Modi and Downhill - A Masterstroke in Futility

        Over the years Modi-bhakts have been relentless to the point where they ridicule any accusation made by the opposition of Prime Minister Narendra Modi being too authoritarian in his approach. Even today as his on-going poorly executed demonetization scheme is causing millions of Indians difficulties, his call for nationalism resonates with majority of Modi-bhakts. The idea - that you will be hailed for your gallantry if you stand in a queue outside ATMs and banks doing mala-japa (name chanting) of Modi and that you will be remembered as a martyr for eons to come if you die in one. On the other hand, if you oppose the demonetization scheme, you have black money! - is a conspicuous con job. This propagation of overly-frenetic jingoism will dearly cost both Modi and India. His is another of the many cases in history where a sane right-winger, in the name of nationalism, develops authoritarian tendencies which snowballs by his own success, only to bloat to an extent where even his once-upon-a-time staunch supporters and close allies repent for not restraining him when the time was right.

        In 2.5 short years in his office, Modi took enough strides that all previous Prime Ministers could not even imagine to take, cumulatively! Given his goodwill and credibility, he had more than just three strikes before being declared out. But regarding his demonetization scheme - what for some is a 'historic masterstroke' is an 'exercise in futility' for others. Here is why - 

        Demonetization primarily seeks to purge India of two evils 1) fake currency and terror funding, and 2) black money / tax evasion.

        For the evil of fake currency and terror funding through fake currency, demonetization has successfully bought India essentially 6 months of time (kudos!) before these hostile foreign forces start producing new fake notes. Demonetization, a one-time event, neither has the ability to hunt down these external perpetrators (who print fake money and fund terrorism) and bring them to justice nor does it have the ability to enlighten the terrorists and eliminate the very school of thought. Demonetization also is not a foreign policy change which will bring about a compromise to any of the bickering issues with our hostile neighbors and some agitating insiders. This means before you go around celebrating peace in Kashmir in the last few days, realize that this is just a temporary phenomenon and demonetization cannot and will not solve the underlying issues! Let alone the important questions - how much fake currency is floating around anyway? Are we seriously saying that moving forward we intend to fight terrorism passively like this?

        For the evil of black money and tax evasion, I want to discuss a factor less discussed otherwise - the reversal of burden of proof. 

        I count with borrowed fingers the number of times Finance Minister Arun Jaitley has said that the government is not able to act against the 800 odd individuals (whose names have been acquired from disparate foreign entities and tax havens) because it takes time to build up a case and gather evidence, and that there is a procedure that governments must follow lest the foreign entities will stop cooperating. Critiques have also raised questions as to why is it that Income Tax or CBI raids can't be conducted on these 800 odd individuals (who belong to the ultra-influential super league) based on prima facie evidence? But Jaitley, being the lawyer that he is, always maintained that there are various legal complexities and challenges in taking that route. 

        What was yesterday the prerogative of the government of building a case, is today made a compulsion for all citizens. Throughout these yesterdays, the government said it was difficult for them to prove the super league black money owners guilty. But today that same government's logic is that all regular citizens should queue up to prove their innocence. Why can't this be reversed where these super leagues are forced to prove their innocence based on prima facie evidence? Do you really think putting the onus on 1.3 billion citizens, 98% of whom have no black money and of the 2% who do have black money, it is safe to assume that 80% are mere tax evaders (out of systemic loopholes) and remaining 20% have criminal intent of smuggling, corruption, etc., is the best method?

        Regardless, let us focus on how much of the 'black money' can this scheme actually recover. Black money is but a combination of all illegitimate assets both liquid and fixed. As we see in the matrix below, there are four ways how an individual can possess illegitimate assets. Non-INR (Indian National Rupee) assets include gold, property, other currencies, etc. By definition, demonetization can do nothing about the non-INR assets (red boxes). Demonetization can only invalidate INR if not exchanged for new currency notes in the given time-frame. Estimates suggest that INR - black money is only 6% of all the black money. How much will the country have to go through in terms of 1st order, 2nd order, etc. negative cascading effects in the economy and lost opportunities / reduction in national output for this? RIP ROI!

        Further, before the elections Modi made 2 promises - I will bring back black money into the mainstream economy because this money belongs to the nation and I will catch hold of all these super league thugs. As it turns out, Modi decided to take the third route - I will not target the super league, I will not even bring back the black money! Rather, I will impoverish all thugs by invalidating their black money.

