Tuesday 15 November 2016

Controversies Surrounding the Demonistization move - Use of Indeliable ink : Common Man or Con Man

DAY - 7

Genesis 2:2
By the seventh day God completed His work which He had done, and He rested on the seventh day from all His work which He had done.

It is really not right to believe that the Genesis of New notes on 08-Sep-2016,could have been completed within this time frame. After all, we really are not Gods.
There is no doubt that the move by PM Modi to abolish the Rs.1000 & Rs.500 bills came as a surprise to almost of all of us. Yeah ! there is fierce debate about who all knew beforehand. However, not even a single person has questioned the good intentions even after having to go through some amount of trouble to get hands of their own hard earned money. Every Indian is ready to bear the pain provided that this does have the intended effect on the eradication of Black Money.
However, this is where the consensus among different sections, groups & parties ends - Good Intention.The controversies lies in the way the implementation phase has been handled.
The basic step in any new policy implementation of taking the Team into confidence was lacking from the beginning and resulted in a comedy of errors (though the supporters would like to believe that it was intentional and of course it really was not so comic) with PM's Office issuing statement after statement and the RBI along with related infrastructure struggling to keep up with any of the promises.

Their is still no respite for the common man who is still struggling to get some cash owned by him which he has earned with his hard work and put in the Banking system for safekeeping (a service for which he is charged). 

Now, the Economic Affairs Secretary Shaktikanta Das has now announced a brilliant idea to curb the queue by using indelible ink. It is quite shocking that in spite of the repeated Press Releases by the RBI regarding claims to have enough cash, they have to resort to such an idea. This announcement directly contradicts the claims by various Government Agencies regarding the availability of enough money. Instead of focusing on the issue of solving the cash crunch and hunting down the oversees Black Money, these sort of antics will only lead to erosion of mass confidence.  It is quite absurd that one has to Queue up for getting back the money he has (Which incidentally the Governor had promised to honor), and that to in small chunks. No one would/ could have believed me just a week back. But now, it has gone one step further to Insanity. It is quite pathetic that the persons responsible have mistaken the Common Man to be the Con Man. Thinking aloud - For ensuring that the bills in my hand (which the Governor had promised me to honor) could be exchanged for new currency (which again incidentally, the Governor has promised to honor), I am being made to queue up and being marked in the process

The routine of common man in India has only one agenda everyday, for the past 7 days - Queue Up and wait for the magic to happen. Yes, it sure has become a magical feat to be actually be able to get the your money. 

It is good to see that at last the ruling faction has called for an all party discussion on the issue. It is already established that this will be the condition till the end of this year. It would be good, if the concerned persons would actually admit this, approach the matter in a more mature and systematic way and meet the deadline, if not better it.

I will wrap up with an ironic fact regarding the IT Department keeping an eye on the cash deposits above Rs. 250000/- (of the Common Man, mostly).  Dire consequences are being announced for unexplained amount above this limit. If we compare this just to the missing Rs. 9000 crore from just Vijaya Mallaya (one of the Con Man) - The department will have to go through at least 30 lakh accounts (36 lakh to be more precise), as the chances for actually depositing unaccounted money above this limit after all this fanfare is abysmal. 

It is high time that the decision of this magnitude which is sure to be have huge positive impact on the future Indian economy will be backed up by better level of Management & Implementation.


Monday 14 November 2016

Much Ado about Nothing - PM Modi's decision to Demonitize Rs.1000 & Rs. 500, Reason for introduction of Rs.2000/- note & the Timing

In one of the most thunderous political decision of the decade, PM Modi has declared that Rs. 1000  and Rs. 500 notes will cease to have legal tender as on mid night of 08-Nov-2016. However, this declaration of war on 'Black Money' can in no way be termed as 'Surgical Strike'. As it turned out that the collateral damage upto and including the Sixth Day running is even massive than the original strike The decision has literally crippled the Indian economy. The patience of the common man is being tested on a day-to-day basis. The Bank staff are overworked, the politicians are crying foul, Media is abuzz with debates and the common man is still clueless as to what actually hit them. And, of course, the PM is emotionally broke down, "I was not born for sit on a chair of high office. Whatever I had, my family, my home...I left it for the nation," .

The Government and other personnel who are in the Know (or pretend to do so,including the ruling party members) may find these assurances of the PM as adequate, but the general public, who are in the queue, may not be too convinced with this emotional outburst. The social media though lauding the bold steps taken has lashed out severely against this.

Yes ! Black money is a curse and it should be eradicated. We are even ready to bear some pain for effective implementation of the 'White Money'. But, systematically unsystematic way the demonetization has been handled is pathetic. When you come up with such a massive move, you should be able to see it through and of course in a clean manner. The tuglakan philosophy of burning down the town to dispose off the four robbers is really not an apt example in this context. Actually, it is not that simple, considering the fact that those four robbers did rob the Royal Treasury to the last penny. And, yeah, none of them were available when the actual burning down began.

However, i really am not the one to complain. One of the most discussed aspects is the seemingly illogical introduction of the new denomination of Rs.2000/-. The Government, RBI or any other related sources are yet to to disclose the actual reason behind this. This intellectual matter has been entirely left to speculations. Yes, it is surely an intellectual matter, as the common man has failed to understand the logic behind sudden withdrawal of high value notes in circulation. The most seemingly plausible explanation is doing the rounds is the open letter of CA Mehul Shah to CM Kejriwal with the 'Peak Theory'. This reasoning is brilliant, but does it not lack some common sense. Yeah, I know, Common sense is abhorred by us intellectuals. Most of the cases where the peak theory has been called for have been decided in the favor of the Income Tax department as the onus of proving that the same money has been rotated lies on the tax payer. In some genuine cases, the tax payer does gets some relief, as already pointed out in the said open letter. But we are not really after the genuine transactions, only the black ones - or are we,albeit inadvertently ?

