In assessing the impact of the Modi government’s demonetisation measure on the black economy, the fact that nearly 99 per cent of the outlawed currency came back to the RBI has been widely taken to indicate that the measure was a failure – its costs far outweighing any benefits. The obvious reason for this is that the return of almost all the notes establishes the fact that hardly any black wealth was destroyed as its immediate direct outcome. Clearly the government had expected a different result and that is the only reason why the Reserve Bank of India (RBI) took nearly eight months to confirm to the public what it knew by the end of December 2016.  The attorney general had told the Supreme Court that the government had expected that only Rupees 10-11 lakh crores would be returned. A campaign had also gone around about the benefits that would flow to the public from the ‘gain’ to the RBI and the government of the Rs 4-5 lakh crores that would be extinguished by not being returned and converted into valid modes of payment.

Having failed to achieve the dramatic result that was expected to add to the government’s propaganda arsenal – the finance minister was seen clutching at straws after the RBI’s announcement, trying to convert the failure into a success. The claim made was that deposits of the notes had laid the foundation for future benefits as the anonymity associated with cash had been undone – more illicit incomes would be revealed, the tax base widened and greater tax revenue generated. He failed to note, however, that the return of almost all the currency in circulation also said something about the prospects of such future benefits. 

It was known even before the demonetisation announcement that only a small part of black income earned, or black wealth accumulated, up to that point, would have been held on November 8, 2016 in the form cash by their beneficiaries. For one, there was the empirical fact that there simply wasn’t enough currency around in relation to the supposed size of the black economy for it to be otherwise. The currency in circulation was about 12 per cent of one year’s national income and less than 5 per cent of the total household wealth. If the amount of black income generated annually and the amount of wealth accumulated through it were large parts of their respective totals, then clearly the proportions in the form of currency had to be relatively small. This was also not surprising but to be expected. Money is made to be spent and not held on to – even if the objective is simply to make more money rather than consuming it, or to ‘save’ for the future. For anyone not consuming immediately his or her current income but keeping it aside – currency would be the least preferable form for such addition to wealth. Currency does not earn any return and with rising prices tends to lose value.

It follows from the above that even if the beneficiaries of black or illicit incomes taken together were to lose all their existing cash holdings because of demonetisation, it would amount to a one-time loss of a small magnitude relative to their past and prospective earnings and accumulated wealth. The demonetisation measure presented such people with four choices:

The first was to suffer fully the one-time loss of losing their illegal wealth held in the form of currency. This is a choice they would have made if this loss was expected to be less than the immediate and future financial and non-financial loss/penalties they would have to bear by revealing these holdings and drawing the attention of tax authorities to themselves and their incomes. In other words, the expected costs of surrendering the “anonymity associated with cash” had to be more than the loss that would be suffered by simply destroying the outlawed 500 and 1000 rupee notes held. Clearly there were not too many people who thought this would be the case and that is why all the currency ended up being deposited!

The second choice was to reveal their cash holdings but take advantage of the amnesty scheme announced soon after demonetisation, the Pradhan Mantri Garib Kalyan Yojna (PMGKY). The advantage of this over the first option would be that the one-time loss could have been somewhat reduced, but at the same cost of revealing information on illegal income to tax authorities that would have a bearing on future earnings. We know, however, that the response to the PMGKY has been very poor with just Rs 4900 crores (or less than 0.03 per cent of the total currency deposits) being declared through it. In other words, very little of black income or wealth came to be revealed through this route.

The third and final choice was to simply deposit all the cash holdings into their own bank accounts as those without illegal incomes would, or into accounts of ‘trusted’ associates willing to do this favour and not anticipating getting into trouble themselves by doing so. This third choice would be exercised by those who expected the resultant immediate and future losses to be too little in relation to the value of cash held – that is if they were confident that the tax authorities would not be able to impose heavy penalties on them or extract significant amount of additional tax in the future based on the information that would become available to them through such deposits. Is this the choice that was favoured by most beneficiaries of illicit incomes?

