De-Lurking on the Net

November 20, 2016

Mr Trump, Mr Modi, Democracies & Intelligence

Here is a video between  Mitt Romney and Trump just compiled by BBC. See how Mr Romney was judging Mr Trump in this video –

Mr Trump is a phony. His promises are as worthless as a degree from Trump University. His domestic policies would lead to recession. His foreign policies would make America and the world less safe. He has neither the temperament, nor the judgement to be president and his personal qualities would mean that America would cease to be a shining city on a hill.”

In this exchange of this video, it is clear that Mr Trump is hurling abuses at Mr Romney, while Mr Romney is analysing the man, Mr Trump is or would be in his presidency. It seems that Mr Romney has mapped out the capacities of  Mr Trump quite well but it just makes you wonder why those who can see the future, judge things minutely do hardly ever become head of the govt. Why do they  get defeated in elections.

However, I would like to apply the Romney’s assessment of Mr Trump, to the champion who is leading another democracy in the world, Mr Modi. So, let us see if Mr Modi possess that elusive quality to stave off recession by his domestic policies (demonetisation move) or if Mr Modi’s promises made at election time can be fulfilled.

mrmoditrump

India has been pretty nascent democracy in spite of its seventy years of age and the analysing capacities or scrutiny of the govts’ performances are seriously lacking in media or by opposition. Usually, either you are ready to throw away a govt like previous scam ridden govt of UPA led by Congress or you are ready to revere a govt without understanding the implications of any govt initiative. So, analysis is missing but either hurling of abuses is non-stop or showering effusive praises are endless. The current govt of Mr Modi is having a easy time in spite of giving awful time to the public by its recent drive of de-monetisation  or rather reissuing a Indian currency note and introducing a bigger note. Public is staying calm because indirectly, it seems that rich people have become less rich overnight and some sort of redistribution of wealth is going on between rich and poor in order to defeat the govt drive to eliminate black money. The poor people are getting offered a commission in order to help convert rich people’s black money into white, legitimate money. The poor people can not resist the powerful rich people(politicians included) either due to their display of force,  power by rich or due to the poor people’s own greed or need. Somehow reverence of Modi gets converted into a devotion of him in spite of the hardships of standing daily in the queues to convert the money from black to white rather than going to earn your daily wage. Chances of  wiping out a big chunk of GDP seems certain that relied on the availability of black money. So, how much of a big hole in GDP will it cause remains to be seen. Will it usher recession or merely drop some GDP growth rate is not clear to any one. Will it wipe out corruption or bring back black money stashed overseas as promised at election? It is pretty clear, it will not. It would just eliminate some black money. It will help RBI(Reserve Bank Of India) and govt to strengthen the banks balance sheets by infusing new funds into them.

A roar goes out against those who throw the pebble in the wells where devotees of Mr Modi also called Bhakthas in Hindi not only dwell but have been enjoying themselves in great numbers – specially on most of the WhatsApp groups. Discovering myself at the receiving end, recently I had wondered if  they should be dared to be asked if any of them had ever read anything beyond local publications from New York Times, Washington Post, Globe & Mail, Telegraph, Guardian or Le Monde about demonetisation drive of Mr Modi. But I resisted the urge after remembering  been questioned already once when BBC was quoted wherein a quote of the Indian PM’s speech of 2014 was referred. But Bhaktas had told that BBC was hardly trustworthy source even if it was a direct quote of the PM. One of the Bhaktha sometimes back had called the BBC as ‘Bak Bak Corporation’ meaning BBC just knows how to yap most of the time.

Recently, I was watching a video  by Mr Arun Puri, an ex editor of a magazine called India Today. Mr Puri has been very eloquent in this video in summing up Mr Modi‘s inning thus far. When Mr Modi campaigned during elections, he was projecting all kinds of hopes in the minds of voters as well as giving the ray of optimism to the world. May be, he just projected and promised too much. It seemed as if he will not only be able to stop the corruption, scams of previous govt, but also  be able to bring the efficiency in his new govt like it was never seen before. Unfortunately, he has ended up only tinkering mostly, so far in his new bureaucratic governance even though spawning some new initiatives like MakeInIndia, JanDhanYojna etc. In the early days of 2014, when he was sworn in he had raised the hope greatly by saying him believing in minimum govt, maximum governance . The Cabinet is now 80-member strong, up from 45 when Mr Modi came to power two years ago.
The tinkered bureaucratic system in India by Mr Modi is hardly ever going to complain about not changing much as why would the bureaucrats or the system  machinery not like to retain their status quo. The public is hardly ever going to debate it, if the media does not display the state of affairs to the public. The opposition is abysmal, the media delinquent, boot licking type. It is strange that Mr Arun Puri till date, had not had a chance to say his bit that he has just said in this video. I wonder how could he never got a chance to say it earlier. Why could he not write this in local media or international media. May be he waited, perhaps, for the right occasion or perhaps like most in journalistic circles, he too was not ready to take on the sloganeering brigade of Bhakthas. Let us see how he copes with the new attention that he will now draw from those in power. But I am glad, he took the opportunity to judge Mr Modi‘s govt now. Like him, I had always felt the same.  Mr Modi perhaps finds himself overawed  in that position. He offers simplicity and sincerity in the face of complex issues, problems. The plethora of advisers must be making it really tricky for him. It is difficult to drop an advice on your own, if you can not think beyond the simple things and do not understand all the complexity of a system. In financial systems, demonetisation and impact of globalisation on investment, currency flows, corruption, recession, growth etc is even hard for most people to understand, so would it be any wonder if the simple leaders do not understand it. They rely on advisers alone. So, how will one make its mind  before deciding to dump this advice or that advice. I am not surprised that Mr Modi has got lost in this conundrum.   Unfortunately,  Indian political scene is totally bereft of intelligent people in politics who could attain a position one day to challenge him politically. The political parties are really controlled by few people or groups and real talent within parties get stifled and never allowed to rise. It is not true that no intelligence exists there but what is there can never rise.  But this  democracy in India will not fail you as comprehensively as it does in most other countries where not only honesty, competence of the leader remains suspect but is also that of the leader’s advisers that the leader himself has gathered around him. One could easily conclude that democracy is a compromised system of government as individual intelligence of those not near power have not much role to play in it.

