De-Lurking on the Net

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.


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.


December 12, 2012

Which one is the best government in the world? The winner is Canada !!

I wanted to seek reasons why the democracies are wobbling in reaching maturity. Of course the reasons are not far from comprehension – it is due to inability to develop mature institutions. Any successful democracy needs lots of institutions which are independent and beyond corruption. It needs independent media, independent judiciary, a fully working corruption free legislature who can raise the questions of probity without compromises and legislate the right laws and finally the executive who can oversee the implementation of those laws. Of course, one would also need independent election commission, a strong corruption free military and police for a working and mature democracy . I would like to rank democracies based upon these measures as to how much mature the democracy is. Since, China and other single party state also have to be accommodated in this maturity index. Let us call it govt maturity index rather than democracy maturity index. So, for this I have used stats from ‘Transparency International‘. I have used their stats on the measures like human resource development, judicial independence, press freedom, voice and accountability based on country wide data to discuss governance maturity. I have ignored corruption here as people tend to use this as a single parameter to discuss governance. In my view, there is no single consolidated governance parameter justifying why any country is getting better governance than another and how any country is travelling towards a better governance. But the world definitely need one govt maturity index. There is of course the table printed on which is the best country to live in but it has more to do with issues like standard of living, health, infrastructure etc. Here, I have picked up those countries I was interested in to compare them – the Source is Transparency International

Country Judicial Independence

(score out of Max 7)

Rule of Law Press Freedom

(High means bad)

Voice and Accountability
UK 6.2 1.769596058 2.00 1.312851012
France 4.9 1.524405497 9.50 1.225976029
Japan 5.8 1.31377106 -1.00 1.047643331
Germany 6.3 1.627934067 -3.00 1.345103086
USA 4.9 1.584584729 14.00 1.16180876
Canada 6.3 1.789068657 -5.67 1.379444766
Australia 6.1 1.770200087 4.00 1.428903554
China 3.9 -0.346839923 136.00 -1.649501221
India 4.3 0.057769364 58.00 0.42402758
Pakistan 3.9 -0.785570665 75.00 -0.81606361

Clear winner here is Canada. It has the best measure in all commonwealth countries even better than the mother country UK. The only measure Australia is better than the Canada is on “Voice and Accountability”. Comparing USA with Canada makes you wonder why USA is not as good – is it because the number of people it has in comparison to Canada? If that reason was plausible then it could justify why India is so low down as it has even more people. I consider that it has more to do with the will to change. Comparing India, Pakistan and China makes one wonder about the China’s real achievement. Other than the wealth creation, it virtually falters on everything else. How its citizens must feel one can only empathise. In Europe, it is not the UK who holds the flag of having best govt – but it is Germany. The only measure on which UK leave Germany behind is the “Rule of Law”. And of course, the Asia has also a first world govt in one country at least – it is in Japan.

July 19, 2012

Indian Migration Around The World – Unmitigated Joys And Sorrows In Equal Measure

Usually, there should be no surprise as there are two major countries China and India with the biggest population and no matter how much progress these two countries have made, their citizens are always craving to leave their motherland. Both countries not only compete in terms of growth but also in terms of migration to the western world. Indians have the advantage because of English and having good understanding of democratic norms of governance that allows dissent. It helps them settle, integrate and grow better in a foreign land. So, it is not a surprise that they are most prosperous ethnic group in US. But they are usually the cream or the most talented bunch of India. Indians provide the third biggest migration to US after Mexico and China. This was the data in 2010



Mexico 139,120
China 70,863
India 69,162

Interestingly, the Australia has just published their data too saying that Australia took more permanent migrants from India than any other country for the first time in the year to June, 2012. India was the largest source of permanent migrants in 2011/12 with 29,018 places, or almost 16 per cent of the total. China was the second most fertile source with 25,509. “Skilled migration is essential to support our economy and help overcome the challenges of an ageing population,” said Australian Minister for Immigration and Citizenship, Chris Bowen.