If almost all the currency held by them was deposited by the public with banks, then it must be true that no one really feared that the effective total of current and future costs resulting from depositing their currency holding would be more than what was deposited. For those who had no unaccounted incomes, this would always have been true – there was no possibility of any additional tax burden or penalty arising for them from depositing of their cash holdings with banks. One part of the total deposit of Rs 15.28 lakh crores came from such people – that part was certainly not insignificant and if it accounted for most of the deposits then clearly very little of the currency deposited was ‘black’. We may not know yet the exact magnitude of the balance which originated in illicit incomes. We can be certain, however, that it must be well below 15.28 lakh crores, which is itself, as mentioned earlier, much less than the black incomes generated annually and accumulated the black wealth. Those who deposited that ‘black’ part, almost without exception it seems, revealed by their own actions that they do not anticipate paying, over several years in the future, more additional taxes than that amount. In effect, therefore, they confidently voted with their money against the finance minister’s claim that the supposed loss of their anonymity would lead to significantly greater tax revenues in the future. Doesn’t this almost unanimous opinion among the ‘experts’ at hiding incomes and evading taxes, arrived at without any explicit coordination, tell us something about what is likely to happen? If some more evidence was needed, here it is. Apparently taken in by the rhetoric of demonetisation, the finance minister had budgeted for a 25 per cent rise in income tax revenues in 2017-18 compared to the previous year. Till November 2017, eight months into the financial year, the actual increase compared to the same period of the previous year has been just over 15 per cent. Even on this count thus, the country waits for the elusive achhe din to arrive! 

Courtesy: Newsclick.in

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The post The Drama of the Crusade Against Black Money appeared first on SabrangIndia.

The currency ban announced by Prime Minister Narendra Modi was trumpeted as a major step aimed at unearthing black money and which would thus deliver a serious blow to corruption in India. The vacuity of this claim has been conclusively demonstrated by now, but the BJP never tires of insisting that they have been fighting corruption.

A reality-check of a few of the measures taken by the government would bring the tall claims of BJP spokespersons crashing down to earth.

Money laundering made easier?
Union Minister Ravi Shankar Prasad, for instance, has claimed in an article published on Tuesday that demonetisation was “a bold assault on corruption”. One of the examples of the government’s “boldness” that he mentions are the amendments to The Prevention of Money Laundering Act 2002 which have been supposedly brought in to make the law more stringent to deal with the menace of black money.

But he conveniently omits to mention the fact that the government has rolled back its earlier order which made it mandatory for gems and jewellery deals to report all sales above Rs. 50,000 to the financial intelligence unit.

As per the notification issued on 23 August 2017, dealers in precious metals, precious stones and other high-value goods having a turnover of over Rs 2 crore in a financial year had been “notified as persons carrying on designated business and professions under the Prevention of Money Laundering Act (PMLA), 2002”. This had made such dealers reporting entities under the Act, requiring them to intimate the relevant authorities about transactions above certain limits.

But the government issued another notification on 6 October, withdrawing the earlier one dated 23 August. A separate notification was supposed to be issued after considering the points raised in the representations received from various Associations in the Gems and Jewellery sector.

According to reports , the Rs. 50,000 limit for reporting had “dampened sentiments”, and the withdrawal of the limit apparently lifted the spirits of the jewellers. It has been one month since the order has been rescinded, but no new notification has been issued. This raises some obvious questions. Is the order only aimed at lifting the “spirits” of the jewellers who carry on legitimate business, for instance, or is it also intended to help lift the “spirits” of those with unaccounted money and who intend to park it in gold and jewellery? Given the fact that some of the major centres of the gems and jewellery business are in Gujarat, was the withdrawal of the restrictions aimed at appeasing some important players, or at greasing certain money channels ahead of the Gujarat elections? These remain unanswered questions.

The unending wait for Lokpal
Yet another example of broken promises by the BJP with regard to fighting corruption is the case of the Lokpal bill. The BJP came into power promising the appointment of the Lokpal (anti-corruption ombudsman). Well over three years have passed since Modi became Prime Minister, but the government has not even implemented the law enacted by the parliament to establish the Lokpal.

The government has refused to appoint a Lokpal, claiming that the Act says the Leader of the Opposition has to be a member of the selection committee. The government argues that currently there is no LOP in the Lok Sabha, as no opposition party has the numbers (by convention, a minimum of 10% of Lok Sabha seats) required for its leader to be called the LOP.

Senior advocate Prashant Bhushan, however, argues that there are several laws which either define the LOP as the leader of the party in opposition to the government having the greatest numerical strength, or which states that if there is no LOP, then the leader of the opposition party with the highest number of seats will be considered so.

The government meanwhile keeps insisting that an amendment which will remove this difficulty is on its way, but three years don’t seem to be enough for the BJP to bring about this amendment.

Electoral bonds to smoothen and whitewash corporate funding to political parties
The electoral bond scheme introduced by the BJP government in the Union Budget 2017-18 goes even further – it constitutes a grave threat to democracy itself.

The scheme allows those who want to donate to political parties to purchase bonds from authorised banks, against cheques or digital payments. The donor may then gift the bond to a registered political party, and the party can convert the bonds to money through its bank account.

