(In view of its topicality, we are republishing this story)

I really like Indian Leftist historians, some of them are my role models like Irfan Habib (not the bearded one, but the clean shaven one, although the bearded one is cool too), but sadly they have made a big mess while trying to explain  Alauddin Khilji’s supposed “anti-Hindu” policies.  What could have been a simple explanation was turned into something very complicated and hence inaccessible to people not trained in history, which resulted in Alauddin Khilji’s unnecessarily demonization and politicization. Below, I have tried to make it clear why we need to change the way we look at Alauddin Khilji.

Contextualizing Alauddin Khilji’s Reign

Alauddin Khilji’s kingdom was a state which was constantly at war. Although this could be said about different kingdoms and empires in India across history, but the threat to Indian civilization and culture during Alauddin Khilji’s reign was unprecedented. If you think I am overselling my point consider this- by the time Alauddin had ascended the throne in Delhi the Mongols controlled the largest land empire ever in the history of mankind. Everything from China to Russia, from Turkey to Central Asia was under the control of Mongols, so they had India surrounded from the Northern, Western and Eastern sides.

Mongol Empire in 1280 A[i]

Now if you are thinking- “what is the point? Just one more invader in Indian history and didn’t we have a successful Mongol invasion into India in the form of Timur?” This is where you are wrong.

Let’s start from the end of the question, with “Timur”- he was a strong Mongol ruler, but by his time the glue keeping the Mongol Empire together had come off which weakened it considerably.

Now let us consider the “just one more invader” point of the question. Yes, even before the Mongols India has been invaded by everyone from A-list invaders like Alexander the Great to C-List invaders like Yeuh Chihs whom you probably know as the Kushanas.[ii] But Mongols were nothing like them. Historians consider that one-third of the total Chinese population was killed during the successful attempt of the Mongols to capture China. This is based on the evidence that if you look at the population numbers before and after the Mongol conquest of China- it shows a 45% drop![iii] A look at the Chinese economy shows that it took them at least 200 years to recover from the devastation caused by the Mongol Conquest of China.

Source[iv]

Alauddin Khilji’s Personality

Don’t get me wrong, I do think that if Alauddin Khilji saw the heading of this article he would have the same reaction as you- something akin to “No way in hell!”. Alauddin Khilji had no love for the Hindu religion, by all accounts he was a devout Muslim, but he was a realist too. Many contemporary heavy weights in Islamic thoughts condemned Alauddin Khilji for not implementing Sharia throughout his kingdom and for not basing his state laws on sharia which is why they called Alauddin Khilji’s kingdom- “jahandari” or based on laws of the world, in other words- not based on the laws that Allah wanted people to have in the world- or sharia[v].

There is also a minor side issue here- Delhi Sultans prior to Alauddin like Iltutmish, Raziya and Balban also had jahandari policies but Alauddin had also committed regicide when he assassinated the previous ruler- Jalaluddin Khilji, a ruler who was trying to establish amicable relationship between different groups of nobles and who also happened to be Alauddin Khilji’s uncle and father-in-law.[vi] This is why a lot of people tended to look down on him.

So, Alauddin Khilji knew that he was stuck in a situation where he was a Muslim king, who was supposed to carry out God’s work on earth, except that over-whelming number of people in his kingdom did not believe in his God and most of his courtiers looked down on him as he failed to meet the basic standards of an Islamic ruler set by other Muslim rulers while ruling states where majority of the people were Muslims. So, Alauddin did what all Indians even to this day do when they are stuck in a tight spot- adjust.

His Economic Policies

Now that we have contextualized Alauddin Khilji’s kingdom and the situation he found himself in let us get into the different controversies and nothing was more controversial than his economic policies of which the imposition of the jaziya tax is the most debated.

Alauddin Khilji found himself in a situation where he had to ward off the Mongol threat by maintaining the fortifications in Northern and Western India which were built by Balban and by extending them further. He also realised that fortifications will not be enough and that he needed good fighting men. So, he decided not only to pay his army in cash but to increase their salary substantially. Alauddin paid his cavalry men 20 tankas per month which was almost the same amount that Akbar paid his cavalry men but since Akbar ruled India more than 250 years after Alauddin Khilji the difference due to inflation adjustment is quite substantial[vii].

Cambridge Economic History of India: Vol. II C.1757

All of these expenditure in defence required massive sums of money and since most of the people in his kingdom depended on agriculture and were Hindus Alauddin Khilji saw a unique opportunity to kill two birds with one stone. He decided to increase agricultural taxes to half the produce and decided to call a section of this tax “jaziya tax” or the tax that non-Muslims pay to their Muslim overlords for protection.[viii] In fact it was only in the time of Firuz Shah Tughlaq, that the jaziya tax was separated from the agricultural tax.[ix] So, Alauddin Khilji showed his detractors that he was implementing sharia and at the same time got the resources he needed to defend his kingdom.

But, there is a third thing that Alauddin managed to do with this step that people do not realise  – which is to reduce the burden on peasants. Yes, increasing taxes and reducing burden might look paradoxical but to see how he did it we have to dig a little deeper.

The period immediately preceding the Delhi Sultanate is recognised as the golden era for Indian Feudalism when we see classical feudalism at work across India.[x] This was a time when land was parcelled off to feudal lords called samantas and to Brahmans in the form of Brahmadeya[xi]. Under this arrangement the samantas and the Brahmadeya had the right to tax whatever they wanted and had the powers of jurisprudence over their territories. All these resulted in a plethora of “creatively” created taxes. I am not going to comment on the caste and gender discriminations this system caused- you can do some imagining on your own if you can’t then you can read it here[xii]. But what I am going to comment on is visti– the right of the feudal lords and the Brahmans of the brahmadeya to claim forced labour for their lands[xiii]. Under the system of vishti the peasant or kasak had to stop working for his field and instead work for the privately owned fields of his overloads for a particular time period and got no portion of the produce or profits from this labour. So, vishti was essentially a nice Sanskrit word for slavery.

So, although in the period before the Sultanate the agricultural tax amounted to only one-sixth of the produce but in practice it was much more than that[xiv].

Indian Feudalism

Alauddin Khilji took the above mentioned revenue system and decided to rationalise it and limit it to only 3 kinds of taxes- Kharaj-i-jaziya (agricultural tax), cattle tax and house tax.[xv]

But not content with this Alauddin Khilji decided to go one step further to safeguard the peasants and enacted price control on markets. Prices of all commodities were fixed in the market so there was no inflation and people were able to decide which businesses to get into, what to cultivate and on what to invest in to maximise their profits. Some argue that the price control in the markets was because the soldiers were being paid in cash and inflation would result in them demanding more while others like Ziauddin Barani has argued that it was done to hurt the Hindus by reducing their profits.

