Demonetization Thoughts

On November 8th 2016, the prime minister of India announced on National TV that the 500 and 1000 rupee notes were demonetized effective midnight. The PM announced that the people had until Dec 31 to exchange the old notes. Post Dec 31 the people could exchange them at the specified RBI branches. The government believed that this step would help curb counterfeit currency that fed terrorist activities and fight corruption by bringing black money hoarders to book. He asked the people of India to put up with the difficulty for a 50 days, and to view this as a step towards a new India. People obliged, everyone felt this step was in the right direction. None of the major opposition parties questioned this move as they would be seen as aiding the evils that plagued our society. As the days progressed the practical realities hit home. Banks and ATM’s started running out of cash, people started complaining about the need to endure long lines to get money, news reports showed the impact on small businesses and cash based merchants. The government and the RBI announced a slew of measures to counter the realities. Rules were introduced, changed, revoked every single day. As the end of the year approached, it became clear that the challenges would last for more than the 50 day period. The opposition parties started to hound the ruling party holding it responsible for the manner in which the whole process was handed. The ruling party and its supporters blamed the opposition for raking up anti national sentiments and for not supporting the noble cause.

While I do understand that such a large scale undertaking would definitely throw up challenges, I was mildly shocked by certain media reports that highlighted the problems common man had to face especially in the rural areas. As I started talking about the demonetization process with my friends I realized that people were really divided about the benefits, and the picture was not as rosy as the ruling party was trying to project. I tried to understand the numbers that ratified the decision and wanted to understand if this was all worth it. I do have to admit I am neither a economist nor a social policy maker, but I do believe my education and work experiences have taught me enough to put trust in my critical thinking ability. I am not anti-National, and i do want to see corruption free India. I am also ready to suffer long lines for the greater good but please do help me get answers to a few questions I have.

Fight Counterfeit Currency and Sponsored Terrorism:
It is generally accepted in India that most terrorist activities that happen in India are initiated by folks outside the border. The 500 and 1000 rupee note were apparently the most commonly counterfeited and used by anti-social elements to spread the reach of evil. I do not have any information to counter this claim so I will accept this on the word of our PM and national security adviser. It is true by making the (Specified Bank Notes) SBN invalid, we did cripple their financial resources. But unless major security features were introduced in the newer currency, what stops these hoodlums from resorting to counterfeiting again? Would stringer IT audits, and enhanced scrutiny on all financial transactions not help address this problem?

Fight Black Money and Corruption:
One of the major talking points in the news media and social media circles when the PM took oath in 2014 was his stance against corruption. People voted the UPA regime out after numerous reports of scams (2G, Coal, Augusta Westerland, etc.). The PM represented an incorruptible image and does lead a lifestyle that a common man loves to see in a leader. So it should be no surprise when he calls out corruption as one of the major problems that plagues India today. The Income Tax department has published the details of the returns processed for the year 2014-2015. The reports indicate that only 3.65 Crore of the 1.25 Billion Indians have filed tax returns for the year. That is a meagre 3%, so in theory the rest are potential black money hoarders. But taking in account the Indian economic pyramid, and the stats provided by department of labor (surveys– Ref Table 2.4) only about 20% of the population earn income for their households, and from the same paper the number of people performing agriculture based jobs is pegged at 49%. The agriculture based jobs have heavy tax rebates, and for all practical purposes cannot be considered as black money hoarders. (Ref Farmer suicides, news about failed crops). These numbers do indicate that there could be a number of workers who have earned income yet not reported income or paid taxes. Table 1.2 Range of salary incomeshows that roughly 50 Lakh people have declared an income over 5 Lakhs and hence are liable to pay tax. That makes it 0.5% of the population. The largest black money hoarders would probably be the ones who are in the system and enjoy the loopholes in the law rather than the remote few who are yet to be in the system. The tax payable for the 2014-2015 year was 4.5 Lakh crores, so unless the demonetization move causes the reported number to increase drastically the whole exercise might not be as successful as one thinks.

Another factor that indicates problems with this argument is the number of SBN currency notes returned to the RBI. As per the RBI report around 16.9 Lakh crores worth currency was in circulation as of November 2016 and 86% of the currency was in the SBN denomination. That represents about 14.8 Lakh crores. While RBI has not yet officially announced how much currency has been turned in, there have been unconfirmed media reports that put the figure at 15.2 Lakh crores. If this was true, then the amount of money returned to the RBI is only slightly more than what the  RBI states was in circulation before. The same report does state that only 60% of the currency was in banks, and considering the amount of Indians who do not have a bank account, the amount recovered is truly low. Where are the crores and the lakhs of Black Money that we were all expecting to be turned in? Yes there reports of raids in multiple places, news reports of currency recovered, but none of them were the magical figures that were predicted. Again, while I don’t think India does not have black money but I do know now for sure that it was not stashed under mattresses or roof top tiles as films show.

