The Mango Man returns......with his musings!!!!

Demonitization ……The latest buzzword that’s taken the social media by storm and indeed the rest of India by the scruff of its neck.  A lot is being said of its benefits, a lot is being said of its damaging consequences, supporters are nationalists, detractors are anti nationals and boy!the media is having a field day……The supreme court asks the question “surgical strike or carpet bombing” , obviously alluding to it neither being a high precision targeted operation  nor one with minimum collateral damage which are essential ingredients of a surgical strike. A touchy topic that has turned India’s 1.25 billion population into arm chair economists and why not, when It affects every single citizen of the country. So why should this “mango man” be any different. So here's bringing out the economist in me …(By the way, I happen to be an economics graduate, though at the bottom of the class).

To me, Prime minister Modi’s grand announcement appears to be a case of putting the cart before the horse. It’s a good step, allright but my skepticism about it is because of the fact that many loopholes continue to exist which allows the real culprits to manipulate the system. Those in favor argue that this is the first step, a start has to be made somewhere and there are many more to come…..My argument is whether this is the right FIRST step…Without the requisite ecosystem in place, isn’t this step counterproductive?. To my mind, at this stage of our growth trajectory, it’s such a high risk bet that you needed to have odds very strongly in your favour for it to come off successfully. Only time will tell if it delivers the benefits it intended to and whether in the ultimate cost benefit analysis,  it was well worth it. It may not fail completely (I hope not) but the question is was it worth it at this stage. So what is this ecosystem that we talk about? We know that black money exists and the bulk of it exists in the form of real estate, gold, forex and in the equity markets. The cash hoarding stock is much more limited though it is much more dramatic in its existence in gunny bags, walls and under beds. The generation and re-generation of black money also happens through these sources. Cash stocked at home infact loses value over time and does not regenerate unless deployed for economic activities. If each of these areas are taken as separate entities and loopholes plugged within them to stop this regeneration, it would lead to squeezing the deployment opportunities of black money. To me, the steps to eradicate black money should have taken this route (but remember I am an armchair economist)…As a first step, restrict high value cash transactions. For eg. Any cash purchase of 50000 and above would require a PAN card number to be provided…whether it is buying an Armani suit or a five star dinner date or a car or a computer…..Establishments that do not comply or have been caught violating faces a cancellation of license. Implemented as strictly as drunken driving is implemented nowadays.  An SMS to go out immediately after to the purchaser to ensure its not fraudulent transaction.  That would restrict avenues to spend or use this money. In real estate which is the single biggest source of black money generation and transactions, buyers and sellers are known through registration agreements….Tracking their financial activities, spending patterns (when and if they make high value purchases to spend “unaccounted” money as opposed to debits from accounts, credit cards, loans etc…..remember high value purchases require PAN so all of this can be tracked). After all, the IT authorities and Government t claims that they can go after all citizens who have deposited more than 2.5 lacs in their accounts….. if that is indeed true, it is much more better prudent and better use of resources to go  after a much smaller subset in a much more focussed and targeted fashion. Ofcourse all of these have their own implementation challenges but the scale is much lesser and the path significantly less painful. A surprise demonetization drive after closing out all known loopholes and lack of any obvious exit opportunities would have the culprits running for cover and therefore effected a killer punch.

My problems with this demonitization move stems from the fact that the govt has turned the universally true Paretto principle (or more commonly known as the 80/20 rule) completely on its head. For those who may be unfamiliar, The principle states that 80% of the effects comes from 20% of the causes. In our case, the government has inconvenienced 100% of its citizenry to try and trap less than 10% or 5% of the citizenry who by the way hold 90% of all black money……..see the twisted rationale here. And let’s be clear, we are not even talking about the inconvenience in terms of standing in the queues. That is indeed a negligible pain but evaluate it in terms of its impact cost of the economy. Unfortunately no one knows the impact cost to the economy, not even the government and most of it are assumptions but some estimates  suggest that our growth rate would come down to about 5.8% from 7.3%....that is a de-growth of 1.5% and is a significant fall. Hows that for Cost Benefit? And does it mean that the economy will grow at 10-11% in the years thereafter…….Unlikely…very unlikely

So then why the hurry and lack of preparedness? Surely the same step taken 2 months down the line with the same level of secrecy would have equal “shock and awe” value. Atleast it would have given RBI enough time to print all the new notes that the system needs…..I think the answer lies in the unstated. Call it conspiracy theory if you like, but in Indias political underbelly It sure has a rationale…..UP and Punjab go to polls soon. With one single stroke, the government managed to paralyze the opposition and gain a lot of “money power” as well as moral advantage. Getting hold of UP will mean control of the Rajya sabha as well which is critical for this government to manage its legislative agenda. With election commission due to announce dates, the government was probably racing against time.  All’s fair in love and war??......