As per this scheme, the identity of the donor will not be revealed. Rather than ensuring transparency in political funding, the Modi government has created a mechanism to allow political parties to receive funding from the rich and the corporates, without having to let the public know the source of the funding. Corporates can fund the political parties which promise to frame policies which will benefit them, while the parties can claim that their policies are framed keeping in mind the welfare of the people rather than their rich donors. The common people will have no means to know the veracity of such claims.

The Election Commission itself had stated that the government’s move to introduce electoral bonds is a “retrograde” step which would compromise transparency in political funding.

“Bahut hua bhrashtachar, Abki baar Modi Sarkar” (Enough with corruption. This time, Modi government.) was one of the slogans of the BJP in the run-up to the 2014 Lok Sabha elections. But one year after the disastrous demonetisation experiment which led to the death of more than 100 people, crippled agriculture and the informal economy, threw more than a million people out of their jobs, and accentuated the economic slowdown which was already underway, the BJP’s claims about fighting corruption come across as completely hollow.

All evidence shows that the assault of the BJP government was not on corruption. If anything, the assault has been on the economy and the working people.

Courtesy: Newsclick.in
 

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Image courtesy Newsclick

Recall what Modi said to the nation in his first announcement on 8 November 2016: “This step will strengthen the hands of the common man in the fight against corruption, black money and fake currency.” Black money, fake money and terrorist money was what he claimed would be destroyed at one stroke.

Given the ground reality, none of this was tenable. But he could deceive the gullible masses into believing that he was a brave man, ready to take on the moneyed and the anti-national racketeers. Black money, according to income tax estimates through their raids, was just less than 5% of the total illegitimate wealth. Black money is held in assets, gold, real estate and foreign banks. It is held in currency either by petty bureaucrats or politicians who need it to run their political machine.

Contrary to Modi’s beliefs, the big ticket corruption happens in the business world through cross border trade (under/ over invoicing) and tax evasions, perhaps digitally. Another source is politics, Modi’s own profession. So, demonetising 86% currency for such a small change could surely not be the reason. Next, the fake money estimates by the Indian Statistical Institute was to the tune of Rs 400 crores — not even a drop in the ocean of currencies demonetised; hence, this also cannot constitute a logical reason.

The terrorists are not terribly dependent on Indian currency. Modi, or rather his entire class, considers Maoists terrorists, but they are not. Nonetheless, they might certainly have been inconvenienced. But to surmise that neutralisation of their stock would end their movement was too naïve to become India’s prime minister. So none of these primary objectives behind demonetisation indicated by Modi was tenable. 

While there were no benefits from demonetisation in economic terms, the costs were certain, and they were substantial. The printing costs of the new notes to replace the old ones is estimated to have cost in the range of Rs 12,000 to 16,000 crores. Add to it the costs of logistics; the cost of refurbishing and recalibrating two lakh ATMs spread all over the country; and, of course, the cost of economic activity being stopped by unavailability of cash, and the human cost actually incurred in terms of hunger and death. 

As this began getting exposed, Modi resorted to shifting his goalposts. He twisted the entire rationale to that of promoting digitisation, or cashless (later moderated as less-cash) economy. Surprisingly, digital payment companies like Paytm were ready to cash in on this cashless rhetoric. In the absence of cash, some people in urban areas quickly switched to digital payments.

This manifest harassment of people was also not spared; it was flaunted as the success of demonetisation. Given the cost of digital transaction (surely Modi knew that his IRCTC, a company under the Railway Ministry, continued to charge 1.8% extra if you used credit card), once the currency is made available, people would revert to their convenient mode of cash transaction. Many people, including me, have given the relative economy with the currency vis-à-vis the digital cash; but when did Modi listen to others’ voices? As the RBI confirms, the level of digital transactions has indeed reached its pre-demonetisation level. Even digitisation of the economy could not help Modi save his demonetisation from being a flop. 

In the absence of any cogent answers to the criticism coming from all quarters, and mounting negative evidence, the Modi-Jaitley duo clutched at every straw to justify their intrinsically stupid decision. In December, Jaitley used supposedly increased indirect and direct tax receipts to claim that demonetisation did not hurt the economy. Later, when the income tax returns data became available, Jaitley and Co. attributed them to the success of demonetisation — until people began showing them bigger growth in number of returns without any demonetisation in previous years.

Jaitley conveniently forgot that his own Economic Survey had revealed a weak investment climate and sharp decline in industrial credit off take, the lowest in the last 65 years, which has been showing up in the absence of new capital formation and the rise in job losses. But Goebbels’ disciples will not be deterred by these truths! Even the result of the first quarter after demonetisation, showing a dip in the GDP, did not deter them. In his Independence Day speech from the ramparts of the Red Fort, Modi, with characteristic confidence, made questionable claims, inter alia, about demonetisation having brought the generation of black money to a halt. 