Cashless Economy and Digital India:
India is primarily a cash based economy. Even in urban India where food worlds, more and reliance markets have plopped up, the store at the street corner always seem to do brisk business. Markets (Sandhai, Farmers Markets) play a pivotal role in the economic model of India. The prices are low, and more often not there is minimal operating cost involved and households buy things as required on a Day to Day basis. This is evidently proven by the currency in circulation. The RBI report does state that 14.8 Lakh crores was the worth of currency in SBN as of November 2016. So the Demonetization move meant that the RBI should have looked to replenish the currency in circulation with other denomination notes at the earliest. It would have been highly illogical for anyone to make up the 86% cash by printing lower denomination notes (100’s or even 500s) within the specified timeline (50 days from the start) so the focus was to look to print 2000 rupee notes to make up the worth. This would probably explain as why banks were not able to provide for lower denomination alternatives when people turned up in troves for exchanging old notes. Example( A bank in Tamil Nadu received 1.6 Crore worth money from RBI for the demonetization. 1 crore was in the 2000 Rupee denomination the remaining 6 Lakhs were in the lower denomination notes). The fact that the SBN represented 86% of the currency in circulation does indicate that these notes were the preferred instruments for all cash based trade in India. The lack of lower denomination notes directly influenced reduced spending as consumers started either buying things in bulk or started buying from stores where they could use their credit cards. A family member had to close her shop for a few days as she did not have enough lower denomination notes to run her business. These small time merchants seem to be the ones worst affected by the move not the supposedly multi millionaire tax scammers or black money hoarders. The cash in circulation number reported by the RBI dropped by 48% since March 2016. Thereby truly defining a cash-less economy.

The government advocated the people to  embrace electronic transfers, e-Payments, e-wallets, digital transactions and has been trying to promote the Image of a digital India. Sure, several western countries have developed a digital system that minimizes the use of cash in day to day life. In the US, I do use my credit card at grocery stores, parks, movie rental boxes, shopping centers and even parking lots. It is extremely convenient, carries no service charge, helps me track all my transactions and makes me less worried about being mugged. The country has laws in place for data privacy and the banks systems are geared to detect frauds and cyber security attacks. True none of the systems in place are 100% fool proof, but the point is there is a lot of systems in place that helps or promotes cashless transactions. In India, definitely the past few years has seen a spurt in the usage reports of online payments and e-wallets, but these still remain confined to the cities and the private national banks. Co-operative banks, public sector banks still have miles to go before they enable digital transactions for all customers. The service charge on these digital transactions (2%) do not really help as well. The small time merchants I described earlier can afford to offer low prices because of their low operation costs and day to day transactions. Are we expecting them to up their investment and move to a digital system? Are the banks built to allow the same flexibility the cash based system allows? If not we just brought their livelihood to a halt. I think it is great the government has come up with payment modes such as BHIM and UPI, it is a bit concerning to see how government advocating third party systems such as PayTM and Jio Money. Unless there are at least clearly defined laws on the nature of data they can access and minimal rules in place that protect the interest of the consumer it would be extremely difficult to get a majority of the population to trust in these systems.

The System:
A new narrative that has been gaining traction is that now the cash is all back in the system the government can put in good use of the money. That is the most absurd thing that I have ever heard, the money deposited in the banks are the people’s (exchanged for other denomination notes). The money was already in the system, because the source of the money is known, it was just that the money was not deposited in a bank account. Surely, a little bit of common sense will help see the difference. How can the government claim this for their use? The SBN were declared invalid as a financial instrument so how or what would these notes be used for? Banks are seen as custodians of wealth. They don’t own my money. My deposits in the banks are mine and the banks are liable to give me back the deposits when I want them. How or what gives a democratic elected government the right to set limits on the money I can withdraw from my own account? Is there any draconian law that allows them to do this?

It must be the left-liberal in me that makes me question the oppression of liberty and stand up for others. While I try to defend actions with numbers and logic, people can throw my arguments to sink just based on pure emotion. While emotion is not bad it can sufficiently cloud your thought to be biased (True for me as well!) I do wish I find the strength and patience to help others see reason, but in the mean time if you think of me as the struggling liberal so be it.