Both arguments have significant drawbacks- first, the soldiers comprised of less than 1% of the population in Alauddin Khilji’s kingdom and were already getting very high salaries for their time as mentioned above.[xvi] So, taking such a massive economic step for so few people who were not facing economic problems is meaningless.

Secondly, Barani’s communal insinuation is also non-applicable at the ground level because a large section of the merchants and traders in Delhi and surrounding areas where this price control was in full force, were Muslims.[xvii]

So, the peasants who were impacted negatively by the increase in tax rates, did not have to worry about their purchasing power going down and could plan for investing more in the future as the market conditions were more or less stable.

Propaganda Then and Now

After reading the above you might be saying that you heard elsewhere about how Hindus suffered because of the jaziya tax. For you I have two things to say- firstly to repeat what I have said above that jaziya tax was indistinguishable from agricultural tax during Alauddin Khilji’s time.

A History of Medieval India

Secondly, the stories you heard about the suffering of the Hindus, did it sound something like this-“the Hindus were so badly affected by Alauddin’s taxes that womenfolk of rich Hindu households had to find work in other’s lands and houses to pay their dues”. Don’t worry, I have heard them too, but I beseech you to exercise caution while making assumptions on this story. Remember the feudal lords called samatas and the land grants made to the Brahmins called brahmadeya, mentioned above? Well after conquest of their lands by the Turkish Sultans their rights over the lands of course deteriorated. Under Turkish rule they changed their identity and became the biggest landlords in the villages or the village headman. They were called khuts and muqqadams by the officials of the Delhi Sultanate.[xviii]

But till Alauddin’s reign the khuts and muqqadams continued to use vishti or forcing other peasants in their area of influence to work their fields, without pay. Since they lost the right to the tax breaks that they used to enjoy before the Delhi Sultanate came to power, they used this kind of forced labour to pay their taxes.

But Alauddin Khilji needed all the resources he could get and khuts and muqqaddams keeping peasants away from their own fields to work on their own not only impoverished the peasants but also negatively impacted state revenue which is why Alauddin Khilji ordered the discontinuation of this system. The khuts and muqqadams were forced to work their own fields, or could hire labourers for a price but since this would mean other peasants had to leave their own lands and work in someone else’s land and keeping in mind that the taxes appropriated were extremely high (half the produce), the village elite found it difficult to get enough labour to meet their needs. On top of it anyone found using vishti in their fields were severely punished. This is why you have all these stories about rich Hindu families becoming impoverished due to Alauddin Khilji’s new tax laws.

But if you study Alauddin Khilji’s reign without any pre-conceived ideas you will realise that there are far more stories about him punishing Muslims for their failure to obey his tax laws than there are about Hindus being dealt with in the same way.

How did Alauddin Khilji Save Hinduism?

While facing the Mongol onslaught Alauddin Khilji found himself defending his kingdom of Hindustan where most of the people were Hindus. We have to remember that during the time of Alauddin Khilji although there were substantial Hindu populations in the Malay Islands and in Indo-China, but they were eventually eclipsed by either Buddhism or Islam, so the Indian subcontinent was basically the last stronghold of the Hindus.

The Mongols led two massive attacks against India during Alauddin Khilji’s time. The first one was in 1297 AD when the invasion force was 200,000 men strong and the second one was in 1303 when it was 120,000 strong.[xix] But both these invasions were not only stopped but also definitively repulsed by Alauddin Khilji’s forces. From a military history point of view this victory was very significant because the main strength of the Indian forces were their cavalry and the Mongols had possibly the best cavalry force in the history of mankind. Defeating such large Mongol cavalry forces not once but twice is almost unheard of in history.

But what would have happened if Alauddin Khilji had failed to defend his kingdom?

To answer this question we have to look at the geographies of India and China.

Mapping China’s Growth and Development in the Long Run, 221 BC to 2020

Both demographically and geographically the Indo-Gangetic plains dominate India. Then as it is now, most of India’s population resided there. Since economically and demographically important cities of India like Mumbai, Chennai and Bangalore did not exist, the Great Indian Plains assumed much more importance during Alauddin Khilji’s reign than now.

Compare this to China- there are different plain areas in China like the Central Plains or Zhongyuan, but they do not geographically dominate the Chinese landscape like the Great Indian Plains. Moreover, the geographical barriers for an advancing army while trying to reach the East and the South East which were the traditional power centres in China and their economic engines were numerous. This meant that the even after the Mongols broke through the Northern and North Western defences of China they had a hard and long fight ahead of them.

But this has historically not been true in India. Once invading armies break through the Western and the North Western barriers they are free to exploit the most important political and economic centres of India located in the Gangetic plains.

So, I want you to imagine a scenario where Alauddin Khilji fails to protect his Northern and Western boundaries and the Mongol armies break through and get access to the Indo-Gangetic plains- what do you think would have happened then? There are two ways this could have panned out- the Mongols would say something like “Indians are so nice and peaceful people and their food is so great, so we have decided not to harm them in any way”, or they would have pillaged, looted, raped and killed their way through the most densely populated Hindu area in the world and possibly the richest region in the world at the time.[xx] Which scenario do you think is more credible? Moreover even when China provided protection to various populations with its geography even then 45% of its population perished in their unsuccessful fight against the Mongols. What do you think will happen to India where most of the population lived in wide open plains?

Oh, are you thinking they will escape South of the Vindhyas? Think again. The Mongols with much smaller forces than the ones which attacked India during Alauddin’s time successfully invaded Turkey which was protected by mountain ranges far more inaccessible than the flat Vindhyas. But really, how many people do you think would have escape given how fast Mongols seem to travel in flatlands like the Gangetic plains.

Conclusion

The reality is stark and staring at our faces and we only need to have the courage to look it in the eye. If Alauddin Khilji had failed to stop the Mongol Invasion of India- the Mongols would have engaged in a large scale slaughter of the Hindus. Of course the Mongols would have done the same to Muslims in India as well, but by that time Islam had spread from South of Spain to Indonesia so the effect on the religion of Islam demographically would not have changed a whole lot. But the Hindus by the late 13^th and early 14^th century remained largely confined to the Indian subcontinent, so a mass slaughter of Hindus in India would have been disastrous for the Hindu religion and might very well have led to its extinction.

(Source of both the Featured Image and Image at the top of the page is Jami-al-Tawarikh by Rashid Al Din).

