikramarka said the move shows that the government is in defence of itself.
In a letter to Speaker S Madhusudanachary, BJP floor leader in the Assembly G Kishan Reddy sought debate on farmers’ issues, reorganisation of districts, alleged delay in release of funds for its two-bed room house scheme and fees reimbursement.
First Published On : Dec 15, 2016 17:54 IST
Vijayawada: Police have seized Rs 17.30 lakh in Rs 2,000 denomination, allegedly meant to be exchanged for a commission, from a person in Andhra Pradesh’s Krishna district.
The man, along with an accomplice, allegedly brokered a deal with some persons for exchanging the scrapped Rs 500 and Rs 1,000 notes for a six per cent commission, a senior police official said.
He used a police constable, his close relative working in Gudivada rural police station, as a shield for the operation. However, the persons who wanted to exchange the old currency did not turn up and Rahman started on his return journey.
During a routine check, police intercepted his vehicle at Pedaparupudi late last night and found the bundles of new Rs 2,000 notes.
“We have detained the man while a hunt is on for his accomplice. The constable in question seems ignorant of the operation as this man only wanted to use him as a shield,” Gudivada Deputy Superintendent of Police Ankineedu Prasad said.
“We are now investigating from where he got such huge cash,” the DSP added.
First Published On : Dec 15, 2016 14:42 IST