The One about Life @ OMR

“Anna” “Anna” yelled the kids by the wayside. They were waving frantically and get somebody to who could drop them near their school. 9 times out of 10 I would have sped away, ignoring them, lost in my own world. Today I decided to stop. As soon as I moved to the side of the road, 5 kids ran toward me and started climbing all over the bike. I found out first hand that it was impossible to take five kids on a two wheeler. I told them that I could not take all of them with me and could only take a couple of them with me. The Kids got into a small discussion. I waited patiently beside them, and the eldest came out and said “Anna, take everybody or you can go alone”. I was not going to take the risk and took off alone. But so many others do oblige. The drive becomes a balancing act, and a safety hazard for the kids as well.
What Has Changed
Five years ago, the words Perungudi, Karapakkam and Metukuppam would not be familiar to many people to the people living in the City of Chennai. Today you need to be a multi millionaire to own a house in any of these areas. The IT Companies that have sprung up in these Special Economic Zones ushered in the change. The old broken road has been replaced by a 6 lane highway, numerous high rise apartments and office complexes have lined up. Many small hotels, shops have shut shop and have been replaced by fancy restaurants and shopping malls. When everybody was awe struck by the rate of development, not many thought about the people who were forced to give way for development projects. According to P.Sainath journalist and author of “Everybody loves a good Drought” at least 24 million Indians are forced to give up their habitat to make way for Infrastructure. The Kids who ask fro lifts to the schools are some of them, forced out of their homes they have adapted to settlements further down the roads. While the joyride to the office on the 6 lane highway lasts 15 minutes. Life is not sop easy for many. It is a 20 minute walk to the bus stop and then a struggle to get into the packed buses and share autos.
The frequency of buses is too little and this causes a stampede when the buses roll in to the stops. When the IT professionals complained about the lack of buses on the IT highway the government complied. Now there are A/C Buses plying between the ends of the highway every 15 minutes. The ticket fare is almost 5 times the normal bus fare and the IT Brigade hops on indifferently. The school kids are left to fight it out with the college students, daily laborers and a few others who think that the new luxury is unwarranted for. The government did fulfill its promise of introducing a new fleet with new routes, but what is the use if still there are many who cannot even get onto a bus?
Share Auto is another common medium of transport. Even the IT brigade believes that Share Auto’s are expensive and complain that the drivers are very rude. I have heard a colleague complain about a driver who said “You are earning right, then what is your problem in paying extra?” When I asked her what she did about it, she said“Who can argue with these people so I paid him extra!” Yes we do not complain, we pay because we can afford it. The Kids don’t, so they don’t get a ride in the share auto’s.

It is a pity to see many struggle for the minimum necessaties when there are so many who indulge in unwarranted luxuries.

The one about Protests

Last month, a friend of mine and I had to go out. It was super hot that day, and we decided to stop for a drink. As we were relaxing with the drink in the shade of the shop, I saw a group of youngsters who had set a stall in the roadside and were holding up messages against Child labor and were conducting a signature campaign. The first thought that came in my mind was “What are the Idiots doing?”. I pointed it out to my friend, (who to my surprise was offended by my remark). She went on about the need to speak out and let our voices be heard and people like me had to empathize. I remained silent. I couldn’t somehow understand how a signature campaign or giving out notices in the hot sun will help stop Child labor.

In a democratic country such as India, the idea of people’s voice being heard is very much in. Students, political parties, and various groups use mechanisms such as hartals, rallies, protest marches to showcase their strength whereas smaller groups, and activists do it on a smaller scale by setting up stalls and doing chain rallies.

Looking back at the major protests in the past two years, the ones that stay in my mind are the ones that turned the most violent. The protests in Shopian, the clash between lawyers and police in Tamil Nadu, the Gujjars strike in Rajasthan. The extensive media coverage that these issues got ensured that images from these protests made it to the front page and “Breaking news” section of each newspaper and television channel. These images makes one empathize the pain and the torture the victim had to go through. The image of Qutubuddin Ansari pleading to the rioters became the face of Gujarat Riots. But years later, how many of us feel for the innocents massacred? Haven’t we sort of moved on? Sure we do feel bad when we read about them somewhere, but will that ensure that another picture like Ansari’s wouldn’t come out?

It is not about how loud or how long your protest was. It is how many you have convinced that matters. When the LTTE was defeated militarily by the Lankan army, a thirty year old bloody civil war ended, and along with it the hopes for a separate state for Tamils. The Shopian villagers protests against the security personnel, fell on deaf years. But amidst all this, Candles lit by a friends of Jessica Lal and Priyadarshini Matoo protesting against their murder, helped them achieve justice. The accused in both cases were found guilty of all charges. The sense of support was because a person had been wronged and the emotion in the others surfaced as the signature campaigns, slogans raised, candles lit and what not. The key is to appeal to the people’s emotion. Unfortunately this does not work all the time.