        Say Mr. X has INR 1000 of black money. If Mr. X decides that he does not want to exchange his INR with new currency notes (because his INR black money is anyway close to only 6% of all his black money), this INR 1000 which Modi said belonged to the nation, just vanished! While this is a simplistic case, give it a thought. This INR 1000 was once legitimate output of some activity in our nation and this step instead of bringing it back, threatens to invalidate it. National losses anyone?

        In this piece, I have not even touched upon the poor execution strategy, government's investments into executing this whole fiasco, number of lives lost (even 1 life lost is 1 life lost too many), and the challenges that cash dependent sectors like agriculture, fisheries, transport, daily wagers, etc. have experienced. Our nation was not ready to go in this direction and sustain so much disruption. If you really were open to having such disruptions in just 2.5 years, Dr. Subramanian Swamy was a better choice any day! While Modi’s intent is right, given the timing and the execution of this scheme, it clearly was not a decision taken through due consultation and was definitely not a masterstroke! 

        Of course it is too late to repeal it! Of course Modi will showcase some histrionics on January 1st 2017 and declare victory! Of course this scheme will deter potential defaulters (any other scheme would have done that too)! Of course they will come up with all kinds statistics - 92 % of people are okay with the inconvenience! (A sample set of 5 lakh Modi-bhakts who have Narendra Modi App on their smartphones, in a nation of 1.3 billion people); thousands of crores of rupees have now entered into the banking system (as if people had an option, and let us see how much of that stays in the banks after January 1st, 2017).

        As a nation, we can either choose to ludicrously do a disservice to our PM (out of ignorance or cowardice) and go downhill in excessive nationalism, or we can choose to ask ourselves a very touching question - the soldiers stand on the border in all circumstances for years and can't we even properly execute one sane monetary decision?

Choosing our Heroes of Tomorrow

        It was one of those evenings when I called it a day at 8:20 PM. Given that so much had happened in India (the country where I am from) and United States (the country where I currently reside) in the past few hours, I needed some time to gather myself, to relax under dim lights with my phone set aside, to feel the silence on a cold evening, to take a step back, and ponder.

        I could draw numerous parallels between the Indian general elections of 2014 and the US presidential elections of 2016. The left leaning party held the highest office for 2 terms; through a leader (LLP - leader of the left party) who was a first from his race - a Sikh Dr. Manmohan Singh and a black Barack Obama. A weird case where people loved the LLP as an individual - a family man who was intelligent, highly qualified, and clean; a nice man who was merely incompetent as a premier. Yet, there was a strong vibe of anti-incumbency, because nothing seemed right about the state of the nation within and the looming threats from the outside. The left leaning party's current standard bearer was a woman (Sonia Gandhi and Hillary Clinton), whose husband was once the premier of the very same nation. This woman was looked as someone who had been in politics long enough to have known the game, the rules, and the cheats. The woman, sadly, was not destined to have her husband all by herself in her lifetime, for disparate reasons of course. The woman, sadly, was also accused to have had involvement in the biggest of the scandals in her nation.

        The right leaning party then brought a leader (LRP - leader of the right party) from nowhere, who went on to win the election. The LRP was hated by the mainstream media to begin with. The elevation of this LRP was not taken well by their own party allies - Nitish Kumar and co. for the NDA and the various Republicans for the GOP. Other party veterans too had had to be cajoled into endorsing the LRP, because that seemed to be the need of the hour. The political power centers dug as deep as they could to uncover facts and secrets about this LRP. There arose questions about the LRP's significant other. The media questioned and doubted - did the LRP really create something as awesome as he claims he did in the previous position he held? Or is he making it sound grandiose in his speeches just to gain some public eye? The media took pride in being able to obtain testimonials of individuals who claimed to have lost everything they owned and had because of the LRP's previous position and actions. As the weeks went passed, the media labelled the LRP as a human rights violator, a perpetrator and abettor of numerous ghastly crimes and as someone who managed to conceal the truth through his might!

        I realize that the parallels that I drew omit the uniqueness of all these personalities. I also realize that these individuals themselves are really really really different people. I only wish to highlight the sheer arrogance of the mainstream media and their modus operandi here. The three major world events in the last two years - Narendra Modi becoming the Indian Prime Minister, Britain's decision to vote leave, and The Donald becoming the POTUS-elect were predicted only and only contrarily to what actually eventuated (which curiously happened to be favoring the left in all three instances BTW) by the mainstream media. There are two possibilities here - either they genuinely did not know what the people felt, or they knew and were hence trying harder to condition the minds of their consumers by their own endeared delusions. Media should ideally be taking in what they saw as is, and ideally be distributing what they took in as was. If that is true, how could they have not known?