[i] http://asianhistory.about.com/od/Genghis_and_Mongols/ss/The-Mongol-Empire.htm
[ii] Thapar, R., Early India (Noida, 2002).
[iii] https://myweb.rollins.edu/jsiry/ChinesePopulationHistory.htm#diagram
[iv] http://www.china-profile.com/data/fig_pop_0-2050_large.htm
[v] Chandra, S., History of Medieval India (New Delhi, 2007), p. 134.
[vi] Chandra, S., Medieval India (New Delhi, 1997), p. 76.
[vii] Chandra, S., History of Medieval India (New Delhi, 2007), p.103
[viii] Habib, I., The Cambridge Economic History of India (Delhi, 1984), pp.48-76
[ix] Chandra, S., Medieval India (New Delhi, 1997), p. 124.
[x] Sharma, R.S., Indian Feudalism (Delhi, 1965).
[xi] Ibid.
[xii] Sharma, R.S., Economic History of Early India (New Delhi, 2011), pp-52-75.
[xiii] Sharma, R.S., Indian Feudalism (Delhi, 1965).
[xiv] Chandra, S., History of Medieval India (New Delhi, 2007), pp. 41-42.
[xv] Habib, I., The Cambridge Economic History of India (Delhi, 1984), p.55
[xvi] Compare the data you find here: http://www.ggdc.net/maddison/oriindex.htm with Chandra, S., History of Medieval India (New Delhi, 2007), p. 120.
[xvii] Chandra, S., History of Medieval India (New Delhi, 2007), p. 104.
[xviii] Ibid, p-124.
[xix] Ibid, p 87.
[xx] http://www.ggdc.net/maddison/oriindex.htm
 

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What is a  Bad Bank?

A bad bank is basically a bank which will buy the bad loans from different banks and try to “reconstruct” the assets to get back the money that was due.

With the main opponent to this plan- Raghuram Rajan out of office- the finance minister of India, the chief economic advisor to the Indian government  and a deputy governor of the Reserve Bank of India have recently opined that a bad bank should be established as soon as possible.
 

1. Why did Raghuram Rajan oppose it?

He opposed it because of the Indian banks’ debt profile. Almost all the bad loans or NPAs are in government owned public sector banks and almost all of these are a result of loans being given to privately owned corporation and business houses. The private sector will not invest in a bad bank because it is a venture which guarantees loss. So, Raghuram Rajan was worried about the government using public money in order to settle private debts which might have serious consequences for India’s debt to GDP ratio.

In other words, Raghuram Rajan implied that if most of the loans were in the private sector banks then the banks would/could have been forced to raise money from the public through securities to solve that problem. But now the government will be forced to do that if it decides to set up a bad bank which will increase government debt and force them to limit expenditure.
 

2. What does it mean in simple words?

Well, we as a nation have watched in slow-motion all the bad business decisions of liquor baron Vijay Mallya, such as, buying an IPL team, buying a Formula 1 racing team, private jets, expensive cars and last but not least swimsuit calendars. If a “bad bank” is formed all of Vijay Mallya’s bad loans could be transferred to it and the government will have to use our money to right Vijay Mallya’s mistakes. I don’t know about you but I find this completely unacceptable. But, Vijay Mallya is just one example- there are hundreds of people like him, many of whom are even bigger spenders than Mallya.
 

3. If this plan is so bad then who is supporting it?

Last year the former RBI governor Rajan forced all banks to disclose their Non-performing assets. This led to a lot of embarrassment for many bank officials when it emerged that they gave loans to private business concerns which should not have got any if normal banking procedures were followed. Investigative journalists also soon found out that many of these loans were given out due to pressure being exerted by government bureaucrats on the banks.

But now with a bad bank buying up all the banks’ bad loans and NPAs- the bank officials and bureaucrats can wash their hands off of their misdemeanours and pass the responsibility for an asset’s “non-performance” onto this newly founded institution.
Bankers have a second reason to support this plan. If a bad bank is set up then the responsibility of banks to lend money responsibly considerably decreases because after all if the loan becomes a Non-Performing Asset then they can simply sell it to the Bad Bank and wash their hands off from any fallout.
 

4. Is there any alternative to deal with NPAs other than opening a Bad Bank?

In order to deal with bad loans the government owned banks have been engaging in “assets reconstruction” either by themselves or by employing privately owned Assets Reconstruction Companies, but this initiative has been a failure. Now with a bad bank the government is hoping to succeed by setting up a big government owned Assets Reconstruction Company to deal with NPAs. I have only one thing to say here, that is to quote Albert Einstein- Insanity is doing the same thing again and again and expecting different outcomes.

Indian government should seriously and sincerely think of a different way to deal with these Non-performing assets. Below I have mentioned a suggestion- please have a look at it.

Possible Solution

One of the meanings of the word “democratise” is to make something available to all. Why don’t we democratise the NPAs?

Keep the NPAs with the respective banks. The banks know who their high value customers are. Banks can contact the assets reconstruction companies and not ask them to reconstruct the non-performing assets which take a lot of time without any guarantee of success but asks them which failed assets can most easily be reconstructed or re-converted into a profitable asset. This is not a difficult job to do and frankly there are many private consultancy firms in India which can do this job. The banks then should offer to sell these NPAs which have high probability of success to their high value customers. Only those customers who have impeccable credit record which can be easily determined with the help of CIBIL or Credit Information Bureau of India Limited should be made eligible to buy such an asset.

Any asset thusly sold to a private party should for a particular time period be made eligible for loans based only on the immovable assets of the business or the high value customer to whom this NPA had been solved. Moreover, loans should only be approved if the buyer of these assets agrees to implement the changes which have been proposed in a plan drawn up by the bank and the firm which assessed the non-performing asset before it is sold to the high value customer.

There are many high value individuals banking with Indian banks but most do not have any business background or entrepreneurial acumen. The pre-conditions to sell NPAs to such individuals should also be that they agree to set up an independent board of directors who can run the everyday operations of the newly acquired asset. The size of this board must vary according to the size of the asset and always be an odd number to avoid indecision.

I think this plan will work because there are many NPAs which have a lot of potential but have been run down by bad business decisions. I also think that there are sufficient number of high value individuals using the Indian banking system who would love to own a business but are hesitant to do it because they do not want to start from scratch and because they are ill-equipped to run the day to day operations of such a business. Moreover, a high value individual will most likely “adopt” a business close to where he/she resides, this will help in the welfare of local communities since NPAs and high value bank customers can be found everywhere in India.

If you like this suggestion on an alternate method to deal with NPAs, please share it online and on government portals.

(Full disclosure– There was recently a similar move to create a bad bank for Europe, but it has been shot down by EU’s biggest economy- Germany. I have been trained by and worked closely with at least 3 leading German economists and economic historians so the above article might be a result of my pre-conceived ideas.)
 