The first quarter after demonetisation registered a growth of 6.1 % as against 9.1% in 2016. It was much lower than even the 30 economists’ prediction of 6.65% in a Reuters poll. Now, in the next quarter, the first quarter of 2017-18, GDP figures show a further fall to 5.7 % against 7.9% in the same quarter last year, the lowest in three years. There was no surprise. The sane voices warning of such economic damage were drowned in the deliberate cacophony of government voices intended to confuse people. The fact is that demonetisation has completely devastated the cash-based informal sectorthat contributes 45% to the GDP and employs over 80% of the workforce. The sector is precarious in nature and does not have the capacity to bear severe shocks like demonetisation.Contrary to what the government apologists say, it will take a long time to restore normalcy in this sector. 

Demonetisation is about the economy — which the common man and woman hardly comprehend or relates to. But they certainly understand the hardship demonetisation has heaped on them for no fault of theirs. Their hardship will never be revealed by these figures being flaunted by the government. The common manwas made helpless; he had to stand in queues at ATMs to get his own hard-earned money. Millions like him had to go without food; some even lost their lives. The common people will never forget the chaos created by the daily flip-flop of the RBI during those cashless days. There were as many as 62 amendments in procedure during the first three weeks. The common man bore all these believing Modi’s statement that it was good for the nation.

But the truth is coming out: it has, in fact, done lasting damage to the country.On November 24, 2016, Manmohan Singh rightly described Modi’s demonetisation as “legalised plunder and organised loot”, and predicted that the growth rate might come down to 6% from a whopping 7.3 % in the third quarter ending September 2016. Many economists thereafter have predicted similar damage to the economy. The Centre for Monitoring Indian Economy (CMIE) has predicted that India’s GDP growth rate for the current financial year is set to slow to 6%, “on account of demonetisation”, and warned that there’s no hope of recovering from this slower pace for the next five years.

While Modi has squarely failed to deliver on any of the promises he made during the election, this destruction of India’s growth story will be his enduring contribution. This is what will be remembered by people for a long time to come. 

Why did he do it? There was no economic reason behind such an ill-conceived and badly implemented demonetisation. On apositive note, it may have certainly served to neutralise the opposition’s, particularly Mayawati’s, stock of cash while the BJP remained unaffected on the eve of the Uttar Pradesh elections the BJP was so desperate to win. But more tangibly, it was meant to show off Modi’s proverbial 56” chest, making him a muscular leader who alone could take such bold decisions against the rich. 

Modi has cast a spell over the masses with his oratorical skills and his hyperbolic speeches far too long. They believed in him, ignoring their own pains. They supported his demonetisation, thinking that he was punishing their tormentors, the rich. They gave him massive wins in post-demonetisation assembly elections. When they come out of their trance and realise the damage Modi has done to India, what will happen to the BJP’s apple cart that has set out to achieve Hindu Rashtra? 

Republished with permission of Indian Cultural Forum.
 

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Sitaram Yechury, General Secretary of the CPI(M), has exposed the truth about deMonetisatiob. In a press conference, he has pithily outlined the hardships caused to ordinary Indians,  both in the short and the long term.

According to  RBI data, 99% of the notes, that were demonetised last November, have been returned to the banks. All the black money that the government stated would be removed from the system, has found its way back in and has ended up being legitimised. 

The move ended up costing more than a hundred lives, as they stood in queues waiting to withdraw their own money. It effectively killed the informal sector costing scores of the poorest people their jobs and did not come close to curbing any terrorist activities. Then what was the purpose of this move after all?

Twelve  questions Yechury has put to the Modi regime, demanding answers:

1. Who decided to demonetise? (Was it the PM?) Is that the reason why Raghuram Rajan was forced to go?
2. More than 100 people died in queues, trying to get their own, hard-earned money due to PM’s announcement. Who is responsible? Why no compensation? Is there an FIR?
3. Reportedly, more than 100% of demonetised currency is coming back after Bhutanese, Nepalese and Coop Banks Currency is taken in. This shows it’s a successful Money Laundering scheme.
4. In Bengal and elsewhere too, BJP members were known to have made bulk deposits of massive amounts just before Demonetisation was announced. So it was the biggest scam of Independent India. So much for PM’s fight against corruption.
5. There was no mention of digitisation on Nov 8, but the the Economy crashed, the government went out of the way to help certain selected private companies under the mask of ‘digitisation.’ PM himself featured in full-page ads of a private company (Paytm). Why? Clearly to give a profit bonanza to international and domestic players.
6. Was this entire exercise done to protect the corporates who are refusing to return the loans they had taken from our nationalised banks which according to one estimate is around Rs. 11,00,000 crores, including interest? Was this done to prevent the banks from collapsing as a consequence of these loans? The government instead should have taken measures to recover these loans which is people’s money.
7. Corruption has far from ended. The amount of money in 2000 rupee notes is much more than the amount of money in 1000 rupee notes. Is that what the PM wanted? To help the corrupt rich?
8. PM’s claims on Counterfeit currency are wrong. This scheme has legitimised all counterfeit currency.
9. There were claims that this was to finish Terror. Far from it, numbers of security personnel lost to terror has gone up significantly since.
10. The Informal sector has collapsed. All data shows that this sector which employs more than two-thirds of our workforce has collapsed due to demonetisation. Lives, Livelihoods and Jobs have been decimated. This government is responsible for this.
11. Ill-Effects of demonetisation on rural markets and Agriculture, heightened the distress among farmers. Their protests have been met by police firing from BJP state governments.
12. Why were people imposed with a burden of printing new notes costing Rs. 8000 crores; ATM recalibration cost of over Rs. 35,000 crores in addition to the loss of economic activity estimated by the CMIE and others to the tune of Rs. 1,50,000 crores?
13. How much taxpayer money in ads has the centre spent to ‘ glorify’ the PM and Demonetisation?
14. The government must fix accountability for this disaster and punish those responsible.
 

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Recently released data from the Reserve Bank of India (RBI) shows that almost 99% of the banned 1000-rupee notes actually made their way back to the RBI. This means that either black wealth held in these notes was successfully manipulated back in to the legal system or such black money was not being held in 1000-rupee notes. Either way, the govt.’s move of demonetisation or note-bandi has come a cropper.
 
RBI TABLE

At the Modi regime’s direction, the RBI had declared 500-rupee and 1000-rupee notes illegal on 8 November 2016. Prime Minister Modi had personally gone on air and dscribed it as a historic strike against illegal wealth. A few days later he had claimed in emotion choked voice that he was willing to accept any punishment if it turned out that this move was a failure.

What a spectacular failure the ill-thought out move has turned out to be. The government is adamant in its refusal to reveal the details of how much money in banned notes was deposited back with the RBI although 8 months have passed since the window of exchange closed in January this year. Despite repeated questioning in Parliament, by the Parliamentary Committee, in the Supreme Court and through RTIs, the govt. and RBI has doggedly maintained that old banned notes were still being counted. In June this year, finance minister ArunJaitley claimed that each note was being checked whether it was counterfeit and that the process would take “a long time”.

Now the truth emerges, albeit slowly. Analysis of data recently released by the RBI shows that when financial year 2016-17 ended on 31 March 2017, there were Rs. 8925 cr worth of 1000-rupee notes still in circulation. This means that these are the notes that were not deposited with the banks after note-bandi.

How many total 1000-rupee notes were there in circulation on 8 November 2016? According to a statement made by Santosh Kumar Gangwar, minister of state for finance, in the LokSabha on 3 February 2017, 6858 million pieces of 1000-rupee notes were in circulation on 8 November. The value of these notes works out to Rs. 6.86 lakh cr.

So, out of Rs.6.86 lakh cr, just Rs.8925 cr is unreturned. That is a mere 1.3% of the total. The overwhelming balance of 98.96% of 1000-rupee notes is back in the RBI coffers.

The total value of demonetised currency on 8 November 2016 was Rs.15.44 lakh cr. Of this, 1000-rupee notes made up about 44% and 500-rupee notes 56% approximately.

Similar calculation cannot be done for 500-rupee notes because unlike the 1000-rupee notes, new 500-rupee notes were printed and circulated in parallel to withdrawal of old ones. So, figures of 500-rupee notes in circulation on 31 March 2017 are mostly for new notes.

Experts say that what goes for 1000-rupee notes is equally applicable for 500-rupee notes. Although data is not released but in all probability 98-99% of 500-rupee notes must also have come back.Former JNU professor of economics Arun Kumar, in an analysis published in EPW in June, has suggested that 98.8% of all banned currency was deposited back with RBI.

In other words, no black money was unearthed by Modi’s ‘historic’ move.. As has been shown earlier, terrorism has also not gone down after demonetization and neither has circulation of counterfeit currency. So, it was a failure on all counts, a point that has been predicted by economists worldwide.The only people who benefited from the note bandi were companies that own digital payment systems (like PayTM, MobiKwik etc.) and credit card companies.

It also seems now that ultimately, the black money owners have benefited because they managed to convert all their black wealth in to white using proxies.
 
When will the political opposition be able to creatively convey these facts to the populace during the ultimate game of electoral politics—the game for votes???
 