It is important to stress here that the intent (leaving aside the political angle) is obviously very good but the question remains “at what price”? ….. Lets not forget, most loopholes are still open and we do know that its being exploited to the hilt at this point. Wouldn’t closing of all known loopholes (and they are well documented) and then announcing a surprise demonetization with fair degree of preparedness yielded much more encouraging results. Wasn’t it the more prudent way to go about it? Wouldn’t it have been much more effective? Taking a high risk political gamble on your personal future is one thing…..Taking a high risk bet on the growth trajectory of a nation is quite another story…..Some will call it confidence…some will call it arrogance….I call it reckless…….. …..And of course You can drive recklessly and still reach home……I guess lets have this conversation 2 years from now…….For the moment, step out and get your cash, smell the coffee!!!

So whats the real "change" we are voting for?

The last couple of weeks have been spent arguing fervently with friends, family, colleagues, strangers on social media on the need to vote objectively...In my last blog, my closing statements have been that our vote should be for the best candidates in our area irrespective of party affiliations. That line of argument has been a subject of intense debates and often meets with a fair bit of resistance. So let me elaborate on why i am making that appeal. 

A lot of compelling jargons have been thrown about in this election campaign..Words like "secularism", "development", "vote for change" have been hammered down our throats. Parties find it hard to explain what those words really mean but lets for a moment step back and think about what the "vote for change" really means. Whats it thats hurting us the most? I am sure we all agree that our frustration has been against the entire political system of the country. Youngsters consider politics full of stink and the word "politician" is synonymous with "villian". We view them with a lot of cynicism and rarely believe anything they say. They are generally seen as lacking credibility, having little education, low intellect, insensitive to the common man, often criminal and infinitely rich. This is ofcourse not true of all politicians but sadly is the general image of a politician among our masses. We are resigned to the fact that our political culture has degenerated massively. BUT DO WE NEED TO??Arent we responsible?? DO WE NEED CHANGE???A vote for change should be a vote for change of this culture. A vote for change should be about electing good representatives and not merely a vote for change of government. It should not be merely about allowing parties to play musical chairs with governance....5 years me and 5 years you...It should necessarily be about changing culture and we need to begin now. We should not lose sight of the fact that our democratic setup is such that laws and policies are made in parliament, by parliamentarians through parliamentary panels and committees, through consultations and discussions. They are made by "OUR" representatives, reflecting "OUR" collective views and aspirations, voicing "OUR" opinions in parliament.  No Prime Minister or President has the veto power to override the supremacy or the collective will of the parliament. Is it not binding on us therefore that we sent our best representatives to parliament. I am often told that this election is not about your local candidate but about leadership at the centre.Yes I agree but my counter point is that if my local candidate by virtue of him being elected by me and you contributes to the laws or policies we get in future then he bloody well be capable. He may not responsible for better roads in my area but he  is responsible for economy we get to live in, or the air we get to breathe in this country or the kind of taxes we pay on the salary we get. Shouldnt we vote for the best candidate who is sensitive to these issues and can positively influence decision making in parliament. Isn't it our vote on our future? Another argument put forth is that our country needs a stable government. Yes ofcourse we need a stable government but what makes a government unstable is the insatiable appetite of our elected representatives to be in power by hook or crook. Ideologies don't really matter as much as having a spoon in the pie. If responsible good men with honest intentions enter parliament, stability would be a byproduct in itself because such politicians are not driven by the greed for power but rather by the eagerness to contribute to society. They wouldn't spend their waking hours conspiring on ways to bring the government down at the drop of a hat. They wouldn’t practise throwing chairs , mikes and abuses at each other. Good intentioned men and women would focus on getting things done. Another argument being made is that this election is about a strong leader. Yes ofcourse it should be...The country needs good leadership more than ever in the past more due to the perceived lack of leadership of the current regime. But remember a captain is only as good as his team so if the leadership is not supported by able men or women, the ability of the leadership to deliver is considerably weakened. I hold the view that this election should not be about 1 man at the top but rather 500 good men (and women) in parliament that collectively decides on Indias future. I do not see any reason for parties to be rewarded if they have shown no respect to the electorate and not fielded credible, honest, educated candidates in EACH and EVERY constituency...We as citizens cannot be taken for a ride. If you wanted my vote, you should have put out your best candidate with very good credentials for me to vote else you don’t deserve my vote. You cannot take me for granted and think that you can get away  by fielding a criminal with suspicious intent simply because a "namo" or a "RaGa" or an "AK" is at the top. If we, the voters, do not exercise good judgement in our voting, we will be encouraging parties to continue the existing political culture and discouraging those good candidates who really deserved to be there but did not because we decided to be blinded by the blitz of media campaigns and inspired propaganda. If we prefer to ignore those honest, good intentioned men and women who have decided to get out of their comfort zones and decided to do more than merely whining (which the majority of us do), we will be “Killing Change” rather than bringing in change. We will carry forward our culture of discouraging good people from entering politics. Our dream of a credible parliament that engages in healthy debates, takes responsible decisions, resonates with the idea of a prosperous India will remain just that......a dream......Therefore my fellow citizens, I urge you to vote for the "best" candidates in your area cutting across party lines. Vote responsibly and vote for "REAL CHANGE". 

As the nation starts voting today, I am wondering what are we really "voting" for? What is the agenda that we want to put our stamp of approval on. We have a party that refuses to share its vision, we have another party that shares its vision but has tied itself in knots trying to deliver on some of them in the past making a complete mess of it. We have yet another new kid on the block who flattered to deceive...

The buzzword this election seems to be "development", a flashy flamboyant word been thrown around by all and sundry but have we stopped to think about what "development" really means? This is subjective....To the urban middle class, development means big wide expressways to zip their cars on, space for parking their luxury cars anywhere in the city, malls that sell the american dream in India.This is also the model of development that media,the conscience keepers of society seems to have lapped up. All very good but the question is "Is this the real development we are looking for"? What about  rural India, that huge part of our population that does not have access to healthcare, education, food or electricity...Shouldn't real development mean that our least common denominator, the poorest of the poor have improved access to these basic necessities of life over a period of time. Shouldn't development really mean a steady upmove on the human development indicators. Increased literacy for all, better sanitation and healthcare, lower mortality rates, atleast one square meal for all, reduction of social and economic inequalities. Afterall does a country really move forward if its economic and social inequalities are huge. It just moves one step closer to greater pain. An ideal development plank would be to balance industrial growth with improvement in human development index with greater stress on the latter in a rural agrarian economy like India. A great example of faulty development vision is the state of AP where we had a poster boy a couple of decades ago in the form of Chandra Babu Naidu who transformed Hyderabad and we all called him the poster boy of development. Look at AP today where the real issue of Telangana and Seemandra is the issue of inequal opportunities. Politicians will have us believe its linguistic and cultural but the real issue has been non-proportional development. We need to step back and think about this and then weigh our options against this background. Lets see now what each of the current formations have to offer in this context.

First up, lets talk about the current, highly marketed "Indian Idol". The so-called "messiah of development". He offers his state as a model state...a poster of development....Really? Putting this model to test basis the perspective shared above, tells us that the state falters on key indicators of human development. There are states in the country that are far ahead on human development indexes. However little data seems to be coming out of the state on these factors...reportedly, the state website has removed all economic indicators from their website....Great picture of transparency....Great marketing cannot substitute for an average product, forever atleast... In matters of policy, the manifesto (which has come out on the cusp of voting day) seems to mirror the policies of the current regime with nothing new to offer. I wonder then why opposition was created to many policies of the incumbent government .....political opportunism or hypocrisy.....The claim is a promise to put India back on the growth trajectory...Well most economists will tell you that the worst is probably over for the Indian economy and things can only get better. The timing couldn't be better for the "messiah". So really whats on offer is simply "an able administrator" who may struggle in a coalition environment which is probably the most likely outcome this election. The "wave" is simply a bubble.....

Then its the "most eligible bachelor". The "Shehzada". Not sure what he offers because he seems lost in wilderness. The rights based approach that he champions seems to be visionary in substance but its way ahead of its time. In a country where the judicial system is overburdened with tonnes of cases of scams, criminal activity, terrorism to deal with, where is the space for a rights based justice system that effectively stems the red tapism/corruption in delivery of services. The stress on social indicators is visible but confined to political rhetoric with little action/implementation.  Here is a team that has presided over some of the worst scams this country has seen, has kept quiet about it and squandered an opportunity to make a meaningful contribution to its electorate. Why should the electorate trust this disposition? Why should the fate of billions of Indians be in the hands of an outfit that has lately been very skillfull at screwing things up? If I was an angel investor investing in "this corporate", I have zero chances of getting a return on investment.The "shehzada" is a lost soul searching for his true calling.....Perhaps he should go on a honeymoon sans his companion....a "la queen"

And then we have the king of mango men....The "AK49"....First things first, I think he should sue the pharma companies because none of their products have been able to cure his cough, nothwithstanding their big claims on adverts.Advertising regulator, please note. That apart, this formation has been the most disappointing simply because they greatly raised our expectations from our polity. They played with human emotions in raising a lot of hopes. They flattered to deceive. While the intend is honest and real, the approach has been crude and immature in a lot of cases. The policy direction seems to be right but means and methods questionable. I would go a step further to say that their manifesto looks the best on paper but would quickly caveat that by saying the acumen to deliver on those is completely missing.The rise to superstardom has got many "wannabe's" in the fray lending an immature, non cohesive image to the formation. They are certainly not ready for the top job but we do need them as a strong opposition to keep governments on its toes which then means they do need to get a fair share of votes. This "AK" needs training in strategic warfare. Stop firing at will....

So where does that leave us ....the confused voter.....Well, I say get back to the basics, evaluate your local candidates objectively blanking out the party behind them. Look at the programs they are willing to put their weight behind and then vote in their favor. Chances are that someone who has been doing a good job will continue to do a good job irrespective of the symbol he stands for. We, the voters, have a big responsibility and we need to step up!!!!!!!!!