The post Why setting up a Bad Bank is a really Bad Idea and what can be its Alternative? appeared first on SabrangIndia.

Yes, you heard me right. The government wants to give you Rupees 635 per month and in exchange they will abolish everything including MNREGA, Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Awas Yojana, National Health Mission, Swachh Bharat Abhiyan, Sarwa Siksha Abhiyan, Mid-Day Meal Scheme, LPG Subsidy, Food Subsidy, Fertilizer Subsidy and every other Centrally sponsored scheme and sub schemes.

Unbelievable? Believe It![ii]

But how can they have arrived at such a measly amount? Well, what they did is that they took the consumption level of an average person living in poverty in 2011 (According to now defunct Tendulkar Committee Report) and then calculated the amount needed to be added so that that person crosses the poverty line threshold, then they inflation adjusted the numbers to 2016-17.

There are so many problems here that I do not know where to start my analysis from.

It is very strange that when the discussions on Universal Basic Income took place in the rest of the world people called it too socialistic a measure, but in India we have a situation where the Finance Ministry has perverted UBI to demolish whatever elements of socialism and social welfare remained in India.

I will be going off topic if I start to discuss the merits of poverty lines here but I think it should be mentioned that when the last report on poverty line was released by the Rangarajan Committee it was criticised for keeping the poverty line very low. The Tendulkar Committee Report which came before that kept the threshold at a level even lower than the Rangarajan Committee. According to the Tendulkar Committee Report, anyone with income of more than Rupees 1000 per month in urban areas or INR 816 per month in rural areas was not poor.

Now, do the authors of the economic survey really believe that the welfare programs that they plan to abolish will have no impact on income levels of the poor? Programs like MNREGA and Pradhan Mantri Gram Sadak Yojana employ lakhs of unorganised labour for whom income from these programs are very important for making their ends meet. But the impact on consumption of even basic things like food and fuel for cooking will be much worse which I will discuss in details below under a different context.

The “Evil” Middle Class
There is in the chapter on UBI a lot of implied and direct ranting and raving against the middle class of India which is apparently misappropriating a large amount of subsidy for their own benefit which in turn has been sighted as one of the reasons why subsidies and welfare schemes should be done away with in favour of a Universal Basic Income. But how much of the subsidies is the middle class appropriating for itself- according to its own admission the Economic Survey says it amounts to only 1.05% of India’s GDP (the total value of all subsidies and centrally sponsored welfare schemes is 5.2% of the GDP)

It is important to note that the subsidies valued at 1.05% of the GDP which according to the Economic Survey is going to the undeserving people of the middle class also includes favourable interest rates for farmers, long distance non-AC train travel, fertilizer and LPG subsidies. I am not convinced that it is only the rich or the middle class which takes advantage of these subsidies, are you?

What is the Middle Class?
The Economic Survey of 2016-17 does not quantify or define the middle class but if the above mentioned subsidies that it wants to curtail, the massive focus in the chapter about the undeserving appropriating subsidies and “75%” to whom it wants to give the UBI to are any indication then the number of people in the middle class in India according to Finance Ministry’s estimate should be something close to the World Bank’s estimate i.e. around 20% of our population or over 260 million people. [iii]

But how did they come up with this number and is it relevant to the present times?

The World Bank came up with this number by considering everyone whose income is equivalent to 2-13 US Dollars per day as middle class.

But, I will like to draw your attention to another study done by Credit Suisse in 2015 where the size of the Indian middle class comes up to only 24 million. They arrived at this by considering wealth instead of income[iv].

What is the difference between income and wealth?
Income primarily refers to only the salary or wages that a person earns from doing his job. On the other hand wealth or net worth refers to the financial assets of a person like the amount of money in the bank and insurance policy returns and non-financial assets like immovable assets and people’s debts are subtracted from this calculation[v].

So, even though a person’s income might categorize him as being middle class, he/she will lose that stature if they lost their job. But a person categorized as middle class based on his or her wealth will not lose that status immediately, even if they lost their job because they have a protective net preventing them from falling into poverty.

So, is Income or Wealth Assessments more applicable to India?
According to the International Labour Organisation (ILO) only 15.4% of Indian workers get regular salaries and over 80% people work in unorganised or informal sector[vi].

Furthermore, over 60% of India’s GDP comes from the service sector[vii]. The service sector does not only include the IT sector but also tourism, shipping and port services and media and entertainment services[viii].  These sectors are extremely vulnerable to external shocks and it seems the world economy is facing one shock after another. Two of the biggest shocks that it is currently facing are the increased speed at which China is selling US debt and the US dollar becoming extremely strong thanks to Trump’s policies[ix].

So, in the current situation where only 1 out of 10 Indian workers get a regular salary or wage, a number which threatens to plummet even lower owing to the present volatile international situation, income should in no way be the basis for defining the middle class, Instead a person’s net worth or wealth should be used for quantifying it. It also means that the Economic Survey’s assumption that around 20% of India’s population belongs to the middle class is not applicable since if we consider the wealth or net worth of Indians it is only around 2%.

Transaction Costs
I am a student of Economic History, but I have always been on the fence when deciding the role that economic history can play in policy making. But this chapter on Universal Basic Income released by the Finance Ministry has convinced me that economic history is very important for policy formation or else neo-classical economists like those involved in creating this Economic Survey will let some obvious things slip from their minds.

The proposal for the UBI falls under the New Institutional Economics or NIE school of thought. This is fast becoming the most important school of thought in economics. But some neo-classical economists are trying to pervert it to their own needs which currently mean only one thing- reduction of government spending and austerity which according to them will free the market for the private sector. But NIE school of thought not only talks about the often abstract economic notions that most people find difficult to comprehend, but also deals with implementation issues with their primary aim being to decrease transaction costs.

Let me give you a brief explanation about the transaction costs. According to the New Institutional Economics when people interact with one another economically they not only exchange goods but also rights to those goods. For example when you buy a cucumber from the market you buy the right to eat it not the right to hit someone over the head with it. In order to ensure that these rights are preserved three main costs are incurred- negotiation costs, information cost and enforcement costs. All these comprise to form the transaction costs and lesser the transaction cost the better it is for the economy. This principle is not only applicable to economics but can be applied to many other things like functioning of the government or distribution of subsidies. What you see in the economic survey is unfortunately a shortcut by which the authors are trying to reduce transaction costs by directly reducing the expenditure of the government, but this is really very short sighted.

Institutions, Institutional Change and Economic Performance (Political Economy of Institutions and Decisions)

Let us consider some possible consequences on transaction cost if the UBI plan as mentioned in the Economic Survey of 2016-17 is implemented.

