Monday, December 26, 2016

The cash mess. Changing goalposts, new exemptions raise doubts about the Government's intentions

In the wake of the demonetisation tsunami, our Prime Minister asked for a 50-day grace period. That period ends this week, with no end to the sufferings of people at large. What has in fact become clear is that (a) the Government had not done its homework diligently enough before launching such a mammoth policy shift and (b) it is unsure now how to get out of the mess.

The confusion about how to proceed is reflected in the way goalposts are changed with unsettling frequency. It began with the 4000-rupee cap on exchange of old notes turning, within five days, to 4500 rupees, then to 2000 rupees. Withdrawal caps changed too. An indelible ink exercise lasted a few days. Special allowances for brides and bridegrooms brought heartburns because of the stringent operational rules announced alongside. (Political bigwigs of course had no problem conducting ostentatious weddings costing several hundreds of crores). A climax of sorts was reached last week when the Reserve Bank ruled that banned notes could be deposited only in one 5000-rupee instalment. It reversed the rule within a day, bringing itself and the Government to ridicule.

There was confusion even about the purpose of the new policy. Initially we were told that it was meant to end the menace of black money. Then they said it was intended to fight terrorism. More recently, the refrain is that the intention is to make India a modern cashless society, citizens using their mobile phones for their transactions with ease and speed.

None of these appears credible. The big boys of black money do not keep their hoards in 1000- and 500-rupee notes under their beds in India. Our Government says it knows the names of Indians with bank accounts in foreign safe havens. But there has been no serious effort to inconvenience them. Defanging terrorists was a plausible reason. But modern terrorists are a resourceful lot with sovereign states backing them. In any case, local terrorists can raise their own cash. Ask the gangs who emptied banks in Kashmir at gunpoint. That leaves the patriotic ambitions of turning India into an ultramodern cashless country. Noble idea. And forward-looking. But is this the time for it? And at the cost of such a colossal economic-social shakeup? The fact that India is among the world's poorest and most illiterate nations cannot be wished away. Are we to assume that daily wage earners, small-time farmers and sundry hawkers who don't even know what is a bank will be happy to see the country getting rid of cash, rather than vague things like illiteracy and poverty?

However dressed up, the picture was seriously vitiated on December 16 when the Finance Secretary in Delhi announced that political parties could deposit demonetised notes in their bank accounts without income-tax interference. Social media was outraged by this obvious bid to provide legal protection to corruption. The Election Commission pitched in by asking the Government to amend laws to stop exemption to anonymous contributions to parties and to remove parties that contest no elections from the exemption list.

Not many of us know that there are 1900 political parties registered with the Election Commission. Of these only 400 have bothered to contest any election between 2005 and 2015. The 1500 sleeping parties -- which obviously serve as convenient vehicles for some VIPs -- can accept demonetised notes as contributions from undeclared sources and keep them free of income tax. What a farce! The untenability of it was so patent that the Government quickly came up with a face-saving promise to consider the Election Commission's proposals.

This freshly-revealed tendency to allow political corruption will now have to be linked with the saga of bad debts accumulated by our public sector banks. Of all people, Vijay Mallya showed how wreckless the banks had been. Of the 7000 crore he borrowed from various banks, 1600 crore came from the State Bank of India. They knew King Fisher's financial position, he remarked in a letter. Many banks, he said, advanced loans to many businesses in this manner, their total adding up to Rs 11 trillion (11,000 billion).

Who authorised this extraordinary generosity to doubtful borrowers? And why the sudden rise in the bounty in the last two years? According to published reports, the non-performing assets of public sector banks rose by 4 percent during 2004-12 and by 60 percent during 2013-15. When facts of this kind rise before us, it becomes difficult to believe that demonetisation was a wholly patriotic move.

Monday, December 19, 2016

Dangers of using religion as a political weapon. It's a problem that plagues others as well

"The country yearns for a national leadership that can shore up unity imperilled by burgeoning identity politics. Dangerously, identity politics is the politics of division that undermines the shared awareness that we are one nation. It erodes solidarity and tolerance, the essential spirit we need to keep the country's integrity. It breeds distrust, suspicion and animosity that can easily erupt into conflicts. When it comes to achieving the common wellbeing, people of all stripes -- majority and minority alike -- will have to fall and rise together. Bigots who reduce politics to such identities as ethnicity, race and religion are sowing the seeds of division that can spell doom to the nation..."

Strong words against the politics of polarisation and intolerance. Timely, too, when people are encouraged to turn against people in the name of religion and ethnicity. Who is putting it so bluntly -- and boldly? I had to pinch myself to remember that I was in a foreign land, reading a local newspaper, The Jakarta Post. Nor was the local columnist, Pandaya, writing about India. His concern was his own country. After half a century of multicultural peace, Indonesia is in the thick of sectarian politics similar to India's: Ultras in the majority community are asserting themselves against religious and ethnic minorities.