I may even suggest that if this was the sole reason, the demonetization and curtailment of Black Money could have been better achieved by introduction of new currency in the denomination of Rs. 900/-. Huh ! Silly me. In this inflated economy, even Rs. 2000/- is not enough and you talk about Rs.900/-.Though, the move of the Government to introduce Rs.2000/- note while claiming that inflation is under control seems to be contradictory. I also wonder whether the brilliant mind that came up with such an intelligent solution, failed to see the common sense that the dimensions of this note need to be at the least compatible with the present ATM system for better and easier compliance on the part of the common man. Or, for that matter, did they really think that Rs. 2000/- could actually circulate through the economy without the support of lower denomination.Tender coconut drink is one of the most refreshing ones when one is thirsty and exhausted. But for all practical purposes, you cannot savoir it without the help of some tool to help it open. It is quite useless to have a basket full off them without any supporting tools to pry them open and consume it. The RBI and the Government should have taken steps to back up the infusion of new Rs. 2000/- currency with huge supply of  lower denominations (Rs.100/-,Rs.50/- etc.)to actually be of some use.

Now, coming to the timing of this decision - No one has actually come up with the explanation of why this date? Time - yes, Date - a Big NO. Why this time - After 8:00 PM - because no one can just flood the market with the hoards of money they possess after the close of the days business. But seeing the actual implementation, I just could not stop wondering whether the announcement could have waited a day or two. I presume that, it would have been quite difficult to keep such a massive operation hidden longer than necessary. Yes ! I also understand the psychology that the thought of such a massive operation is a burden on the mind & it is always easier to let it out than hold it. But still, the question would remain whether the picture would have been quite different had RBI finished the printing of all the estimated required smaller denominations before taking the actual plunge. I still opine, based on the way that events unfolded (and of course in retrospect) that the requirement of having to change the ATM structure to fit the new currency was really an afterthought.

The Motive
The Idea, Motive or aim of this Act of war on black money is beyond suspicion and remains still unquestioned. And one and all supported the PM on this issue. The opposition parties have questioned the actual intent though and as most of the common people I came across actually suggested that they are more than ready to bear through this trial only if the Modi Government actually brought back some black money or the culprits who have escaped outside India. No, the name Vijaya Mallaya does not ring any bell. The actual way that this decision has been implemented is below par, even going by the Indian low standards in the implementation phase.

The Effects
The MSME sector has come to a halt. India is a cash based economy and as expected (vide common sense & not brains or stats) taking the cash out of this economy has had the desired effect of crippling it. Most of the people in India rely on cash receipts on daily basis. The labourer expects the settlement in cash at the end of the day. He uses the public transport(Bus, taxi etc.) to go to and from the place of work and utilises the available cash to pay off in a per journey manner in real time. He pays the chayawala and dabbawala on a daily/weekly/monthly basis in cash to satisfy his stomach. He pays the vegetable vendor and kiranawala for the provisions to his house in cash. All these persons receive cash and plough it back into the economy in a similar manner while utilising the same for their day to day needs. This is simply a case of losing the War for want of a nail. Cancelling the tender has resulted in non payment of the daily labourer and in a cascading effect the cash & the business has been sucked out.

The only seemingly flourishing business is the 'Banking business'. Though in reality they are overworked and I am sure that the Ratio of Quality Service to Personnel is on the negative side. The statistics are staggering and quite frightening.
1. The banned bills accounted for more than 80% of notes in circulation.
2. Not a single ATM in the country is equipped ( or can be equipped in reasonable time) to handle the new currency.
3. The RBI is really clueless as to what actually is happening - No reasoning or explanation has yet been officially published regarding the various steps already taken or planned in the future to contain the situation.
4. 50 days is the time to eradicate the black money market and not actually the time in which things are expected to return to normal for the common man. This blind pursuance of the black money is quite frightening. As the saying goes "It does not matter whether my son dies, as long as I can see tears in the eyes of my daughter-in-law.

The Containment - What could have been done (does not really matter now) Vs What should be done(with immediate effect)
What could have been done (does not really matter now)
As seen above a bit more careful planning with a mix of common sense could have gone a long way in upholding the resolve of the Government to eradicate 'Black Money' and of course any trace of the opposition parties from the hearts of the people. The compatibility of the new denominations with the existing system, preparedness for rolling out enough backup in the form of lower denominations etc. are some of the examples.
What should be done(with immediate effect)
The Governement,the ruling party & RBI really should put aside the big brother all knowing stance, come on their knees, and Think about actual practical aspects required for the implementation. A simple capture of some of the actual culprits, preferrably who is not in India, wll surely go long way in boosting the morale of the people. Do something to support the people instead of continually asking the people to do bear in the name of the country. The ruling party personnel should refrain from commenting in any derogatory manner regarding the spending habits of the people or for that matter taking humorous shot on the subject matter on opposition. After all, the opposition is also part of the general public.

It would be actually good to use the party strength to reach out to the people in these dire times and provide some kind of consolation, say for instance, provide water to the people waiting in the Queue. They may be considered to operate as the channels to provide the minimum amount of cash to the Senior citizens or persons with different abilities. 

Dear PM, the day calls for acts of humility for the humanity and certainly not Humor. 
These are just some personal thoughts.