It seemed really bizarre to me that this chapter which talks a lot about the negative psychological impact that poverty has on people, which they basically lifted from a study done by the World Bank in 2015[x], seem to be so clueless regarding how people deal with their surrounding everyday of their lives when they live in poverty. Living in poverty is a form of violence in itself which makes people behave in radical and often “unlawful” ways.

For example, the current NDA 2 government says that they have been able to provide LPG connections to lakhs of poor household[xi]. Now, if the LPG subsidy along with the kerosene subsidy is discontinued then what will these people do? Obviously they will start cutting down trees for cooking fuel.

Also, millions of people all over India are employed for a season (100 days) under the MNREGA scheme. If this support is removed then not only will many people lose their income and remain unemployed for almost 1/3^rd of the year but rates of theft and robbery would increase.

As we have seen, elimination of just these two subsidies or welfare scheme will result in massive increase in the enforcement costs for the government be it to enforce the forest protection laws or to reduce petty crimes.  But these are obvious things, how could the economists writing the economic survey miss it? The answer might be in the following meme

It is no secret that the neo-classical economists see themselves as scientists who work in a field that can be mathematically precise. This has been their undoing in the recent years. This is why I am proposing that economic historians who deal with more social issues should be given more say or at least should be heard when shaping economic policies.

The Basic Problem with this Document
The basic problem I think with this UBI chapter in the Economic Survey is its clear intention to cheat the Indian people. To an extent they have succeeded because they have garnered support and congratulations for the Economic Survey from some staunch critics of the NDA government like from Yogendra Yadav[xii].

The primary instrument for this cheating has been the structure of this chapter. They begin and end this 41 page document with several out of context quotes from Mahatma Gandhi talking about social justice, responsibility and frugality, so that no one can question their good intentions. Then they proceed to tell you how much the Central Government is spending on all its welfare schemes and subsidies (5.2% of the GDP). Then they tell you that this does not reach the deserving by showing the percentage of poor people across all of India’s districts. In the next map they show you in how many districts there are shortfalls in welfare schemes/subsidy allocations. Their implication is that the undeserving has gobbled up those subsidies. But do they consider that the government might itself be under-investing in those schemes, no.

Instead they go on a full rant against the “evil” middle class based on their assumption that it comprises of nearly 20% of India’s population, all the while telling you the advantages of better targeting the welfare schemes and subsidies. In the mean time they also tell you that to implement the Universal Basic Income the government will need to spend 4.9% of India’s GDP. They freely sacrifice the subsidies they think goes to the middle class alone for this purpose but it comes up to only 1.05%. As for the rest of the subsidies they give a warning that dissolving them might destabilise the country, but this is to just confuse the people who might condemn it. But no one is getting confused, even The Economist read it the same way I did, but they were happy with it while I am disturbed by it[xiii]. Even Arvind Subrahmaniam (person in charge of writing the Economic Survey) in his interview to The Hindu makes it clear that he is all for of removing the entire gamut of subsidies and welfare schemes in favour of a Universal Basic Income.[xiv]

This document can also be accused of lying by omission especially with regards to two issues. Firstly, there is no discussion about how the government finds money to give subsidies and tax cuts to corporates while it cannot find the same for the poor, something that is repeatedly highlighted by people like Jean Dreze and Amartya Sen. Secondly, there is no explanation as to why they considered the old and much criticised Tendulkar Committee Report for deciding the poverty line instead of using the newer and somewhat better (although in no way perfect) Rangarajan Committee Report.

What saddens and worries me also is that the team which prepared this economic survey includes young and brilliant graduates from some of the best universities in the world like Harvard and Oxford. Do, they think that they can pass even an under-graduate exam in those universities if they produced such a mess of a paper? Do they think it is a great achievement on their part to cheat people into giving up all their subsidies and claims to social welfare for a measly 635 rupees per month?

The media and the civil society of India must ask the government to disown the concept of Universal Basic Income as proposed by the Economic Survey of 2016-17 or else shrewd economists will manage to convince sufficient number of politicians to approve this proposal. After all we have to keep in mind what John Maynard Keynes said-
 

“The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.”
 

 
[i] http://finmin.nic.in/indiabudget2017-2018/es2016-17/echap09.pdf
[ii] Catchphrase from http://www.imdb.com/title/tt0218787/
[iii] http://www.business-standard.com/article/current-affairs/indian-middle-class-is-24-million-not-264-million-credit-suisse-115102900181_1.html
[iv] https://www.credit-suisse.com/us/en/about-us/research/research-institute/news-and-videos/articles/news-and-expertise/2015/10/en/global-wealth-in-2015-underlying-trends-remain-positive.html
[v] http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD783798-ED07-E8C2-4405996B5B02A32E
[vi] http://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—sro-new_delhi/documents/publication/wcms_496510.pdf
[vii] http://www.business-standard.com/article/economy-policy/india-s-services-sector-grew-10-a-year-in-2015-16-cii-report-116042001082_1.html
[viii] http://pib.nic.in/newsite/PrintRelease.aspx?relid=136868
[ix] https://www.ft.com/content/2a01d6c2-de6f-11e6-86ac-f253db7791c6?myftTopics=TnN0ZWluX09OX0FGVE1fT05fMTIxNjIw-T04%3D  and https://twitter.com/adam_tooze/status/826029868009787392
[x] http://www.worldbank.org/en/publication/wdr2015
[xi] http://pib.nic.in/newsite/PrintRelease.aspx?relid=155686
[xii] https://twitter.com/_YogendraYadav/status/826435386914136064
[xiii] http://www.economist.com/news/finance-and-economics/21716064-powerful-idea-unfeasible-now-india-floats-idea-universal
[xiv] http://www.thehindu.com/business/Gandhiji-said-poverty-is-about-dignity-and-self-respect-CEA/article17124278.ece
 

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A Strange Experience:
I went to an SBI ATM a couple of days back, there was money in the ATM and there were only 5 people in the queue. Soon after that 3 people left the ATM without withdrawing any money because it was not giving out 50, 100 or 500 rupees notes. The remaining two people after failing to get notes of lower denominations reluctantly took out 2000 rupees notes and left. Then came my turn, fortunately I was not there to take money out but was there to just check the balance in my father’s account. But, unfortunately, the bank officials due to the huge rush caused by demonetization had not updated my dad’s pension papers so his account was empty.

This experience for me was symbolic of the utter chaos that demonetization has caused in our country.

Situation in North East India:
Everyone living in India and every region in India have been affected by the demonetization process albeit in different ways. To understand how the North East has been affected we have to first look at the macro-economic picture.

