Tuesday, November 15, 2016
When cash is not king
In one fell swoop, demonetisation has struck a blow to the parallel economy.
In a new tryst with destiny, once again at the stroke of the midnight hour on November 8-9, Narendra Modi effectively demonetised large denomination notes in India. Of the Rs.16 lakh crore-plus in circulation, Rs.500 and Rs.1,000 notes account for about Rs.14 lakh crore and more than 85 per cent by value of all rupee bills in circulation, as per Reserve Bank of India data. With this master stroke, the Prime Minister has walked the talk and shown that when it comes to doing the right thing, and eliminating the wrong, he doesn’t spare even the corrupt in his own party. He has effectively dealt a death knell to the private businesses of all politicians, lawyers and bureaucrats.
All those craving for big-bang reforms couldn’t have asked for more — corruption cannot thrive where money is traceable and Mr. Modi’s is a significant step against big-ticket corruption and black money. The secrecy with which it was conceived and executed has left the nation stunned. It is far bigger in scope and scale than those attempted ever before in independent India, and is the first of many bold steps which perhaps only this Prime Minister could have done for disrupting the business model of Indian politics forever.
Parallel transaction networks
At the heart of it is the simple proposition that large currency notes are used more to conceal than to purchase. Mr. Modi has converted this one sentence into an economic manna in his avowed fight against black money and corruption, which is laudable.
At the heart of it is the simple proposition that large currency notes are used more to conceal than to purchase. Mr. Modi has converted this one sentence into an economic manna in his avowed fight against black money and corruption, which is laudable.
Peter Sands of Harvard Kennedy School, one of the proponents of this idea of killing large currency notes, one later supported by former U.S. Treasury Secretary Larry Summers, argues that a million dollars in $20 bills weighs 110 pounds or about four suitcases, whereas in 500-euro notes, less than 4 pounds, making the former very hard to transport. The U.S. stopped issuing $500 notes in 1969, the European Central Bank halted 500-euro notes early this year, and Singapore killed its $10,000 note and Canada its $1,000 note in 2000. India has one of the highest cash to GDP ratios at 12 per cent (excluding the parallel economy) and despite a well-publicised amnesty scheme, the fear of god had not sunk in. Now it will, with Mr. Modi’s big-bang step.
Mr. Sands illustrates by arguing that bulk cash transfer plays a role in more complex drug trafficking and money-laundering schemes. Cash couriered from Paris to Belgium was used to buy gold, which in turn was couriered to Dubai, where it was made into jewellery which was sold in India with the profits then wired back to France. This network was estimated to launder 170 million euros per year. And this is an example of one transaction network — imagine how many more are out there in the world! India’s black economy is estimated to be $400-500 billion, larger than several economies of the world, and almost $3.5 billion is spent in currency operation costs annually, as per Tufts University’s Cost of Cash study. On purchasing power basis, Rs.500 and Rs.1,000 notes are large by Indian standards even though they may not be as per exchange rates.
Short-term pain, long-term benefits
Indeed, there will be some contraction in money supply and thus a slight deflationary impact, which will cause some inconvenience in the very short term to the average citizen, which the Prime Minister has acknowledged repeatedly in his speech, but this will be compensated by significant benefits in the long term for all law-abiding citizens.
Indeed, there will be some contraction in money supply and thus a slight deflationary impact, which will cause some inconvenience in the very short term to the average citizen, which the Prime Minister has acknowledged repeatedly in his speech, but this will be compensated by significant benefits in the long term for all law-abiding citizens.
The deflationary impact could be felt in sectors where cash is the main instrument of transaction and perhaps in some asset prices as well, such as in real estate. In the longer term, it will lead to a greater proportion of the economy shifting from black to white. Those who hold large amounts of cash may, if they deposit it in banks and perhaps pay taxes on it, be forced to join the white economy. It may also raise permanently the cost of holding cash by adding a risk premium. This may encourage people to take the certainty of paying taxes in lieu of the uncertainty of holding black cash.
Real estate firms or jewellers may not accept cash unless it is at a good discount, for they will have to declare it to the banks and pay taxes. So there is no easy option to convert it via real estate or gold. It skews incentives against cash purchases, and gives a fillip to card transactions.