        Before I lose any of my readers here, let me put in a disclaimer - I do not wish to tangentially rant on about the insatiable desires of the media and their supposed reach that their arrogance finds genesis in. I also do not wish to discuss the dichotomy and righteousness of right and left - there are good and bad things about both. Today, I ponder upon how will we choose our heroes of tomorrow if this is what is the current state of how and what gets fed into our brains? Where will we get the realities from? What would we base and not base our decisions upon?

        Think about it. Two decades from now we will have candidates who would have had social media presence since they were fifteen or seven or soiling themselves. Imagine the kind of images, videos, and statements that we would uncover about them then, that they once had themselves willingly made public. Imagine the extent of micro-aggression that can be induced upon these candidates by ways of memes and trolls which are majority of the times half-truths and irritating manipulations. The targets of these memes and trolls are not limited to political figures. Imagine what we would discuss on public forums tomorrow about candidates if today is what is the nadir for many consumers to be able to take! The way I see it, I don't see it in any election interminably which won't make us choose that candidate which is the least of all the evils. The world moving ahead will only and only have evils as candidates / celebrities.

        Today the media, as we have now established, has leaned so far left that more than of propaganda, theirs seems to be a strategy of denial - a contagious disease so unrelenting that it obviously would take nothing but bitter to antidote, and reason alone would obviously not suffice. I look at them more as diseased and less as propagandists. And here is the catch - what will the mainstream media and the diseased, now that they are unveiled, do next to contaminate our minds and systematically condition us and preoccupy us?

         Brand managers and social media influencers, and NOT the mainstream media are our biggest threats going forward. The new challenge will come from both the troll makers supposedly leaning left and working for the left and the troll makers supposedly leaning right and working for the (pay attention here) left. There will be media persons and celebrities who will develop belated wisdom and try to keep themselves in good books with the new power centers like twitterati and the right. Beware of them! While the mainstream media and the mainstream supposed prime-time funny-men have lost relevance and have imploded in their own slander-propagation, there still are forces which will try to contaminate by their mere presence any new platform that most neutrals, truth-seekers, and rationals adopt and look up to.

        The future ain't what they said it would be!

Chai(wala)nomics vs Dosanomics - the grand tug of war!

        Saturday, 18th June 2016 – the day when chai(wala)nomics subjugated dosanomics – a recurring phenomenon that found its first manifestation on 16th May 2014 – the day the Narendra Modi led NDA government came to power. There are some, well read and meritorious included, who are yet to come to terms with this. How and why on occasion after occasion chai(wala)nomics continues to subjugate innumerous such dosanomics’ in India are questions that baffle many an elite and a common man alike. So here is a tale of the grand tug-of-war among the four most important individuals in this game, their wins, and their losses.

        The tug-of-war, long overdue, has begun only to get uglier. It is convoluted because though everyone seems to be pulling and pulling hard, nobody knows where to. In one corner we have the once upon a time tea-seller (chaiwala) turned now full time Prime Minister, Narendra Modi. In corner two, we have the virtual number two in NDA, Finance Minister Arun Jaitley. In corner three, the man of the moment Dr. Raghuram Rajan, the governor of the Reserve Bank of India (RBI) who announced on 18th June that he will not seek a second term. Lastly, in corner four, the unguided missile (as they call him) and the big time anti-graft crusader Dr. Subramanian Swamy.

PART ONE OF TWO: WHY REXIT WAS BOUND TO HAPPEN.

        There is a reason why bureaucrats of high standing fail to get (forget get into) politics. Their solutions are limited by their reach and not their intellect. It is their reach and position which prevent them from looking at the bigger picture and the greater good. Dr. Rajan, as dynamic as he is, while taking a stab at the new world order failed to gauge the new India order post May 2014. What he did during the UPA regime was well timed and apt. But the problems that the majority of the Indians identified with this country that the NDA promised to solve had nothing to do with monetary policy and the ancillary institutions. A tight monetary policy to induce stability and discipline in the market was desirable under the incapable and scam laden UPA/Congress government. But these very policies proved to be impediments under the new and popular Modi government.