I live in the biggest city in North East India- Guwahati. But this does not mean we escape the harsh realities that afflict the entire region.

The size of the economy of North East is very small. In fact the size of the economy of the entire North East is smaller than the economy of the cities of Mumbai and Delhi individually.

Figure 1: Source[i] [ii]

Moreover, Assam which constitutes around 60% of the economy of North East India and around 70% of its population, has per capita income far below the national average.

Figure 2: Source [iii]

Also, over 90% of the employment comes from the unorganised sector which is 10% more than the National average due to the over-emphasis on primary sector in the North East.[iv]

So, most people in North East earn their daily livelihood in small denominations of cash. But what happens when there is none of that available? Simple- the common experience that people across the country have had due to demonetization namely- people spending less, postponing work that needs to be done, not employing labour, people not get paid, consumption levels being low and businesses encountering massive losses, have also been felt in the North East but to a much larger extent.

What is worse is that government’s prescription to go cashless is almost completely non-applicable in North East India because digital and Mobile phone network access is very poor. Share of E-commerce in retail for everyday needs is 2% for the entire country which is even lower in North East due to both poor physical and electronic infrastructure.[v]

A Rural Perspective:

I have witnessed recently that people who are opposed to the demonetization program usually mentions the difficulties that the farmers might face in procuring seeds.  But, the Indian farmer has more or less adapted to this challenge mostly because the concept of trust is far more prevalent in rural areas than in urban areas. Farmers have sold their produce to APMCs without getting paid, with the promise from the traders that they will pay them later. Similarly, farmers have purchased seeds from seed sellers without paying them with the same promise that they will pay them latter. So, we have the emergence of a true “cashless” economy one that is based on debt.

Unfortunately, many of the promises made above will have to be broken because of the basic laws of economics. Due to good rains last quarter the agricultural sector performed well and there was increase in agricultural produce. But now their consumers do not have sufficient cash at hand to purchase these primary goods which are sending their prices tumbling down in many urban centres. So, when the traders do not get sufficient cash by selling their goods how are they going to pay the farmer back?

But “seed” is just one of the problems facing rural India. The bigger problem is “labour”. The rabi cropping and harvesting season is going on. During this time the farms in India employ large amounts of extra labour.

The rabi season is a good season for the labourers in unorganised sector in both the urban and rural areas and the labourers have an option to choose amongst them. This is because coming fresh off from the monsoon season which causes huge disruption in construction in real estate sector (one of the largest employers of unorganised labour) the autumn and the winter periods are the time when they aim to do most of their work.

Similarly in rural areas the farmers having faced difficulties like floods and silts during the monsoon season pour everything they have into the rabi season to break even. So, this results in massive employment for low income households in both rural and urban areas. But now when there is no cash at hand and when most of the unorganised sector labourers are daily wage labourers how can the employers pay them?

This problem is far worse in the North East because our population levels are very low. The entire population of North East is just 45 million. So, North East comprises of 4.5% of India’s population while occupying 8% of India’s total land mass. This makes labour a scarce and precious commodity here.

Another important element for the rural economy of North East is the tea gardens. Prime Minister Narendra Modi’s Jan Dhan Yojana might have been a great success as far as opening bank accounts were concerned in the country as a whole but it was a massive failure in the tea gardens. This was realised by the Assam government only after demonetization program was launched and a haphazard attempt by the state government to make tea garden workers open up Jan Dhan accounts has as yet not been a success and why will it be? Tea Garden workers have been daily wage earners in Assam for the past 150 years- it cannot be reversed in just a few weeks’ time.

But this has helped in the rise of a new group of thekedars or labour contractors. Many of the farmers who own their own land have at least one bank account in the name of one of their family members. So, they contact these middle men and tell them how many labourers they need to farm their land. On the other side of the spectrum, the tea garden workers desperate to earn some money will contact these middle men and let them know of their willingness to do agricultural work for some income. So, the thekedars will make it possible for the demand and supply side to merge. After the work is done the farmers will transfer the money from their account to the contractors’ account.

It might look like a good deal, but it is actually not a very good deal for the agriculturalists. The sowing and harvesting of a farm which grows crops and vegetables are vastly different from the activities in a tea garden. So, tea garden workers are far slower in completing their work than the labourers usually employed by the farmers. This means extra income for the middle men but loss for the agriculturalists. The tea garden workers’ communities are also facing a lot of uncertainties due to this new ad hoc system coming into play.

The Security Angle

Just a few days after Demonetization was announced by the Indian Govt. it began to be also promoted as a step against terrorism and insurgency as much as it was a step against Black Money. But what has happened in the insurgency hit region of North East?

The constitution calls for the Indian Government to safeguard the unique culture of the North Eastern region under its 5^th and 6^th schedule. So, various tribal areas in the North East are governed by independent local council bodies. Many tribes governed by these councils do not have to pay any income tax, hence the concept of “disproportionate assets” is non-applicable to them. Keep in mind the government can put tax penalties in bank deposits only if there is disparity between the source of income and the real income. But what can the government do if there is no requirement to show source of income? Nothing!

So, the insurgents and militant groups which are dominant in these areas have brought trunks of currency that they had accumulated over the years through various illegal and nefarious activities like extortion and kidnapping and made the people of these regions deposit it into their bank accounts.[vi]

But what happens to the insurgents and other militant groups which are more dominant in regions which are not governed by these local councils?

Well, immediately after demonetisation we began to hear that people were very afraid that now since the money collected from them by these violent groups have become useless- they will start using more aggressive methods to extort money from them. The government also knew this and decided to step up security measures, but to no avail. The insurgent groups showed this new aggressive stance when ULFA (I) ambushed and killed 3 Indian Army soldiers on the 19^th of November 2016 and NSCN (K) killed 2 Assam Rifles soldiers and injured 7 others in another ambush on 3^rd December 2016.[vii]

“But at least they are getting the Black Money back”
I don’t think so. Till now around 75% or 12 lakh crore of the 16 lakh crore demonetised currency have come back to the government. Out of these only around 2000 crore rupees have been recognised and taxed as undisclosed asset which is just 0.16% of the total amount returned.[viii]

So, where did all the black money go? I don’t know. Maybe as I wrote before (here: http://monishborah.com/2016/11/14/1380/ and here: http://monishborah.com/2016/11/09/why-did-the-government-take-out-indias-big-rupee-banknotes/ ) most of the black money is probably not in liquid assets and after all the 500 and 1000 rupee notes constitute only around 12% of the total size of India’s economy.[ix]

Also another place to look for the “missing” Black Money are the notoriously stagnant Jan Dhan accounts which from the date when demonetisation was announced till the 2^nd of December 2016 has seen a sudden influx of funds amounting to nearly 50,000 crore rupees.[x]

“Only a Few days more and the situation will be back to normal”

Unfortunately the numbers in front of us belie this assumption.  On the 8^th of November the government had demonetised 16 lakh crore rupees. But by the 8^th of December only 4 lakh crore rupees of the new currency notes have been injected into the system.[xi] So, by normal calculations it will take another 3 months more or till the 2^nd week of March 2017 for the situation to normalise (optimistically).