People have far too many problems of their own. It is not that they do not care, it is just that they neither have the time nor the mind set to be bothered. The violent ones definitely attract the peoples attention, but ultimately everyone moves on. We pray for those affected and live in a hope that we do not become the victim. The healing factor is not the same for only those who were affected, the scars remain to remind them of the pain. How many of us help to remove that pain, i wonder?

I know people would get the notices from these youngsters, speak words of encouragement and toss it in the garbage can. I have met people who sympathize with the “poor”, and then turn around to spend a fortune on useless crap. I hate these phonies, and i felt for that youngsters for letting themselves believe that they are going to make a difference.

I do hope that someday all of this changes and i am proved wrong. But as of now it is not much and it is fading fast.

The Little Gods

Is He willing to prevent evil, but not able? Then is he impotent.

Is He able but not willing? Then is He malevolent.

Is He both able and willing? Whence then is evil?

These are words of the ancient Greek philosopher Epicurus. For Epicurus, the purpose of philosophy was to attain the happy, tranquil life characterized by the absence of pain and fear, and by living a self-sufficient life surrounded by friends. He taught that pleasure and pain are the measures of what is good and bad, that death is the end of the body and the soul and should therefore not be feared. He also said that gods do not reward or punish humans, that the universe is infinite and eternal, and that events in the world are ultimately based on the motions and interactions of atoms moving in empty space.Not many of us in India think along these lines we are brought up in an environment where Gods and Godmen have had a special place. I still remember the numerous stories my grandmother used to tell me based on Mahabharata, Ramayana, and the Gita. All these stories had the same theme: “Triumph of good over evil.” Nobody told me what was good or evil, and I was never bothered to ask. I was told that Godmen represent God, so as I grew up with a respect for anyone in khavi (orange robes) or the sanyasi robes.Soon that respect turned to anger when I started to feel that in the name of God the Godmen were cheating innocents.With time and experience my anger changed to awe, I could not believe that a person could pose as God and so many people could believe it.In fact, going by today’s scenario, the “Babas” would easily be among the richest people in the country. Recently, in the span of a week, four Babas were arrested from God’s own country, Kerala. “Swami Amrita Chaithanya” was arrested on charges of fraud and possession of pornographic CDs. The police carried out the raid on his 16-suite ashram after a Malayalam weekly established, in an expose, that Chaithanya and Santosh Madhavan were the same person, and wanted by Interpol.Swami Himaval Bhadrananda, a college-dropout-turned-faith healer was booked by the Kochi police for using a beacon light on his car and trespassing into a local newspaper office and threatening journalists. Bhadrananda is out on bail now after he staged a suicide drama in jail to protest his innocence. The swami claims to have predicted the tsunami and Chikungunya outbreak.In spite of hearing about so many allegations against these “babas,” people go to them, worship them, and call out to them in the time of need. The sheer volume of devotees, and the donations made in their name makes one wonder as what Maya is causing the thousands to throng to these Godmen. I call these Babas the “Little Gods.” The people too have fallen for the gimmicks. The Little Gods use mechanisms such as Mass prayers, grand poojas, pulling fruits, holy ash, statues out of thin air, predicting vague catastrophic events to get crowd attention. The act is so convincing that many start to believe that the Little Gods are indeed manifestations of God. An increase in the number of followers, increases the baba’s popularity. The baba’s respond with a bigger and better act and thus the cycle repeats.Some neighbors of mine are ardent devotees of a local God woman. Now this God woman has been in our locality for quite some time. Earlier she used to go on a frenzy and dance around the place yelling something. Then came the pattern—she begun to get these “fits” on the third Tuesday of every month. I still remember as a child, my friends and I used to go there to see the fun. Today she has a mansion with a separate temple and, if not thousands, hundreds of devotees who come to see the “divine happening.”When I spoke out against this, my parents and neighbors said, “Oh no! What’s happened to you nowadays? You never pray, and you speak against God…”I am not against God.I am just against the Little Gods who call themselves manifestations and make a living out of it.I am against people who can offer money, gifts, and food to the God men, but would not spare a thought, forget a penny, for the needy.I am against the people who do all they want, and then pray and say God will forgive their sins.I am against people who do nothing and blame everything on God.I have always believed in God. God is life, energy, music, and the passion with which we associate ourselves. God is in us, guiding us in what to do and what not to. It’s up to us to accept the guidance and strive to make lives better, or just blindly follow others and hope our lives will become better.I recollect a quote from a movie in which the protagonist tell his friend that God exists in all of us, and when all realize that, the world will be a better place to live in.