The hawala network also won’t accept non-legal tender and the ultimate end user anywhere in the world will be stuck with worthless pieces of paper after December 30, 2016. So a person will, at best, exchange it at a discount for the next 50 days.
The next big hit should be on purchase of benami property which is a national avocation, for that’s perhaps the other big outlet and repository of black money. When the Goods and Services Tax comes into force, the government should do away with stamp duty on land at any stage of the sale; moreover, the tax rates on purchase of property should be dramatically slashed. This apart, election funding reforms and online voting are all big steps in the continuum of reforms, of which this was just the first big step.
The incentives for honesty have been improved, dramatically, with this reform measure, much needed after it was last done in 1978. This will seriously affect the stock of black money but the effect on future flows is unpredictable. However, the flows will perhaps be reduced because of the increased risk perception in cash transactions. Further, the government should take steps to increase mobile penetration, pre-bundled with cash apps, which will make it easier for those who wish to go digital.
Cash is the new trash and the Prime Minister has acted decisively, ending reams of debates, declamations and declarations. Changing human behaviour is the hardest thing to do in the world — Mr. Modi is doing just that in one of the most difficult ecosystems in the world. As a small aside, he has also dealt a body blow to ‘terror money’, and electoral politics in India will never be the same again.
Srivatsa Krishna is an IAS officer. Views are personal.
Source: The Hindu, 15-11-2016
Forest rights and wrongs
Social activists and wildlife groups must acknowledge that no rights can be championed, nor wildlife saved, if the forests at the centre of the tussle vanish
Soon after daybreak, driving through the forests of Sonitpur district in Assam in late 2005 we made a quick U-turn when a herd of around 15-20 elephants, young ones in tow, emerged from the forest to forage right next to the road leading to the fishing camp at the Nameri Tiger Reserve. The night before, we watched as elephants raided paddy stocks in a village near Balipara, unafraid of the mashaals (fire torches), drums and yells of the distressed villagers. Even as we turned, the matriarch followed our vehicle for 20 metres or so, trumpeting protectively from around 30 metres to make sure we got her message loud and clear.
I know this part of India well and before my eyes, I have seen some of India’s most precious forests sacrificed to satiate political expediency using mistaken notions of tribal rights as a fig leaf to exchange land for votes. On a site visit to the same area 10 years later, I found myself speechless at the sheer destruction. In a decade, virtually the entire standing forest on the right bank of the Jiya Bharoli river had vanished. In its place were sparse mustard fields and scattered tree stumps that spoke of once-tall hardwoods whose trunk girth would have been three or four metres at the very least.
Similar stories unfold across vast areas of Sonitpur. We had predicted such disaster when the Forest Rights Bill was being debated way back in 2004-05. We asked, at the very least, a consensus be arrived at that individual rights not be included. A leading NGO, Kalpavriksh, amongst the most vociferous supporters of the flawed FRA, agreed with us in principle but went forward with other groups who threw such suggestions to the wind. Today, much too late, Kalpavriksh agrees that a site-specific amendment to Section 3 (1) of the Forest Rights Act (FRA), 2006, should have been made in Sonitpur to roll back the 2005 cut-off date to 1980, “in consonance with the Forest Conservation Act.” Subsequent to that admission, no further action was taken.
As we have seen happen time and again with urban slum rehabilitation and regularisation schemes, the horse had bolted. The barn door was never shut. What ails the FRA?
To begin with, the Act was intended only for tribal communities, but this was later extended to all forest “dwellers”. Second, individual rights trumped community rights which is evident from the statistics taken from the website of the ministry of tribal affairs from the report on FRA implementation. According to these statistics, people are predictably keen to claim individual rights as this enables them to encash real estate and other financial opportunities. Third, no time limit was definitively set. Had a cut-off date been effectively applied, we would not be in a position where even today “deforest, encroach and claim rights” continue unabated because gram sabhas would have finalised all rights within two years. And the date was 1980 in the first version of the bill.
Here is what the learned Supreme Court judges had to say in an order passed in response to Writ Petition(s)(Civil) No(s) 109/2008 and 50/2008.