But the situation Indian economy finds itself in due to demonetisation is actually much more severe than the government authorities are letting us know.

The 4 months that Indian economy will take to arrive at any semblance of normalisation due demonetization also constitute an entire quarter in an economic year. Now the Indian economy is growing at around 7% per annum (nominal GDP). As mentioned above the value of the demonetised currency notes is 12% of India’s economy or around 1/8^th of India’s gross GDP. The destruction caused to such massive portion of the economy and the time required to recover from it, is why most experts are saying that India will lose at least 1 percentage point in the nominal GDP growth numbers.[xii] Thus demonetisation will result in India returning back the crown of “the fastest growing big economy in the world” back to China.

But what does the growth numbers have to do with the common people? Private institutions / investors be it foreign or domestic invest in various countries by looking at several things like infrastructure, human development index and growth rates. With regards to the first two factors everyone knows that India lags behind most of the world, but they were still eager to invest in India because the economy was growing rapidly. But now when the economy decelerates to 6% how eager will foreign/domestic companies and
investors be to invest their precious resources in India? Not very, and at a time when the government is increasingly abdicating its role in the economic sector to the private players this could have disastrous effect on the employment numbers in our country.

Final Suggestion
None of the top economists in the world believes that demonetisation will help end corruption, black money or the shadow economy; it is only quacks amongst economists who believe that. Fortunately the economists, even though they have diverging views in many topics do not have many varying views regarding how to fight the above mentioned ills of the economy. Their prescription is very simple, which is- improve institutions to reduce transaction costs. I can explain what they mean by this but that will be a subject for another article. For now know that their prescription refers to the scholarship in the New Institutional Economics (NIE) school of thought.

NIE is rapidly becoming the most important school of thought in economics and many of the last UPA government and present NDA2’s policies show traces of it. But demonetisation stands completely opposite to NIE principles.

To get a basic idea of what their prescription meant and what this school stands for you can read Doughlass C. North’s- “Institutions, Institutional Change and Economic Performance (Political Economy of Institutions and Decisions)”.

(This article is a follow up from this: http://monishborah.com/2016/11/14/1380/ ; the author may be contacted at monish.borah@gmail.com)

Disclaimer: The views expressed here are the author's personal views, and do not necessarily represent the views of Sabrangindia.

[i] http://statisticstimes.com/economy/gdp-of-indian-states.php
[ii] https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/gci_mumbai_02.pdf
[iii] http://statisticstimes.com/economy/gdp-capita-of-indian-states.php
[iv] http://www.thehindu.com/opinion/columns/Chandrasekhar/indias-informal-economy/article6375902.ece
[v] http://www.thehindu.com/business/Economy/We-need-a-level-playing-field-for-the-local-ecosystem/article16778911.ece
[vi] http://indianexpress.com/article/india/india-news-india/with-old-crores-in-cash-naga-insurgents-look-to-tax-exemption-law-bank-accounts-demonetisation-4390590/
[vii] See, http://www.hindustantimes.com/india-news/one-army-jawan-killed-4-injured-in-alleged-encounter-with-ulfa-i-in-assam/story-LxCNhvnP0TecCXP1kATt7M.html and http://scroll.in/latest/823243/assam-rifles-soldier-dead-8-others-injured-after-militants-ambush-convoy-in-arunachal
[viii] The Hindu, Demonetisation a Month Later, (Kolkata, 9^th December 2016)
[ix] http://economictimes.indiatimes.com/markets/stocks/news/inadequate-capitalisation-threatens-psu-banks-fitch/articleshow/55334559.cms
[x] The Hindu, Demonetisation a Month Later, (Kolkata, 9th December 2016)
[xi] Ibid
[xii] http://www.forbes.com/sites/timworstall/2016/11/20/hsbc-says-demonetisation-will-slow-indias-gdp-growth-by-1/#798f43cc76e3
 

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In 1985 and 2010 the Indian Government and the World Bank respectively conducted two different studies on how big the black or “Shadow Economy” of India is[i].[ii] They both came to the same conclusion- it is around 20% of the total GDP.

It is quite a surprising consistency over a quarter of a century. So, let us assume that this share of “black economy” in India is still around 20% of its nominal GDP.

Image: Pradeep Gaur/Mint

According to both the IMF and World Bank India now is the 7th largest economy in the world. According to the IMF the size of India’s economy is 2.25 trillion dollars.[iii] 20% of 2.25 trillion is 450 billion dollars.

Before the last week’s demonetization the total value of liquid currency in India was around Rs. 16250000000000 or around 240 billion dollars. Rs. 500 and Rs.1000notes which have been dropped as legal tender constituted 86% of this total amount which brings its value up to around Rs. 14000000000000 or around 207 billion dollars[iv].

Figure 1: Values are in Billion dollars (US) and from before 9th November 2016

So, we see that the total value of the “black economy” is more than twice the total value of all the 500 and 1000 rupees notes. Now, let us consider that 20% of the 500 and 1000 rupees notes were “black money”. Even then, it will constitute only around 9% of what is generally considered to be the size of India’s “black or shadow economy”.

Hence in conclusion, demonetization will not affect more than 91% of the “Black economy”.

I like many other people have been quite critical of NDA2’s economic policies but we should not assume that the economic policies of our country is determined by “idiots”. Afterall, the Indian economy which was the 11th largest economy in the world last year is the 7th largest this year. So, they must have known that demonetization would affect only a minute section of the “black economy” so why go ahead with it?

Part 2: Why then did the Government do it?
(I am no government insider so this is at best an educated guess and at worst a speculation)

When I look around myself post- demonetization – I see nothing but economic stress. Businesses are not selling anything, because the customers do not have enough legal tender to buy goods and services and I see lots and lots of people everywhere wasting hundreds of individual working hours by engaging in bureaucratic banking activities.

So, I had to ask this question- why did the government impose such economic pain on the people and what was their cost benefit calculation? The conclusion I came to was simple- the government took this step to protect the fragile Indian banking sector against future volatilities caused by reasons like the US Presidential Elections amongst others.