This is a throwback to the early years of Indonesian independence. Despite the universalism of nationalist leaders like Sukarno and Hatta, political Islam was strong enough to enforce a code under which one had to have a religion to gain citizenship rights and only monotheistic religions were officially recognised. In 1952 the Ministry of Religion declared Bali, the home of an indigenous version of Hinduism, as in need of an Islamic conversion campaign. Bali's local government resisted the move so strongly that constitutional provisions were changed. In 1962 five religions became legal. Today Indonesia recognises Islam (87 percent of the population according to 2010 census), Christianity (just about 10 percent), Hinduism (2 percent), Buddhism (1 percent) and Confucianism (0.05 percent).

As columnist Pandaya reminded his readers, "under dictator Suharto's iron fist, we rarely heard of regional elections marred by debates on the candidate's ethnicity or religion". After Suharto, there has been no iron fist. Current President Joko Widodo is too soft and gentlemanly to have a fist at all. So political Islam is polishing up its steel fist. Its target: Jakarta Governor Ahok Parnama who is standing for re-election.

Ahok is a double minority: Chinese and Christian. He has been charged with an offence unforgivable in Islam: blasphemy. What is interpreted as blasphemy is a statement by Ahok that some people had been deceived [by other people] using al-maidah 51 of the Koran. As his supporters point out, he was not blaming the Koranic verse but those who used it to deceive others.

But his opponents wanted immediate action under blasphemy laws, namely, imprisonment of Ahok and punishment. Violent rallies have been held by Muslim groups under umbrella organisations like the National Movement to Save Indonesia. To diffuse the tension, President Jokowi let the police question Ahok as a suspect. His trial began last week, Ahok pleading his case with testimony by seven witnesses and 14 experts. The Human Rights Watch has asked President Jokowi to change blasphemy and other laws that are being used to persecute religious minorities.

Ironically, Muslims were persecuted by Christian army generals during the Suharto years. Determined to suppress political Islam, religious Muslims were denied promotion and even prevented from using the Islamic greeting Salam Alaikum. Some Generals even insulted the Koran. Suharto, a staunch Muslim, encouraged all that because he saw political Islam as a threat to his authority.

Suharto is gone and political Islam is back with a bang. Ahok's record in public life is immaculate and even his enemies concede that he is a great administrator. He is popular too. But religious sentiments have been aroused to such an extent that it is doubtful whether he will win the gubernatorial election next month. His defeat could cast shadows on the presidentship of Jokowi himself.

Communal sentiments are easy to arouse in Indonesia with political Islam remaining strong despite the Suharto Government's efforts to suppress it. Soon after the brouhaha was kicked up over Ahok's "blasphemy", there were reports of a possible coup which the President's office had to publicly deny. The country is "safe, very safe", said Jokowi. As if to prove it, he travelled to Delhi last week. Was his confidence justified? We will know next month.

Monday, December 12, 2016

Aayirathil Oruval. One in a thousand women, Jaya achieved greatness against tremendous odds

Politics consumed Jayalalithaa so comprehensively that the human side in her remained invisible most of the time. Yet, behind the imperious autocrat the world saw, she was all human, all woman. She yearned for friendships but could not find any that sustained her interest for a reasonable length of time. She yearned for a normal family life but became so disillusioned that she talked about the virtues of not having it. She had everything at her disposal but could not find the enriching relationships she cherished. She was truly lonely.

This was clear from the way she talked, the way she relaxed, even the way she flashed knowing smiles on the rare occasions she felt free to open up. Such occasions were rare because the iniquities she had suffered had made her suspicious of others, especially of politicians and journalists. Criticism had the effect of making her the more obstinate. She herself said once that no one could get anything out of her by threatening her or by being harsh which "only makes me more stubborn, inflexible, unbending, determined". She would cooperate only if someone were "nice to me, pamper me, cajole me, talk to me kindly, softly".

When a television interviewer shot questions at her in his usual lordly manner, she initially tried to go along, then walked off the set saying, as politely as she could, "I must say it wasn't a pleasure talking to you. Namaste". On the other hand, she revealed her inner self with disarming frankness when she appeared in Simi Garewal's Rendezvous series. She even sang a few lines from a popular Hindi film song in response to Simi's prompting. That was one interview she ended with a patently sincere, "It was a pleasure talking to you". It was a pleasure to viewers, too, as the programme was aired more than once in the wake of Jayalalithaa's passing.

In public life hostilities from rivals and competitors either drive people away or harden them into fighters. Women of grit became fighters, the outstanding examples being Indira Gandhi, Imelda Marcos of the Philippines and Eva Peron of Argentina. Each of them vanquished their tormentors and emerged victorious, becoming eccentrically autocratic in the process and yet winning popular applause. The hostilities Jayalalithaa faced were extraordinarily severe; she had been kicked off a gun carriage and physically assaulted inside the legislative assembly. Instead of scaring her away, the threats and humiliations put iron into her soul. Eventually she could recall with pride how hers had been a "tempestuous life" and how she was always "propelled by fate".