“Mr Shyam Divan, learned senior counsel for the petitioner placed before us certain statistical data which indicates that as on September 30, 2015, approximately 44 lakh claims for recognition of the rights under the above-mentioned Act and grant of pattas came to be filed before the authorities competent to deal with those claims in various states out of which some of the claims were accepted and some were rejected. From the information placed before this court by the petitioners, it appears, approximately 20.5 lakh claims were rejected in the above-mentioned 44 lakh claims. Obviously, a claim in the context of the above-mentioned Act is based on an assertion that a claimant has been in possession of a certain parcel of land located in the forest areas. If the claim is found to be not tenable by the competent authority, the result would be that the claimant is not entitled for the grant of any patta or any other right under the Act but such a claimant is also either required to be evicted from that parcel of land or some other action is to be taken in accordance with law.”
Nevertheless, encroachers are not being evicted even after their claims have been rejected. What is more, most lands allotted are unfit for agriculture, condemning claimants to work as landless labour on the properties of richer landholders. The allotment of such lands means that the tribal families have to survive on sustenance farming without access to water, sanitation, health, education and medical facilities.
Even today, the cutting of trees continues. None of the cutting was or is legal. The tribals never had and still do not have title to the land. The elephant herds have vanished, but every once in a while, they return to raid crops. As many as 30 were poisoned in Sonitpur by angry farmers. Neither humans nor elephants are safe any longer. The Kameng-Sonitpur Elephant Reserve (KSER) offers refuge to elephants, in a small measure, but almost daily, as a direct result of human interventions, reports of “wild elephant herds creating havoc in Sonitpur,” appear in the media.
The situation is equally distressful in states such as Maharashtra, Jharkhand, Chhattisgarh, Madhya Pradesh, Bihar, Orissa and Andhra Pradesh. Here, too, in order to grow food on forestlands, locals were encouraged to deforest areas with political patronage. The objective is achieved by burning trees and ground vegetation, then planting food crops on the ash-fertilised remains. But, because the vast bulk of the forest nutrients are quickly washed or blown away, such farms are incapable of offering anything more than borderline livelihoods to farmers. This is precisely what gave rise to “marginal farming”, coined by economists to describe millions condemned to penury. Far from creating self-sufficiency, this has ended up eroding India’s food security, in part because downstream farms find themselves deprived of the flood, drought-control and nutrient-spread gifted by upstream forests.
As I write, the discussion seems Daliesque. The FRA provides a 90-day limit for filing claims. The Act was passed in 2005 (Rules in 2007). Can we seriously be discussing new claims even today? Surely we should collectively agree that no limits be allowed or extended under any circumstances? Remember, that our protected area network barely covers three per cent of our land and acts as an insurance against climate change, floods and droughts. Under no circumstances should such lands be open to the claim of any private rights whatsoever. In fact, it is vital that the long-pending rules to define Critical Wildlife Habitats be framed without further delay and that those deemed to be encroachers vacate such biodiverse lands.
Social activists and wildlife groups must both accept that no rights can be championed, nor wildlife saved, if the forests at the centre of the tussle vanish. Social activists talk of “harmonious co-existence”. But I ask — can 6,000 people live in harmony in 600 sq km with 60 tigers and over 600 elephants with the nearest market for forest produce being six km away? Given that the FRA is a reality and without going into the merits or demerits of the legislation itself, I wonder whether it might be possible for those living next to forests to form cooperatives with the singular purpose of restoring eco-systems back to health on their own lands. This may be easier said than done, but it is possible if a basket of benefits can be channelled to communities that opt for eco-system farming, instead of bajra, wheat or paddy. If this is achieved, the answer to the rhetorical question “Can the Forest Rights and Wildlife (Protection) Acts be friends?” might well be “Yes!”. But I am not holding my breath.
The writer is editor, ‘Sanctuary’ magazine
Source: Indian Express, 15-11-2016
The ‘crime’ of documenting human rights violations
The registration of grave charges of murder and criminal conspiracy against respected academics and human rights defenders Nandini Sundar of Delhi University and Archana Prasad of JNU, and Sanjay Parate (Chhattisgarh CPI (M) state secretary), among others, is the latest chapter in a long ignoble saga of open police bullying of journalists, rights workers and dissenters in the troubled Bastar region.