        Dr. Rajan, in his defense (or offense, if you see it that way), would attribute majority of his decisions to one of these three – crony capitalism, current account deficit and forex reserves (in the first half of his term at least), and of course inflation. For crony capitalism: How much has he been able to achieve as a governor of RBI to stop the phone calls from Delhi from getting loans passed? How much of an influence has he been in terms of getting the inefficient and corrupt bosses/babus fired from public sector banks? How many willful defaulters has he been able to bring to justice in his capacity as the RBI governor? Logic tells me that the ones mentioned above are the prerogatives of the government and not the governor.

        For current account deficit and forex reserves: The only meaningful way how monetary policy can help diminish CAD is by devaluing currency to decrease the cost of exports. Nobody in their right minds is a proponent of currency devaluation in India. Other important factors, which Dr. Rajan clearly has no control over but the government does, include anti-dumping measures, FDI, and some fiscal stimulus (i.e. increase in government spending and/or reduction in taxes). Secondly, thank god that unlike Congress the Modi government did not participate in appeasement politics by immediately transferring the benefits of the savings from plummeting oil (that India has traditionally had a huge appetite for being one of the biggest importers) prices to the consumers. The government chose to divert the benefits to other indirect measures like CAD, forex reserves, and infrastructure investment. Needless to say, an immediate transfer of benefits would have led to nation-wide and multi-sector price disruptions and would have followed by knee-jerk responses from the market, all proving counter-productive from stability standpoint.

        For inflation: The problem starts when the magician starts believing in his own tricks. I am wondering why nobody is talking about the significance of sharp global decline in commodity prices on declining Indian inflation. And inflation is one issue that I personally do not understand. Modi government has cheated this country because prices of aloo-tamatar-daal (potato-tomato-pulses) are still high but Dr. Rajan is the great savior because he controlled inflation? If I were Rajan, I would know it is time to take it easy and be an enabler to the finance minister because mehengayi, rozgaari, beti-ki-shaadi, nal-me-paani, etc., ever since Modi came to power, were anyway going to be his problems and not his.

        But then he is Dr. Raghuram Rajan and he does what he does (as he famously claimed on Sept 29, 2015). But also then there are other things that he does that tend to get him into trouble. I did not want this blog to be a rant against him, because after all he took the right decision in the end; that while he deserves a goodbye, he deserves a good good-bye. But his is a classic case reemphasizing the importance of having your nose and mouth at the right place along with your heart. The man who claims to be in love to be in the realm of ideas ironically and eloquently has been repudiating countless Modi government initiatives like Make in India. His view reduces to his belief that all Modi is seeking is to clone the Chinese model. Again, it is not Rajan’s intellect but his reach that abandoned him. While being aware of the implausibility of the success of such a replication, had that been the case in the very first place, he turned parochial towards the bigger issues that Modi targeted like job creation, reverse brain-drain, foreign investment enticement, technology and knowledge exchange, along with ever increasing self-reliance, which ultimately lead to his decadence.

        Though people think it is Rajan’s supposed strength and resistance to pressure that make him more enemies, I hold it is his sugar-coated oratory and a facile comportment that make him more friends –friends who target Modi placing a gun on his shoulder.

       EDIT (July 06, 2016) - Dr. Rajan is welcome as a public intellectual and critic. In our country, India, we welcome difference of opinion and encourage debate. I, by no means, intend to encroach upon anyone's freedom of speech. My contentions, broadly, are two - 1) Don't mislead the people by trying to project yourself as a hero for something that you in your capacity never could have accomplished. 2) Have a sense of the chair that you occupy and know that there are times when you are much more than your thoughts and speech. You represent some entity and your words and are not taken as your alone but that of the very institution that you are a part of and are employed by. If you violate this unwritten rule and choose to take jibes at others in public forums out of your self-righteousness, be rest assured the same will happen to you. It is natural that Digvijay Singh and Arvind Kejriwal get treated differently than Dr. Manmohan Singh and Dr. Shashi Tharoor. India, after all, taught the world the concept of Karma!

      The takeaway: being oblivious to the fact that there is only so much that monetary policy can do as a growth propellant as compared to fiscal policy, can result in something of Dr. Subramanian Swamy style and magnitude happen to you, especially if you are the RBI governor.

(PART TWO, COMING SOON)

P.S.: I dedicate this piece to my elder brother Chirag Bharat Muchhala. Copying your ideas and presenting them as mine is my birthright!

US Democrats, get this straight!