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Newsclick spoke to Prof. Surajit Mazumdar, CESP JNU, on the aftermath of demonetisation. It has been more than six months since demonetisation was announced. Many tall promises were made while pushing the Indian economy and its people into the ditch of demonetisation; all of which have fallen flat on their behinds. After post mortem, one can infer that this painful exercise has been in vain.

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प्रसिद्ध अमेरिकी अर्थशास्‍त्री स्‍टीव एच हैंके ने पीएम मोदी के नोटबंदी की कड़ी आलोचना की है। हैंके ने कहा है कि नोटबंदी ‘लूजर्स’ (हारने वालों) के लिए है और प्रधानमंत्री नरेंद्र मोदी को भी अंदाजा नहीं है कि देश किस दिशा में आगे बढ़ रहा है। मेरीलैंड की जॉन्‍स हॉपकिंस यूनिवर्सिटी में पढ़ाने वाले हैंके ने ट्वीट कर कहा, ”नोटबंदी हारने वालों के लिए है और यह शुरुआत से ही गलत तरीके से लागू किया गया। कोई नहीं, यहां तक कि मोदी को भी नहीं पता है कि भारत किस दिशा में जा रहा है।”
 
वाशिंगटन के केटो इंस्‍टीट्यूट में ट्रबल्‍ड करंसी प्रोजेक्‍ट के निदेशक और वरिष्‍ठ फेलो, हैंके ने पहले कहा था कि भारत में मोदी की नोटबंदी को अपनाने के लिए जरूरी बुनियादी ढांचा नहीं है… उन्‍हें यह बात पता होनी चाहिए थी। प्रधानमंत्री नरेंद्र मोदी ने 8 नवंबर, 2016 को राष्‍ट्र के नाम संबोधन में 500 और 1000 रुपए के नोट तत्‍काल प्रभाव से बंद कर दिए थे। पीएम ने इस फैसले को काले धन, जाली मुद्रा और भ्रष्‍टाचार पर कड़ी चोट बताया था।
 
नोटबंदी के फैसले पर आर्थिक जगत की कई हस्तियों ने हैरानी जताई थी। चीन के अखबार ग्‍लोबल टाइम्‍स ने अपने संपादकीय में लिखा था कि मोदी द्वारा 500 और 1,000 रुपए के नोट बंद करने की घोषणा ‘बेघर लोगों को एक महीने के समय में मंगल पर घर देने जैसे वादे’ जैसी थी। 
 
अखबार ने लिखा था, ”दुर्भाग्‍य से, वास्‍तविकता यह है कि नोटबंदी ने भारतीय अर्थव्‍यवथा को कम से कम एक दशक पीछे ढकेल दिया है, जिससे नौकरियां कम हो रही हैं। इसके अलावा, इस फैसले से बुजुर्ग नागरिकों को गंभीर मानसिक और शारीरिक कष्‍ट झेलना पड़ा जिन्‍होंने बैंक की कतारों में घंटों बिताए, उनमें से कुछ की मौत भी हो गई।”

Courtesy: National Dastak
 

The post ‘मोदी की नोटबंदी ने देश को एक दशक पीछे ढकेल दिया, घट रही हैं नौकरियां appeared first on SabrangIndia.

When the system failed miserably to provide cash to people, he swiftly asked them to go digital; to make India a cashless economy, later moderated to a less-cash economy.

While launching an Aadhar-based e-transaction biometric app abbreviated as BHIM (Bharat Interface money) on December 30, he did not forget to score a political point saying it was named after Babasaheb Ambedkar. However, it failed to cut ice with people, scores of whom were driven to starvation and literal deaths by then.

The foolish expectation that a significant amount of old currency in black money would never come back, when over Rs. 15 lakh crores amounting to 97 percent of demonetised currency was already back into the banking system, spelt another slap in the face of the government.

Modi then swiftly shifted his goal post by saying that the data generated by the process of demonetisation would be mined using analytics tools to catch the black money culprits. Scores of Modiphiles eager to uphold his irrational move rushed to pontificate on how big data analytics can help eliminate black money, not realizing that the data lacked the crucial bit.  

Alchemy of Analytics
Big data is typically defined by three Vs, Volume (hugeness of data), Variety (multifariousness of data- audio, video, text, signals), and Velocity (rapidity with which data swells). Analytics is the combination of statistical modelling and machine learning. Big data analytics examines large and complex datasets to uncover hidden patterns, unknown correlations, trends and myriad other useful information.