They are charged with organising on the night of November 4 2016, the murder with sharp weapons of a tribal man Shamnath Baghel in his village Nama. The police claims that the murder was to avenge Baghel’s protests against Maoist violence in his village.
as ‘fabricated’ and ‘a direct assault on our democratic polity’ which ‘indicates the growing trend of authoritarianism in the state’ by the CPI (M). This is the latest in a long roll-call of cases filed by the local police against those who tried to record the truth of what was happening in this troubled region.
Bastar is one of the most dispossessed enclaves of the country. Outsider settlers savagely dispossessed local tribal communities of their lands and forest produce, trapping them in cycles of debt.
Dispossession from their lands and forests continued in the hands of the ‘developmental state’, for roads, factories, mines and the so-called ‘scientific management of forests. This dispossession became even more acute with the advance of the neo-liberal state, as for-profit powerful companies grew impatient to extract the forest and mineral wealth of the lands occupied by indigenous tribal communities.
This ferocious, sustained and multi-armed oppression and dispossession led some tribal people to support and join far-left Maoist groups, who promised them justice and protection.
The state responded, not by addressing the massive injustices and exploitation, but by constructing this in the public discourse as a grave security challenge to the integrity of the nation. It unleashed what is not less than a civil war, with various arms of the state using every weapon in their arsenals. It is now standard drill for villages to be routinely raided and for villagers to be rounded up and detained for alleged Maoist sympathies. Some do support the Maoists against what they see as an oppressive state, whereas many of them are only by-standers and persons coerced into support.
Their predicament and insecurity was aggravated further, when the state encouraged armed vigilante groups of surrendered Maoists to turn upon their own people with rape, arson, intimidation and killings, silently or openly supported by the police. The Salwa Judum for four bloody years between 2005 and 2008, undertook mass burning of villages and forced the residents into camps, as well as unleashed massive killings and rapes. Although Salwa Judum is banned by the Supreme Court, new vigilante groups are being openly encouraged by the police administration.
The Maoists in the meanwhile have also splintered into rival factions, and often are riddled with violent rivalries and corruption. They enjoy some real support from oppressed tribal people, especially some young people, but are also known to resort to brutal intimidation, targeted killings of alleged ‘informers’, and periodic violent assaults on security forces, leading to the tragic loss of life of large numbers of usually junior members of the forces.
The ‘crime’ of Nandini Sundar and her colleagues has been that they have bravely both documented the recurring human rights violations of the security forces and vigilante groups propped up by the state; and challenged these in the country’s highest courts. It was Sundar’s petition in the Supreme Court that led it to ban the Salwa Judum. But especially since the IG Police (Bastar range) SRP Kalluri took charge, new vigilante formations like the Salwa Judum have surfaced. Baghel who was killed belonged to one such vigilante formation called Tangiya (meaning ‘axe’).
Caught in the unending cycles of violence of a security state and of militants of the extreme left, there seems no end to the suffering of the indigenous communities which have long inhabited the forested plateau and hills of Bastar. Attempts to silence independent and credible voices like those of Sundar and Prasad will only leave them even more isolated and hopeless.
Source: Hindustan Times, 15-11-2016
Education panel recommends skill training for children from class 3
A Central Advisory Board of Education (CABE) sub-committee on skill and technical education has recommended introducing vocational courses from class 3 to ensure that school students undergo skill training from an early age.
The committee also mooted developing laboratories at primary schools to motivate students in this regard. The report was discussed at a meeting of CABE – the highest advisory body on education for the central and state governments – last month.
Besides this, the body recommended collating a list of skills vis-à-vis the regions they are required in, and integrating them with the education system. “During deliberations, the sub-committee made a number of suggestions, including the introduction of vocational education from the third standard. Also, it was suggested that state-of-the-art labs be developed even at the primary school level to motivate them,” said a source.
Many members also highlighted the need to focus on vocational education pertaining to skill sectors relevant to the states.
Other recommendations made by the sub-committee included training teachers, keeping the needs of the industry in mind. It also suggested ways to ensure that training in the agriculture sector reaches the backward sections of society.
Sources further said the National Institute of Open Schooling is planning to introduce vocational education in class 12 with three vocational subjects, besides one language and one foundation subject.
The committee stressed on the importance of infusing the existing skill education and technical education courses in both school and higher-education levels at academic institutes. It also recommended giving parents a say in picking entrepreneurship training courses for students.