Advertisements

November 9, 2016

Sledge Hammer strike by India’s PM Modi on black economy and terrorism funding

Today, Mr Modi went bold. Perhaps not of his own volition but on behest of what all the economic advisors he could muster in last few months, advised him. He struck the  big denomination Indian currency notes void(Rs 500, Rs 1000). Some say these large notes amount to 86% of economy. Indians have guessed that economy is as much in black as it has been in legal/legitimate or white economy. So, given that both 86% is a guess and dividing line between black and white as at 50% of guess, then Mr Modi is writing off 43% of GDP in one hit. No matter what % is hit, the impact will be to usher the huge deflation in its black economy. It comes on the heel of his visit to Japan, a country staying in deflation since its hay days of 1993, before which it had seen any boom. Perhaps, it is just a coincidence.

pm-modi-ends-rs-500-rs-1000-currency-notes-read-his-full-address-here

His intentions can not be construed as wrong as he wanted to hit the most, two sets of people – 1) terrorists 2) Black economy peddlers who have refused to come out in open in spite of the amnesty to convert their black money into white(The scheme was not failed but could hardly be called a successful scheme).

So, what happens now – he introduces two type of notes – Rs 500 and Rs 2000 . These are not Plastic polymer notes as recently got introduced in number of countries (Australia, Canada, UK, New Zealand, Vietnam, Maldives etc) but it has new security features. Some say , Rs 2000 note has NGC technology . Details of the NGC has not emerged from Govt sources but social media rumors are fueling this. The NGC introduced in Philippines did not have any nano GPS chip as people are talking of Rs 2000 will have one. Without introducing a fool proof arrangement of  temper prevention or making it tough for some people or countries to stay in printing duplicate currency  and sending it to India, this whole exercise achieves nothing but brings pain to India. You merely burn your own notes.

There are terrorists using Hawala market, an arrangement where someone who wishes to send money into India does not go to banks or use legitimate companies. They use individuals who disburse Indian rupees from their black money in India to the recipient and get paid in return in foreign currency in a foreign country abroad. Such transactions were major source for black marketers to convert their money into white, money launderers to launder money, terrorists to get funded for new terrorist acts, drug pushers, smugglers etc . The cinema(Bollywood) largely depended on black money for funding. The Real estate particularly in north India had a big share of black money in it. All the political parties virtually live on black money. There is a domestic currency based trade between Iran and India. India’s currency is also used and particularly popular in Gulf  countries and in a country like Zimbabwe who are in the process of re-introducing their own currency again after a hiatus of several years. So, will all these people or even diaspora spread around the world will have all their money in bank or would be in position to change these notes in time?

So, immediate impact would be less housing activity, less Bollywood Cinema films, less terrorism (at least for now), less smuggling(all the smugglers money is never fully invested in metals like gold or other commodities but also remains in hard currency), less drug trafficking. There will be less activity in air travel and luxury living. There will be suffering for both poor and rich people. Poor people hardly have bank accounts, so will be impacted  a great deal. There are remote , rural areas where there can never, ever be a bank.  Even if such people have notes with honest earning or sent by their relations or kids, they will never know how to go inside a bank and convert it. There will be people not been able to pay to private hospitals. Govt hospitals rarely exist  for most in the country. There will be people who hide the money and unable to return in time to the places where they hid it to convert it or have anyone to access their money to convert it. Virtually all sectors in India have humongous corruption from ISRO scientists to judges, from North to South, West to East India. So, what happens when people suddenly have less financial muscle. Well it means, that their economic activity goes down including expenses on exorbitant weddings. So, hoteliers, caterers, etc all will have impact. It is like dropping a bomb on your own economy or helping your enemies who may all want your GDP to come down to a very low level or to see  your purchasing capacity substantially reduced.

The notes  can be converted in next 50 days . But beyond a threshold  of converting Rs 4000 in cash of new notes, conversion is allowed only by the bank accounts. If someone does not have their own bank account, then they have to use some one else’s bank account by giving them consent to receive his/her money into their accounts. Later on,  such people can withdraw their money in new notes from the account for which they consented. So, this particular activity will make the menace of already accumulated black money  in the economy to reduce substantially and it will become trackable until it stays in bank. It may stay long term in bank accounts but chances of its  staying in bank accounts long term are remote as people are used to cash transactions.  This declaration by Mr Modi, therefore, will not make the economy to become overnight controlled by banks. The networks of black economy generation, terrorists funding or drug peddling mules, duplicate currency circulators, smugglers, betting, bribe givers, bribe takers  are not going to disappear overnight. They are part of the system just like political parties or corrupt judges.  So, a new black economy will start growing as soon as one ends. Yes, there will be  people who will suffer massively and a few may even commit suicides or may even die of heart attacks when they find themselves  ruined totally. Incremental changes like Jan Aadhar Yojana etc would have achieved Mr Modi’s dream of having a economy fully running via banks etc. in few years.

Misery awaits India in short term and this will have impact on  the growth of the world economy too. Perhaps, it will teach a lesson to the other leaders to be patient.

Blog at WordPress.com.

%d bloggers like this: