The #NIA court passed a historic verdict on the Dilsukhnagar Bomb Blast case, in Hyderabad. It is important to note that the bomb blasts at Dilsukhnagar, Hyderabad happened within one month of Akbaruddin Owaisi’s now notorious speech of “Remove the police for 15, we will show who has more strength”. 18 people were killed in the blasts.On expected lines of his agenda of dividing the society Asad Owaisi asked via tweets why this case was put on fast track ?
b. Balagokulam is a unique initiative to impart value education to children in fun-filled environment with the goal of imparting pride for nation and culture in the young sharp minds who form the fundamental pillar for our and world’s future. A typical Balagokulam session is about 1.5 hours conducted once a week with activities including Yoga, Surya Namaskar, Games, Patriotic Songs, Stories, Art work and so on.
It should be realised here that the Nehruvian secularism and Marxism pampering fundamentalists is not mere vote bank politics. They both have ideological affinity to political Islamism and institutional Christianity. It is not uncommon for Muslim leftist intellectuals to become ideologues of Islamist movement when the latter becomes powerful. As early as 1942, a Muslim member of the central committee of the Communist Party of India asked its Muslim members to join the Muslim League in Punjab. One should understand that it was not opportunism. It is more because of the intuitive understanding of the synergy between Marxism and political Islam as totalitarian movements, which while making use of the existing freedom of speech for their expansion, strangle the same when they get their hands on power.
The bench called it “disturbing” that various parts of a judgment in appeal by the J&K High Court spoke of the absolute sovereign power of the state. “It is necessary to reiterate that Section 3 of the Constitution of Jammu & Kashmir, which was framed by a Constituent Assembly elected on the basis of universal adult franchise, makes a ringing declaration that the State of Jammu & Kashmir is and shall be an integral part of the Union of India. And this provision is beyond the pale of amendment,” the judges said. Read More
New Delhi: Demonetisation has brought the trafficking of women and girls for sex work to a grinding halt, studies and rescue workers said.
The estimated size of the trafficking industry, as reported in a study by Global March Against Child Labour, varies from Rs1.2 trillion to Rs20 trillion.
Rescue workers on the field said the process of trafficking of women is usually completed by November, after which trafficked women and girls are transported to various parts of the country to be sold to brothels, placement agencies and as child brides. With Rs500 and Rs1,000 currency notes withdrawn since the 8 November demonetisation announcement and new currency notes in short supply, the trade has hit a dead end, they said.
“Trafficking has stopped completely. Girls are usually trafficked from Guwahati in Assam and Jharkhand in the north and Chennai, Bengaluru and Hyderabad in the south. Over the last one month, not a single girl has been trafficked. This is primarily because there is no liquidity left. All transactions used to happen in cash and now employers have no money to pay the middlemen. All the money that changed hands till now is useless,” said Rakesh Senger, a child rights activist with Bachpan Bachao Andolan, an NGO.
In what is one of India’s biggest organized crime rackets, traffickers usually peg the “cost” of a woman or girl at Rs2.5 lakh, made up of the cost of transporting her, paying off local politicians, authorities and police officials and the ultimate cost of grooming her.
However, the actual cost incurred stands at around Rs20,000. The remaining Rs2.3 lakh is pocketed by the trafficker, rescue workers said.
The study said that there are multiple figures that are involved in the trade whose earnings have taken a hit—traffickers, brothel owners, money lenders, law enforcement officials,and members of the judiciary. “The movement of money is quick and creates a mirage for all players involved. Whenever possible individuals peripherally attached to the business, such as law enforcement, judiciary, doctors, and money lenders capitalize on the illegality of the trade.”
“A 10-12 year old girl costs Rs5 lakh, while girls between the groups of 13 and 15 cost Rs4 lakh. These transactions are all done in cash, in black money. The brothel owners are now caught in a bind because they can’t convert this cash at the banks. Because the new currency is not readily available, clients have stopped going to brothels and the brothel owners have no money to pay the traffickers,” Nobel Peace Prize winner Kailash Satyarthi said.
Senior Delhi Police officers said, on condition of anonymity, random checks on trains bound for Delhi from Bengal, Assam and Bihar, failed to unearth trafficked girls.
“Black money is the backbone of the trafficking industry in India. At the moment that structure has been fractured by demonetisation. It is a matter of time before the new currency is back in the system and the trade picks up. We have approached the PM and informed him of this situation as well,” Satyarthi added.
Note: This story has been modified from its original version to clarify the estimated size of the trafficking industry.
In his article (“Making of a mammoth tragedy”, The Hindu, December 9), Dr. Manmohan Singh attacked the demonetisation of high denomination notes (HDNs) by the National Democratic Alliance (NDA) government as the “making of a mammoth tragedy”. In his prose, Dr. Singh speaks less as an economist in which capacity he is respected more than as the former Prime Minister, the role which has actually dented his image. Yet it is best to respond to him on economic issues which he has kept away from, not to his political verses. Undisputed facts, not alluring rhetoric, should decide whether demonetisation is a tragedy or a remedy. Is it a monumental mismanagement of the economy as Dr. Singh charges? Or is it a remedy for the accumulated filth as Prime Minister Narendra Modi claims? To know the answer, the story of the Indian economy from 1999 to 2004 under the NDA and from 2004 to 2014 under the United Progressive Alliance (UPA) needs to be recalled.
Real versus statistic
During the NDA rule (1999-2004), real GDP grew by 27.8 per cent, annually 5.5 percentage points. Annual money supply, that fuels inflation, by 15.3 per cent. Prices by 23 per cent, annually 4.6 per cent. Asset prices rose only moderately in those five years. Stocks rose by 32 per cent; gold by 38 per cent. Taking Chennai as an illustration, land prices by 32 per cent. Jobs rose phenomenally, by almost 60 million. The NDA also turned in a surplus of $20 billion in 2002-04 in the external sector, after decades of unending deficits, save in two years in the late 1970s.
Now come to the UPA rule under Dr. Singh, the economist Prime Minister. In the first and best six years of the UPA (2004-05 to 2009-10), before it was hit by scams, real GDP grew by 50.8 per cent, annually 8.4 percentage points — one-and-a-half times NDA’s. The world celebrated Dr. Singh. The UPA was intoxicated by the “high growth” story. But how many jobs did UPA’s high growth produce? Believe it or not, just 27 lakhs against 600 lakhs during NDA’s five years, according to NSSO data. UPA achieved one-and-a-half times NDA’s GDP growth, but just 5 per cent of its job growth. Dr. Singh now bemoans that Mr. Modi’s demonetisation will stifle jobs!
Move on. In the six years, prices rose by 6.5 per cent (4.6 per cent under NDA). The external sector deficit was $100 billion (against NDA’s $20 billion surplus). Did high petroleum prices force it? No. Zero-rated customs duty-led capital goods imports which topped petroleum imports was the culprit.
Asset inflation
Why was the UPA’s high growth jobless? The well-kept secret is that huge asset price inflation, not production, passed off as high growth. In the first six years of the UPA, stock and gold prices jumped by three times — annually by 60 per cent. Property prices doubled every two-three years. In Gurgaon, not on the property map in 1999, land prices rose by 10-20 times. Asset inflation in six years was three times the annual nominal GDP growth. The asset inflation not the result but the cause of the UPA’s “high growth”! How? Modern economics deducts the non-asset price inflation from nominal growth to know the real growth. But it sees asset price rise as wealth and prosperity and adds it to GDP. See how this economics worked for the UPA.
Unmonitored Rs.500/1,000 notes
Economics says money, growth, prices and jobs are inter-related. Apply this rule to the NDA and UPA periods. During 2004-10, average money supply grew annually 18 per cent (15.3 per cent under the NDA). But asset prices rose by several multiples of it. The moderate rise in money supply over the NDA’s number does not explain the huge asset inflation. The clue hides in the rising unmonitored HDN cash stock with the public which made black money deals easy. In 1999, the cash with the public was 9.4 per cent of nominal GDP. By 2007-08, instead of falling due to rising bank and digital payments, it jumped to 13 per cent of nominal GDP. Later it began hovering around 12 per cent. More critically, the HDNs with the public more than doubled from 34 per cent in 2004 to 79 per cent in 2010. On November 8, 2016, it was 87 per cent. The average annual rise in HDNs was 51 per cent between 2004 and 2010 and the annual rise was 63 per cent by 2013-14. The Reserve Bank of India noted that two-thirds of the Rs.1,000 notes and one-third of the Rs.500 notes — that is over Rs. 6 lakh crore now — never returned to banks after they were issued. The unmonitored HDNs roaming outside banks began driving up the gold and land prices by black cash and the stock prices through Participatory Notes (PNs) — which are largely hawala transfers out of India — that came back pretending as foreign investment in stocks. The PNs rose from Rs.68,000 crore in 2004 to Rs.3.81 lakh crore in 2007.
How did the asset inflation lead to the UPA’s “high growth”? Inflated asset prices to the extent realised by sale got accounted as part of income and included in GDP. Large part of the gains on stock sale got added to GDP with very little tax under Securities Transaction Tax. The spurious wealth effect also led to high-end consumption. The annual private consumption growth averaged 18 per cent till six years to 2009-10 — 80 per cent over the NDA average. The fake wealth effect, powered by HDN cash, scripted the UPA’s “high growth” story. HDNs outside banks took refuge in stocks, gold and land, produced capital gains-led growth and consumption. Had the HDNs circulated through the banking system, it would have multiplied through the fractional reserve model, reduced the inflation and interest, and funded the small-and-medium enterprises starved of organised funding.
Catch-22 situation
The curse — asset inflation inspired jobless growth — seems irreversible till unmonitored HDNs roam and fuel fake growth. Dr. Singh had had enough wake-up calls when the share of HDN cash was escalating year after year from 2004. He could have de-escalated the hugely growing cash economy had he remonetised the HDNs by lesser denominations without demonetisation — sparing the people of discomfort and economy of short-term damage. Of course, he would have lost the “high growth” brand that made UPA rule an economic success. To unmask this deception and revive job productive growth, the unmonitored HDNs needed to be brought to account forcibly. By his inaction, undeniably, Dr. Singh had landed the economy in a Catch-22 situation. The Modi government could either opt to continue the status quo of jobless growth or force temporary decline in growth to reinstate real growth and jobs. It opted for the latter. Even an undergraduate student in economics will tell you that it will cause hardship and hit growth in the short run. A Cambridge economist is not needed to write a column on that. It is already late. If the status quo of unmonitored HDNs were to last for another five-six years, the size of HDNs would have become so huge that no government may have been able to act against it — inevitably inviting a huge crisis, both internal and external. Prime Minister Modi has rightly called the demonetisation as “kadak chai” (bitter pill). That HDNs promoted high bribery and helped terror funding through fake HDNs cannot be disputed at all. Far from doing a monumental misappropriation or making a “mammoth tragedy”, Mr. Modi is correcting the monumental mismanagement of the economy by the economist Dr. Singh.
This Letter is written by a Kashmiri Muslim to Prime Minister Narendra Modi – We are publishing it, as it is.
Dear PM Narendra Modi
The life of a Kashmiri is unimaginable for the rest part of India. How a Normal Kashmiri, who works hard everyday to feed his family, lives his life amidst the constant tussle between separatists and Security forces, though it is really a sorry state but we have to live with it.
I am a Normal Kashmiri– Afzal Rahman- and I am not from the 2% separatists in Kashmir. I am a husband, a father of 4 and a son of aged parents- And yes I am a proud Indian and a Kashmiri who runs a “Garments Shop” in Srinagar.
Only thing that I think over and over again is to give a good future to my children. Thus, even after so many threats, I asked my elder son to go for the “Police admission Exams” this year. One of my daughter is studying in class 12th, and I am aware how big this year means in her life, Career and Growth.
But last 4 months have been very unsettling. With almost No Business for 4 months and Curfew almost every day. How can a lower middle class man survive without work? Somehow, I managed to feed my family with past savings- but that was not the only problem.
My daughter lost so many days of her schooling, in such an important time of her life. My son was very demoralized with the situation he saw. The youngsters of his age, who were unemployed, were throwing stones on the security forces. They were given money by separatists. But then what an unemployed man can do?- He will do anything to get some money which could feed the aged parents and crying children.
My own so, who was an aspiring police man, joined the gang of stone pelters, without my knowledge. I got to know about it when he was shot on his arm, by pallet gun.
When the tussle slowed down a bit, they started burning the schools in the valley. My daughter’s school was also there in the list of those 29 torched schools.
Our life was totally down and out, neither we could sleep, nor we could eat, and we were not even allowed to die.
But then on 8th November we heard a news on Radio-Kashmir. You took a decision on banning currency notes of 500/1000. The decision scared us further. We had a little money left with us and that too was in the currency notes of 500. And the option of exchange was never with the Kashmiris, due to unrest.
The whole India thinks about Black Money but Kashmiris think about survival. We never thought this decision of yours would give us our lives back, but it certainly did.
There wasn’t any stone pelting on streets, though the forces were there but pelters were not. With in one or two days traffic started moving in the valley. We opened our shops, there were people in the market. We could certainly see some happy faces.
At other part of India, they must be feeling pain standing in lines, but we Kashmiris are enjoying standing in the bank queues, and socialize.
We were worried about my daughter’s exam, but now she went there to take her board exams. And it was not my daughter who took the exam. There were so many other happy faces came to take the exams. It was the highest attendance of students in examination hall this year- almost 95%.
With all this positive happened- We all sat together and started talking about what went well? We came to the conclusion that -These separatists have had only 500/1000 rupee notes which no one is taking now.
I don’t know what rest of India thinks but we in the valley are very happy with the decision.
Sri Swaminathan Gurumurthy, well-known Chartered Accountant, Economics Thinker, Philosopher and political commentator, has been a long time crusader against black money. He spoke to Doordarshan TV channel (DD News) about the need for Demonetization and how it affects the Indian economy.
Interview Excerpts: 1. Demonetization Is Long Overdue & Inevitable
* Demonetization is long overdue and is inevitable for longevity of economy and sustained growth. This is a huge investment by Government as well as the Economy, as a preparation to reach higher levels of economic growth.
* This move could not have been made more comfortable and there cannot be adequate preparation for Demonetization of this scale. Secrecy is necessary for such a massive operation or else everyone would have guessed as to why new notes are coming into market. Only a strong Prime Minister could have taken such bold decision.
* We must congratulate the people of the country for showing extra ordinary patience by standing in the long queues (with no slogans or protests). The counterfeit currency must go.
* Out of the total circulation of 16.6 lac crores currency, 14.5 lac crores currency (about 87 per cent of 500, 1000 notes) is with the public. How much of it finances genuine economy and how much of it finances illicit economy is not clear. Over and above that is the fake currency in circulation that is not counted in the overall figure of 16.6 lac Crores that directly affects security of India. For instance, 3 per cent of the total amount deposited in the banking system since the Demonetization began, was in Jammu Kashmir bank. The extremists had given a threat not to go and deposit the money – they have queued up to deposit the money! And there has been sudden drop in the unrest in Jammu Kashmir.
2. Reasons that led to excessive “Cash Economy”:
* “Wealth effect” and “Real Estate” have led to Cash economy
* As the banking habits pick up, the “Cash economy” should have gone down, but has increased. The growth of cash economy in proportion to the gross domestic product (GDP) – was less than 10 per percent until 2001, now it is almost 12 per cent of GDP. This has also been facilitated by the rise in the proportion of high denomination currency (as high as 87 per cent) and that has led to illicit money.
* Studies show that 50% of Indian economy is Cash-economy. Cash-economy does not mean it is illicit economy. It is actually genuine Cash-economy. 90% of the employment is attributed to economy driven by largely cash or ‘unorganized‘ sector which is largely funded by cash. It is very complex situation. This has resulted in huge cash hoardings and transactions between cash and gold, transaction between property and gold, which has resulted in unusual amount of hoarding of gold, investment in land and land prices beyond reach of the common man.
* This has led to distortions in the economy, especially in Real Estate, Gold prices, usurious lending to small and micro businesses. This is also partly a failure of the banking system. So, it had distorted the economy in the last 10-12 years, because of what is called the “Wealth effect”. The high rise of the stock market also contributed to all this. This situation had to be handled. Only a strong prime minister could have taken this decision.
* Cash economy has moved deep into Indian economy. Cash does not create illicit opportunity – Illicit opportunity creates Cash.
3. On Terror Funding
* Terror funding by normal currency is one and Terror funding by counterfeit currency is another. For example, Naxalite funding is through normal currency in the form of ‘hafta‘ collections. About Rs 50,000 to Rs 60,000 crores of the extremist funding is in the Naxal-affected area in the cash form, mostly in 500 and 1000 denominations. Naxal funding is designed for Cash economy and not for bank economy. Left extremism will receive a very, very serious setback because of Demonetization.
4. Positive Economic Consequences
* According to an estimate by State Bank of India, out of Rs 12 lac crores in the cash economy, Rs 3 lac crores may never come back into the system (owing to large scale bribes, kickbacks) and will never reach the banking coffers at all. So, there will be the monetary surplus in the Reserve Bank of India (RBI).
* Out of the Rs 12 lac crores that comes in, the government should get substantial tax revenue of about Rs 2 lac crores. This should have far-reaching consequences on the Indian growth story.
* Government should get an estimate of 5 lac Crores as revenue surplus. When it comes into the banking system, this 5 lac Crores may become 20 lac Crores because of the “fractional reserves basis”, this Rs 5 lac crores can become Rs 20 lac crores. (Reserve + Investment of 25 per cent; the rest 75 per cent given as loans that goes back into the system, say a year from now). Thus banking system transforms into multiple of 3 or 4.
Illustrative Example:Let us assume Rs 100 is deposited in a bank. About one quarter of the amount will be invested in government bonds and reserves. The remaining 75 per cent will be available for lending. This 75 per cent gets into the banking system. My estimate is that at a minimum, the banking system multiplies the money in the system by three or four times. This money creation by banks will increase prosperity. The black or the cash economy therefore is inefficient in using money this way.
*Reduction in Interest rates: There will be genuine rise in Demand (due to increased consumer spending) leading to genuine rise in GDP numbers. There will be all round reduction in interest rates for business and moderation of interest rates (necessary for our growth in the economy). The lower interest rate is advantage to SME (Small, Medium Enterprises), who may not have sources from abroad unlike big industries or MNCs (who have access to foreign funds at a very lower interest rates / international rates). The reduction in interest rates will be very good for our economy.
* Positive impact on Fiscal situation: Government’s Tax collections may increase, which leads to strengthening of Fiscal situation (due to Rs. 2.5 lac “soft landing rule” – a boon for middle class having savings in the name of family members; had it not been there, they would have had to pay tax on their savings for last 10 years).
* Land prices expected to moderate: Because of the withdrawal of Cash from the Real-Estate economy, the land prices are expected to moderate and can see a drop of around 30-40 per cent in the land prices, particularly in urban areas. This will increase the affordability of housing; most people are not able to afford houses because of high land prices. Housing is important economic activity that will pick up.
* Construction prices are dependent on commodities; land prices are dependent on the amount of money that chases land (as land supply is limited). Commodities have Supply-Demand adjustments.
5. The Challenges Ahead:
* Gold & Cash exchangeability is very important of promoting both. Now Cash being cut, Gold-economy will receive a serious setback. Government need to go for some Gold Reforms. Government should have persuasive policy towards Gold spend and not the way it happens in other parts of the world (of fighting against Gold consumption).
* Generation of “illicit cash” will come down rapidly and it will take long time to generate Cash of this kind again, added to Government’s special efforts to curb such cash. Now, such economy has to be replaced with proportionate genuine cash. As per Economic Census 2014 (58 million “non-farming enterprises” have capital of 12 lac Crore which provide employment to 128 million people, was intended to be financed by MUDRAscheme, “Micro Units Development and Refinance Agency Bank under “Pradhan Mantri Mudra Bank Loan Scheme”).
* The Government has to take special measures to fund Cash-led sectors (Agriculture, SMEs and small traders. MUDRALaw should be passed immediately and this sector must be funded through non-banking institutions and private financiers. They should be registered through banking system and their receivables and advances must be refinanced by the banking system. This Dr.Manmohan Singh did in 1993 when commercial vehicles sector was being funded by the banking and non-banking system for the new vehicles. Non-banking system was financing only the second hand or third hand vehicles. So, Manmohan Singh said, some Rs.300 crores must be given for non-banking finance companies so that they can finance even second and third hand vehicles that saw a huge growth in the commercial vehicles sector. The same move can be adopted for all businesses which are being funded by non-banking financial companies and private financiers and the local bank’s branches can register the local non-banking finance companies and the local financiers and advance money’s is their receivables this is the Indian way of helicopter dropping money, which is very necessary in the next one month. This will have a huge impact on providing liquidity, which otherwise banking sector cannot provide directly.
* After calming and correcting the Demand side, the challenge is, how to infuse liquidity on the Production sector (Supply side) : by refinancing/ by putting money into the Production sector through non-banking financial institutions and asking Public Sector, Government and BSE 500 companies to pay salaries in cash (atleast 30 per cent in cash).
* More measures such as “Jan Dhan Yojana” have to be used for increasing greater awareness, especially in rural India.
* Cashless economy is a dream; Minimum Cash economy is practical.
Demonetization as the foundation, Government has to address “jobless growth” for a better Job creation and rapid growth for next 10 years.
6. On Election Funding:
* Consensus required by all the political parties on Election funding; this cannot be done merely by ruling party. Political funding has to become transparent through “State funding of elections” has to be pursed vigorously. The private funding of elections has to stop. There has to be an “Election Tax” at the State level, Central level and Municipal level. Classification of National and Regional parties has to change depending on the capacity of the parties. Center and State elections have to align.
Arise Bharat 