Original article: 29th  January, 2016 | Revised : 24th February, 2016

        ‘Your three main priorities during the first 100 days?’ was the first question to the Democratic Presidential candidates on January 17th 2016. ‘To defeat ISIS’ said none! Not O’Malley, not Clinton, not Sanders. This fact alone killed all my eagerness while watching the Democratic debate as I knew what was to come. We already are bored of the same old rhetoric – increase income for middle class, Glass Steagall, equal pay for women, climate change, healthcare, faulty campaign finance system, Trump, Trump, and Trump.

        But yesterday, 15 minutes into the Republican debate, Marco Rubio was the first to utter the word ‘ISIS’, and the issue of foreign policy pretty much was the central theme of the whole debate thereafter, as it should have been!

        Every election has a premise. The premise becomes increasingly more obvious only as the primary reaches conclusion. But this time is special. The premise that should be chosen is out there in the open, in bright sunshine, all alone, quite obvious, and up for grabs. No matter who you are – Democrat or Republican – you will sway towards the candidate who grabs that premise. But why aren’t the Democrats grabbing it?

        More than it being a matter of pride for the United States citizens, it is a moral responsibility (being the wealthiest country and biggest democracy in the world) of the POTUS (President Of The United States) to take steps towards making this world a better place to live in – a responsibility, sadly, many of the candidates either are not qualified to or are not willing to take. It will send out a very negative message to the world if the next POTUS says, ‘We have learnt from our past mistakes and we will no longer work as the world’s police because it was never our job.’

        Every time a candidate plays this card, I see that as an insult. An insult to everything what the generations before stood up for. Those were the days when the POTUS Ronald Raegan declared that US is the country best positioned to promote peace, not because of its tolerance but because of its strength. A strength that they then took pride in. A strength that brought down the Berlin wall. A strength that stood up against colonialism, communism, and sheer filthy cannibalism in the name of government. Never will we be able to comprehend the number of wars that the world averted because of the US leadership. It is a shame that a few tactical errors in the recent past made the US rethink its whole stance.

        And what are we discussing during the ‘foreign policy’ segment of the Democratic debates? Whether it is ethical to call it ‘radical/jihadi/Islamic terrorism’ or not. Whether you call it ‘ground forces’ or ‘boots on ground’. As if all you had to do was call it the right name and that was it. You dare call it the wrong name and you are doomed for this election. Violent and peaceful ways are not distinguished by what you call your adversaries as. You can take an aggressive stance and yet embrace peaceful, just, and humane ways to defeat them. You change your strategies if you had had false starts, not your stance.

        The world has currently been successful in pinning the US down by making the citizens feel guilty for what has happened in the middle-east. Doubting its own abilities and decision-making is the last thing the US would want to do. The world would rather have the leader of the strongest democracy take world decisions than have Russia or China do that. The void that you will create by taking a step back will not be filled by any saner power mind you!

        Yes there are issues at home. Yes it is time for the other richer nations in the middle-east to take action. I too urge the Muslim countries – It is time to prove to the world that yours is the most misrepresented religion; that you will be the first line of defense for the world; that you are for peace; that you disown ISIS and extremism. But for how long exactly is form. Sec. Clinton planning to wait for them to wake up? And how are you planning to support their initiatives? By supplying arms? Intelligence? Seriously? Since when have we started believing, to fight the biggest terrorist group ever, in those militaries who have hardly been in a successful war all by themselves?

        The world definitely will witness a political and diplomatic hiatus for a couple of months in toto during the transition phase for the next POTUS. How long are we expecting the ISIS to pause while we get our stuff together? And, by show of hands, how many of us feel that we can persuade the ISIS and the other states involved by reason and dialogue? Who are we kidding here? I will tell you what true Democratic hypocrisy is. It is when you discuss the immigration of Muslims in the same segment as that devoted for ISIS. No matter what you call what. This fact in itself speaks and proves all that it has to.

        The premise of the election is, frankly, very clear. This election is not of the next POTUS, but that of the next commander-in-chief, as rightly said by Ted Cruz. The stance of the new commander-in-chief on war will set the record straight for all the other leaders of the world. This is no time, as there never was and as there never will be, for on-the-job-commander-in-chief-training for the POTUS. This is no time to tell us Sen. Sanders that you were against the Iraq war in the very first place. This is a different kind of war. This is not a war where you invade a country on the assumption that they possess something or that they may be on the verge of doing something. This is a war against an established organization which comprise terrorists and only terrorists, who have forced millions out of their country, orchestrated countless atrocities on women and children worldwide time and again, and who FYI have declared your country their first nemesis! Get this straight.