But then why did the government just not tell people the truth? That is the question is it not? Let me answer that by showing first how weak the Indian banking sector was below

Figure 2: Source IMF[v].

The “tier 1” capital is the capital set aside by banks under the Basel Agreements so that the banks can carry on with their business even after facing a financial calamity thus providing assurance of stability to customers. But as is clear from the above diagram this assurance is lowest in India amongst other leading Asian economies.

Also according to the Fitch ratings agency- Indian banks lack tier 3 capital as well. This capital is supposed to protect against tertiary risks like market risks and commodity prices risks[vi].

Figure 3: Source IMF[vii]

This figure shows that only Japanese Banks have lower returns on investments than Indian banks. Consider this- Japan has been going through not years but decades of recession and India is the fastest growing big economy in the world.

Now, let us see what international and national ratings agencies think about Indian banks-

The CRISIL ratings agency in March of 2016 downgraded the following banks- Bank of India, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and UCO Bank[viii].

Standard & Poor’s ratings downgraded Syndicate Bank, Bank of India and Indian Overseas Bank in May 2016[ix].

ICRA ratings agency lowered the outlook for Bank of India, Indian Overseas Bank, Central Bank of India and UCO Bank[x].

What does the Reserve Bank of India think about this?

According to the Reserve Bank of India, 14.5% of the total loans given out by Indian banks have become NPAs or stressed assets. This amounts to 7% of India’s total GDP or around146 billion dollars[xi].
How does the Government of India look at this problem?

By all parameters the Government of India (GoI) also realises that the situation is quite grim. In 2015 the GoI began the “Indradhanush” plan to re-capitalize the banks by injecting 70,000 crore rupees by 2019[xii]. But this was not enough as the downgrades we saw above all happened after this plan had been launched.

Now consider the above in the light of the results of the US Presidential Election where the Indian Government was staring at a possible Donald Trump victory- a person who made cancelling both intercontinental and regional free trade agreements with some of the closest allies of the US his central theme in the election campaign. Trump’s most significant foreign policy goal was to go back to the isolationism of 1920s and 30s something which aggravated the Great Depression. Whether these things happens or not, we will have to wait till the beginning of next year but, if that happens or even if there is an indication of that happening it would lead to tremendous pressure on the international markets including in India and since India lacks severely in tier 1 and tier 3 capital, its banks will not be able to sustain this pressure. So, what will happen after that? Let me answer this question along with the question I asked above- “But then why did the government just not tell people the truth?” (about demonetization). It was probably because both the situations will have led to the following consequences.

People will rush to the banks not to deposit or exchange cash but to withdraw cash. Government will impose capital limitation over withdrawals (like it has done now- but with the crucial difference being that now it is due to increased demand and then it will be due to lack of supply of money). The people seeing that money is running out and they are not being allowed to withdraw a lot will start buying stuff in bulk and stocking them in their homes- leading to sky rocketing inflation. The RBI then in order to stop people from withdrawing money and to reduce inflation will increase the interest rates substantially. But this increase in interest rates will mean that businesses will not be able to borrow money to expand capacity or even carry on with day to day operations so many businesses will have to shut down leading to massive unemployment and social and political unrest.

I am not pulling the above hypothetical scenario out of my hat- not only because I am not wearing one but also because we saw this exact same situation play out in Greece and Russia in the last few years after their financial institutions collapsed due to the Eurozone crisis and due to the Western sanctions respectively.

So, it seems to me that the NDA2 government instead of dealing with this above mentioned hypothetical situation decided to deal with the consequences of demonetization. How this works out- time will tell but let us look at one of the immediate impacts of the “currency ban”.

Remember the 70000 crore rupees the Indian government was planning to spend on recapitalizing our banks? Well, within just one day after demonetization was announced the State Bank of India alone received deposits worth 53000 crore rupees[xiii]. Also when I see the massive crowd in the banks lining up to deposit their now- worthless currencies I realise that probably the 70000 crore rupees target has already been crossed and by the end of this year the Indian PSU banks should have sufficient resources to deal with their stressed assets comfortably. So, the mission to recapitalize the banks is now a success. But was it worth the pain that we see the government inflicted on the common people with demonetization?

In conclusion I would like to just state something that the Lacanian philosopher Slavoj Zizek said in his review of the 2008 movie- The Dark Knight. So, (Spoiler Alert) Zizek said that the ending where the information about Harvey Dent turning into a villain is suppressed while Batman is falsely vilified in the stead so that people of Gotham have hope in a “brighter future” is a very neo-conservative way of thinking. The absurdity of this thinking is that the powers whom the people elected after judging them to be suitable for holding a post think that the people are too stupid to know the truth and hence it is suppressed from us.

[i] Study was conducted by National Institute of Public Finance and Policy (NIPFP), under the guidance of Dr S. Acharya (1985)
[ii] http://www.economist.com/news/finance-and-economics/21573979-banking-scandal-highlights-problem-black-money-india-evasive-action
[iii] https://knoema.com/nwnfkne/world-gdp-ranking-2016-data-and-charts-forecast
[iv] http://www.hindustantimes.com/india-news/why-govt-s-demonetisation-move-may-wipe-out-illegal-money-worth-rs-140000-00-00-000/story-adn8v35a3Kd6NtBHqXpOjP.html
[v] http://blogs.wsj.com/indiarealtime/2016/05/05/these-three-charts-show-how-bad-things-are-at-indian-banks/
[vi] http://economictimes.indiatimes.com/markets/stocks/news/inadequate-capitalisation-threatens-psu-banks-fitch/articleshow/55334559.cms
[vii] http://blogs.wsj.com/indiarealtime/2016/05/05/these-three-charts-show-how-bad-things-are-at-indian-banks/
[viii] http://www.livemint.com/Industry/8yutjaq7xoY7FnNviw1d2H/Crisil-downgrades-8-public-sector-banks.html
[ix] http://www.livemint.com/Industry/fSaGVUwMkMJt6CTacdiiMO/SP-downgrades-three-PSU-banks-on-asset-quality-troubles.html
[x] http://economictimes.indiatimes.com/industry/banking/finance/banking/psbs-suffer-ratings-and-outlook-downgrade-from-icra/articleshow/51093957.cms
[xi] http://blogs.reuters.com/breakingviews/2016/06/30/breakdown-solving-asias-other-bad-debt-problem/
[xii] http://pib.nic.in/newsite/PrintRelease.aspx?relid=126074
[xiii] http://www.hindustantimes.com/india-news/rs-53-000-crore-received-in-deposits-after-demonetisation-move-sbi/story-VVhqIw0tz6kag77t1F0anK.html

Courtesy: monishborah.wordpress.com

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