Fate was often unkind to her. A girl who stood first in all her school examinations could not go to college because it had become economically necessary to join films. A successful leading lady partnering the legendary MGR beginning with Aayirathil Oruvan (one in a thousand men), she was pushed into politics by him and then left to fend for herself. Like Indira, she could trust only her personal staff and, unlike Indira, she had no children to lean on and groom. Fate turned her into a self-supporting mechanism, making her own rules and declaring, "I don't take any nonsense from anyone". Obedient to her mother and then to MGR, she turned around to make the world obedient to her. And she was detached enough to observe: "I am surprised at the way I have changed".

In her fundamental commitments there were no changes. She kept women's issue on top of her priorities. She launched programmes to give free education to girls, entrepreneurship training to a lakh of women, to provide cradles where families who did not want girls could leave their babies. She launched all-women police stations. She also started the Amma brand of products -- from meals to medicines, salt to cement. She won a niche in the hearts of ordinary people as no leader had done.

Was she happy within? For a person who peppered her speeches with quotations from Tennyson and lesser known American authors, she must have regretted the limitations time imposed on her reading. For one who had a crush, as she said, on cricketer Nari Contractor and actor Shammi Kapoor, she must have felt forlorn when there was no one to admire or love. But she won her battles. When M.Karunanidhi who had persecuted her in humiliating ways found it necessary to say that her fame would live for ever, it was the ultimate recognition of the greatness Jayalalithaa had achieved against all odds.

Monday, December 5, 2016

Demonetisation can only go so far. To go further, politics that backs black money must change

Not enough weeks have passed for us to say that the currency earthquake is over. Aftershocks are more severe than expected, with people waiting in day-long queues, and often failing to withdraw their own money. However, enough time has lapsed for us to look at the overall picture and ask a few basic questions: What is it all about? How did we come to this pass? Will all this lead to the fair and equitable life we deserve?

Only some answers are clear. Basically, this is all about ensuring essential decencies in public life. We came to this pass because Indians like to prosper by cheating other Indians. The unanswerable question is whether all this will clean things up. That is like asking whether the character of the Indian will change.

It can. But it won't if we rely only on currency reform. The Prime Minister's intentions were noble -- the elimination of not only black money but also corruption. But he will be the first to admit that corruption has gone so deep into the vitals of our country that it cannot be eliminated simply by demonetisation.

In developed countries corruption is largely confined to the upper echelons of politics and business. In India bribing is needed for everything from kindergarten admission to selling vegetables by the roadside. Bribing to get wrong things done is understandable. Bribing to get one's basic rights as a citizen is Indian. This kind of corruption has seized India as a direct result of politics.

The political class and illicit money have always travelled together in India because, the way Indian democracy developed, politicians found it essential to amass immense quantities of cash to acquire power and then to hold on to it. Neither black money nor bribery nor mafia influence nor the killing of our cities, mountains and rivers can be stopped as long as the need for big money is essential for the survival of the political class as presently constituted. And, in all fairness, that need cannot be reduced as long as elections in India remain an insatiably fund-guzzling exercise.

In the 2014 elections parties formally reported a total spend of Rs 2000 crore (BJP -714 crore, Congress - 516 crore). An independent research group said the total spend was nearer Rs 30,000 crore. Where do such moneys come from?

In a wellknown 2013 study, Trilochan Sastry (IIM, Bangalore) found that 30 percent of elected MPs and MLAs had criminal cases against them. Crime and money, the report said, played an important role in winning elections. It also showed how easy it was to buy votes. Today, buying of votes has become open and widespread, often ruling governments and ministers taking the lead. When the need exists for buying votes, holding massive rallies, gathering crowds with incentives ranging from biriyani to cash, feeding and sustaining tens of thousands of cadres for year-round field work, how can the "deep immorality at the heart of our democracy" be eliminated by mere demonetisation? As the New York Times editorialised: "The government has begun circulating new 500- and 2000-rupee notes, which means that cash-based corruption... is almost sure to return". (That's already happening. A PWD officer in Bengaluru was caught last week with a hoard of Rs 4.7 crore in fresh 2000-rupee notes. Fake 2000s are already in circulation).

Our leaders have been talking about "cashless society" and using "your mobile phone as your bank". India has more people living below the poverty line than Bangladesh and Pakistan. It will take time for them to supercede cash. To eliminate corruption in the meantime, the character of the political class, the ability of criminals to become legislators will have to be addressed. Strong laws can keep criminals out. Electoral systems other than the first-past-the-post idea bequeathed by Britain can be considered; there are choices ranging from Europe's proportional representation system to Japan's multi-member constituencies. This is the way to real reform -- not getting rid of some old currency notes and introducing new ones.

But that kind of reform demands uncommon courage, even audacity. For the politician is no ordinary animal. Statesman-scholar-orator Cicero explained how:

The poor work and work
The rich exploit the poor
The soldier protects both
The tax-payer pays for all three
The wanderer rests for all four
The drunk drinks for all five
The banker robs all six
The lawyer misleads all seven
The doctor kills all eight
The undertaker buries all nine
The politician lives happily
On the account of all ten.