But while this is all true, it is not a magic wand to produce something out of nothing. True, Currency notes have a country identifier, denomination, unique serial number, and a mechanism for counterfeit prevention. This data can be captured easily and in real time by cash counting machines provided they are equipped with sensors to detect and store serial numbers of currency notes that are run through them. With these data the notes can then be traced to the end user or account holder. The algorithms can be built to indicate the rough location of hoarded money once the collected data is run through them.

But as for the demonetisation process data, the fact remains that the counting machine in banks did not have the requisite sensors to collect the serial number of currency notes. In the absence of this crucial data, there is no way to construe deposits of money as illegitimate, least, to trace them to some person.

The ways in which the old currency was exchanged with new ones are: (1) Ordinary people exchanging their hard earned money standing in queues, (2) Exchanging through agents paying commission ranging from 20-40 percent and (3) Deposit by paying penal tax at 50 percent.

Of these three, only the middle one is illegitimate as it converted black money into white. It happened in two ways: One, through the connivance with bank officials, and two, by engaging a battery of poor people to exchange old currency at a commission of around 10 percent. Crores of rupees have been exchanged by these methods.

What could analytics make out of these data? Expectedly, there will obviously be a big surge in bank deposits but can it be construed as illegitimate money? The only thing demonetisation has done is to convert the black money of criminals into white, thus rewarding them.

Fooling the People
As explained in my earlier column (December 3, 2016) the black money in cash (that includes jewellery) is just about 5 percent. Therefore, if the intension was to trace black money, the currency was an unlikely candidate.

The fountainhead of black money is corporate with its patronage network in politicians and bureaucrats. Interestingly, this very source has Modi’s personal protection. He has given tax exemption to donations to political parties to the extent of Rs 20,000 per donor. The political parties thus became a conduit to make black money white for criminals.

None other than Nasim Zaidi, chief election commissioner has termed these political parties, numbering today over 1900, “as conduits for siphoning off black money”. Of course, the main beneficiary is the BJP. Pretending to catch suspect cases by sifting big data of currency deposit is like trying to catch the fish after letting bulk of them escape through a big hole in the proverbial net.

Is Modi going to flag the peaks in deposits before the declaration of demonetisation? After all, his claim of secrecy of the decision is exploded by the media reports that there were huge transactions in previous quarters. There is no intelligence needed to know that they all belonged to the inner circle of the BJP.

Do you really require BDA tools to identify pickpockets in the crowd when there are robber gangs roaming around in broad daylight? They verily belong to Modi’s own political class.

If the rise in assets were a proxy for corruption, BJP clearly scored over the Congress. Whereas the assets of BJP’s re-elected MPs jumped from Rs 5.11 crore to Rs 12.6 crore in 2014, an increase of 146 percent, that for the Congress saw an increase of 104 percent, rising from Rs 5.66 crore in 2009 to Rs 5.90 crore in 2014.

According to report compiled by Association for Democratic Reforms (ADR) based on the election affidavits of the candidates, the assets of 165 MPs re-elected to the 16th Lok Sabha (of the total 168, the affidavits of three MPs being not clearly available on the ECI website as per ADR), had on an average risen by a whopping 137 percent between 2009 and 2014.

Modi’s own party topped the list in both assets as well as criminal cases. In Uttar Pradesh, where the BJP won 71 out of the 80 seats, Varun Gandhi saw his assets grow by 625 percent. In 2009, according to Varun's affidavit, his assets stood at Rs 4.93 crore. In 2014 it shot up to Rs 35.73 crore, an increase of Rs 30.81 crore. His mother Maneka Gandhi’s assets saw a rise of 105 percent. If the rise in assets were a proxy for corruption, BJP clearly scored over the Congress. Whereas the assets of BJP’s re-elected MPs jumped from Rs 5.11 crore to Rs 12.6 crore in 2014, an increase of 146 percent, that for the Congress saw an increase of 104 percent, rising from Rs 5.66 crore in 2009 to Rs 5.90 crore in 2014.

How come these politicians claiming to do public service are transformed into financial wizards is a question that Modi needs to answer. Varun Gandhi, who had never been to a college, could beat the best of the MBAs! Similar wizardry may be observable in the cases of bureaucrats, without whom politicians’ wizardry may not be possible.

It is an open case that bureaucrats, particularly those controlling administration, police, and in regulatory posts, etc. all have huge assets disproportionate to their source of income. How many of them are ever investigated, least, convicted? The vulgar inequality that brings India a dubious distinction as the most unequal country in the world, with its 57 billionaires owning up 58 percent of its wealth[i] is after all not produced by honest money. 