Some migration will always take place as there can never be an equitable world. There will always be poorer areas and rich areas. Some areas will have more opportunities and therefore, more potential to individual growth than others. Not all migration ends on happier note. There was a news – An Indian’s suicide in a Bahrain park highlights workers’ nightmare“. The agencies who recruit usually are the first to exploit the emigrant. After landing the employer does the same, so the only escape route is that of the suicide as one can’t escape a continuous exploitation or modern day slavery and return home. By now, everyone realises that Indian govt. wants to ship the human capital as much as that can be absorbed by another country. India clearly can not absorb the number of engineers and other graduates itself  that it produces annually by providing them meaningful employment without frustration. It is not creating such jobs in equal number. So, whether it is right or wrong, why should govt. policy bother to stop that migraion. After all, there are plenty of benefits of migration. It generates FDI inflow to India, reduces the need to generate employment for these people back home. Moreover, the other country becomes more Indianised. Also, the migration to the west in particular of highly educated, skilled persons brings another benefit. It creates the absence of those people who may prove restless and critical of govt. functioning by not bringing changes fast enough. It is like quietening the voices without an active action on the part of the govt. but akin to the outcome Pol Pot of Kampuchea sought by actively eliminating intelligentsia. Besides this, migration results in yet another outcome. The Indian immigrants as they all are getting absorbed by west, so they are inculcating the western values affecting the govt. policies in both west and India itself. There is a big Indian voice now in US. So, the inter-government harmony is taking root. So, no matter how many socialist or left leaning parties, politicians and media outlets may be present in India, the Indian govt. policy will start leaning more and more towards the capitalism and the west.

Migration brings both joy and cringe in equal measure. If a migrant wins a coveted award like ‘Noble Prize’ or recognition, people feel puffed up at home and feel helpless when someone gets caught doing something un-mentionable like terrorism, fraud, crime etc. Migration causes some headaches too for both countries when one country wants to act according to its own laws but the other country wants to intervene. This was the case when Germany sought pardon in 1992 for two twins brothers ‘Walter’ and ‘Karl’ ‘LaGrand’ for murdering a couple in 1984. Germany remained unsuccessful in spite of Vienna convention ruling and Arizona went ahead with death penalty. In some situation, the migration become even bigger headache as was the case in second world war when the Japanese Americans living in US were taken away after ‘Pearl Harbour’ and kept in relocation camps away from their homes from January 42 until Dec 1944. They were suddenly considered aliens.

Migration was slated as brain-drain in ’70s India and was looked down upon by the then govt . of India. It will be silly to stop the migration to the west by any Indian govt. regulatory moves as it is a free democratic country. The west already puts the visa restrictions. But, should India be actively seeking to overcome those restrictions? If someone looks at the longing for the home and uneasiness that lingers on during the whole life time of an uprooted person, settled in a foreign soil, one may a have different view. India may recall that even after centuries of adaption abroad e.g. the Indians in west-indies, Surinam, Fiji , that feeling of belonging to Indian roots never went away. India has certainly not been able to help all those settled abroad or going to settle.  It will need ever growing funds to help people in trouble. So should there not be a neutral policy on migration – neither encouraging nor discouraging?

Sir Venkatraman Ramakrishnan, 2009 Nobel Prize winner in Chemistry

It is quite clear that world is becoming more homogenised due to migration but there is personal as well as national pain with every joy or benefit that each migration brings. My own migration to the west has brought me both – pain and the joy. I clearly decried every struggle back home when I was growing up and even working. The only solution and dream was to escape from that struggle to a foreign land. I never wanted to go back home because I was clearly enjoying the life abroad. But, the realisation of my folly of short-term gain dawned on me recently after the death of my mother and younger brother in less than a month when it was too late to be able to help them in more meaningful way. Gazing through their funeral pyres reminded me that my sin was not to consider that my original home was still the home, I should had been looking after. There, I was needed not only by my family but also by that country itself, I had left behind and that I had yearned to escape from. The yearnings for both, family and country linger very deep even today after roughly quarter of a century of creating a home abroad.

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