“Teachers should play the role of a mentor, and help students pick the learning or entrepreneurship training of their choice in conjunction with their parents at parent-teacher meets,” said a senior official.
Source: Hindustan Times, 15-11-2016
25% rise in Indians seeking US admissions
ANKITA BHATKHANDE
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The number of Indian students seeking admissions in US colleges saw a nearly 25 per cent jump while the reverse, that of American students heading to India, has decreased by 3.2 per cent in 2015-16, as per a report released on Monday.According to the Open Doors report published annually by the Institute of International Education in partnership with the US Department of State's Bureau of Educational and Cultural Affairs the total number of Indian students at undergraduate and post-graduate level in the US now stands at over 1.65 lakhs as compared to 1.32 lakhs the previous year. To put it in perspective, one out of six international students studying in US universities are Indians.
“For me, the report just puts into perspective all the small journeys that start at the visa window of our Consulate here in Mumbai,“ said American Consular Chief Michael Evans.
The number was on the decline between 2010 and 2013 following the global economic slowdown which had its epicentre in the US.
“Most universities in our country lack in technology and research facilities. So it is no surprise really if students seek opportunities abroad, particularly the US. While the number had gone down a few years ago, the report clearly shows the change in trend,“ said a senior professor from the University of Mumbai.
While China still remains at the top in terms of absolute number, increasing by 8% to 3,28,000 this year, India's growth outpaced its neighbour for the second year in a row. Together, both the countries account for nearly half of the overseas enrolment in the US.
Meanwhile, the number of US students coming to India, for academic credit at their home university, has gone down in the last one year to 4,438. The report further states that only 11per cent of US students were studying in Asia.
source: Mumbai Mirror, 15-11-2016
“For me, the report just puts into perspective all the small journeys that start at the visa window of our Consulate here in Mumbai,“ said American Consular Chief Michael Evans.
The number was on the decline between 2010 and 2013 following the global economic slowdown which had its epicentre in the US.
“Most universities in our country lack in technology and research facilities. So it is no surprise really if students seek opportunities abroad, particularly the US. While the number had gone down a few years ago, the report clearly shows the change in trend,“ said a senior professor from the University of Mumbai.
While China still remains at the top in terms of absolute number, increasing by 8% to 3,28,000 this year, India's growth outpaced its neighbour for the second year in a row. Together, both the countries account for nearly half of the overseas enrolment in the US.
Meanwhile, the number of US students coming to India, for academic credit at their home university, has gone down in the last one year to 4,438. The report further states that only 11per cent of US students were studying in Asia.
source: Mumbai Mirror, 15-11-2016
The Law of Karma
OSHO
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The law of karma is not a law.It is not something scientific, like the law of gravitation. It has been hoped for centuries that if you do good, you will attain good results. If you look at nature, there are laws, but science has not come even close to detecting anything like the law of karma. If you simply say any action is bound to produce some reaction, it is possible to have scientific support for it. But we are hoping for much more. We are asking that a good action inevitably brings a good consequence with it, and the same with a bad action. Now, there are many things implied in this.The law of karma is a hope. A man wandering in darkness, groping his way , clings to anything that gives a little hope, a little light -because what you observe in life itself is something totally different from the law of karma. A man who is a criminal may succeed and become the president, the prime minister -or vice versa.
If you are living a poor, miserable life, the law of karma says it is because in a past life, you committed evil acts. If somebody is enjoying good health, money and power, you need not be jealous of him: he has done good deeds in a past life and now he is reaping the crop. He has indeed sowed the seeds in his past life.
It does not matter whether you call it good or bad, because what you call it -good or bad -will depend upon your conditioning. If you want to know what the act brings, then you have to drop your psychology; then you will know the law of karma -not before that.
If you are living a poor, miserable life, the law of karma says it is because in a past life, you committed evil acts. If somebody is enjoying good health, money and power, you need not be jealous of him: he has done good deeds in a past life and now he is reaping the crop. He has indeed sowed the seeds in his past life.
It does not matter whether you call it good or bad, because what you call it -good or bad -will depend upon your conditioning. If you want to know what the act brings, then you have to drop your psychology; then you will know the law of karma -not before that.
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