Issues with Analytics
BDA’s new paradigm of data driven decision has enormous implications, both positive as well as negative. Philosophically, it spells the ‘end of theory’.[ii] Big data looks for the correlation rather than the causation–the "what" rather than the "why”. To those who are enamoured by this new paradigm, a recent White House report “Big Data: A Report on Algorithmic Systems, Opportunity, and Civil Rights” may serve as caution about its risks. 

It states, “[t]he algorithmic systems that turn data into information are not infallible–they rely on the imperfect inputs, logic, probability, and people who design them.”

An earlier White House report had warned of the potential of encoding discrimination in automated and secretive decisions that analytics entail through its complex algorithms. The benefits of big data are seriously tempered by concerns over privacy and data protection. Advances of the data ecosystem upends the power relationships between government, business, and individuals, and can lead to racial or other profiling, discrimination, over-criminalization, and other restricted freedoms.

While the entire world is concerned with these issues the Indian government is pushing its digital juggernaut oblivious of its harms. It is upbeat about Aadhar data which it wants to leverage for digitising every transaction with biometrics as identifier.

Despite experts’ demonstrations that biometrics are unreliable for financial transactions, Modi flaunted BHIM as “your thumb as your bank”. Contrary to its stated objective to create a unique identity, soon after Aadhar was launched in 2009, an Aadhar-authentication Application Programming Interface (API) was created, making it available for businesses.

BDA’s new paradigm of data driven decision has enormous implications, both positive as well as negative. Philosophically, it spells the ‘end of theory’. Big data looks for the correlation rather than the causation–the "what" rather than the "why”. To those who are enamoured by this new paradigm, a recent White House report “Big Data: A Report on Algorithmic Systems, Opportunity, and Civil Rights” may serve as caution about its risks. 

As Nilekani, its architect recently averred, just an “Aadhaar-enabled biometric smartphone” is estimated to create a $ 600 billion opportunity.[iii] There is of course not an iota of consideration to what happens to the privacy of Indians or security of their crucial data.

When this issue came up in the Supreme Court in August 2015, the Attorney General had settled it saying that the people of this country do not have a right to privacy. Interestingly, in the case to strike down defamation as a crime, around the same time, the government pleaded exactly opposite that they had to protect the privacy rights of the people.

The Supreme Court had rightly restricted the use of Aadhar card to only six areas – rations in the public distribution system, liquefied petroleum gas, the Jan Dhan Yojana, the National Rural Employment Guarantee Act, and pensions – and that too, voluntarily. But in utter contempt of it, the government has been bull-dozing it to make it mandatory all over. Obviously, it wants to take complete control of our lives in contravention of the Constitutional guarantees and reduce us to be the guinea pigs, the subservient automatons, with application of Big Data Analytics.

When people could quietly endure the disaster of demonetisation, this malfeasance perhaps may be a minor irritant!
 

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जयश्रीगिरी पूरे इलाके में दबंग साध्वी के रूप में भी जानी जातीं हैं। साध्वी मुक्तेश्वर मठ से जुड़ी हुई हैं। हाल ही में एक कार्यक्रम के दौरान साध्वी ने 2000 के नए नोट उड़ाए थे, जिसके बाद से वह काफी चर्चा में आईं थीं।

मामले का खुलासा तब हुआ जब एक व्यापारी ने साध्वी के खिलाफ जान से मारने और धोखाधड़ी की शिकायत दर्ज कराई थी। फिलहाल, पुलिस साध्वी जयश्रीगिरी को हिरासत में लेकर उनसे पूछताछ कर रही है।

पुलिस अधीक्षक ने बताया कि एक स्थानीय जौहरी की ओर से साध्वी के खिलाफ दर्ज कराई गई धोखाधड़ी की शिकायत के सिलसिले में उसे गिरफ्तार किया गया है। उन्होंने बताया कि पुलिस के पास उपलब्ध सूचना के मुताबिक, साध्वी जयश्री जिले के वडगाम तालुका स्थित मुक्तेश्वर मठ से जुड़ी हुई है।

पालनपुर के जौहरी प्रीतेश शाह ने साध्वी और दो अन्य के खिलाफ शिकायत दर्ज कराई थी। शाह ने तीनों पर आरोप लगाया था कि सस्ती दर पर उसे सोना देने का वादा कर आरोपियों ने उससे पांच करोड़ रुपये लिए थे। पुलिस अधीक्षक ने कहा है कि जब तीनों ने अपना वादा नहीं निभाया, तो शाह को धोखाधड़ी का अहसास हुआ और उसने प्राथमिकी दर्ज कराई।

Courtesy: Dainik Aaj
 

The post नोटबन्दी – मोदी जी के गुजरात में साध्वी के पास से पकड़े गए 1.26 करोड़ के नये नोट, शराब की बोतलें appeared first on SabrangIndia.