Saturday, September 16, 2017

How Narendra Modi is fooling us about the “0.1% loan” from Japan

Through his tweet that “Would you believe if anyone gave you interest free loan, for repayment in not 10-20 years, but 50 years” Narendra Modi is trying to project that India has got a sweet deal in form of interest free loans. Prima facie, it looks very fascinating to us Indians, who are used to getting loan at high interest rates (my education loan is at 13% interest rate), and we think of saying “Waah! Modiji, Waah!”. But, anyone who has read basic MacroEconomics can easily call his bluff of this. Unfortunately for India, not many of us have that kind of economic training, so let me explain it in simple terms -


In 2010, a friend of mine from US agreed to give me a soft loan of 1000$, free of interest to be repaid after 5 years. I thought, wow! What a great deal, and accepted it. In 2010, the average exchange rate for USD to INR was around 46. So, I got approximately 46,000 rupees from him. Now, in 2015, when it came the turn to pay him back, rather than paying 46,000 rupees, I ended up paying him nearly 63,000 rupees, because by now, the exchange rate had become approximately 63. So, what was supposed to be an interest free loan, was not actually interest free. [Similarly, You can pick any long period based on historical data, (>3 years, to average out any short term fluctuations)].


Do you see, what happened here? While the Dollar value of my amount remained same during the last 5 years, due to depreciation of Indian Rupee, I had to end up paying more to my friend. This is precisely what is happening with Japan here. The inflation rates in countries like US and Japan are very low, as compared to India. Since India is a growing economy, our currency will definitely depreciate at a faster rate than USD or Japanese Yen (Explanation of the Economics behind this - https://www.economicshelp.org/blog/1605/economics/higher-inflation-and-exchange-rates/). Leaving aside minor ups and downs, due to recession, demonetisation or Tsunami, on average, over the last 10 years, the rupees’ value has depreciated considerably as compared to USD/Japanese Yen. While 1000$ was worth 40,000 rupees in 2007, it is around 65,000 rupees in 2017, and will only increase by 2027, as India is still growing at a faster rate than US. Similarly, while 1000 JPY was worth 350 rupees in 2007, it is now worth 580 rupees in 2017. (Source)


For a long time now, Japan’s inflation is stagnant around 0% rate. In fact, the Bank of Japan, is giving a negative interest rate, yes, you read it right, a rate of -0.1% on loans, to increase money circulation. In such circumstances, taking such a huge loan worth 1 Lakh Crore from Japan is only an economic blunder, for which we will keep repaying in years.


On a side note, the same Narendra Modi gave interest-free loan to Ratan Tata for Tata Nano plant when he was the Chief Minister of Gujarat, where Tata Motors got a soft-loan of 10,000 Crores at 0.1% interest payable over 20 years. This was clearly a personal favour by Modi to Tata Group, and now it is also a common knowledge, how much money Tata Trust has donated to BJP in the last few years. So, NO Modiji!, such a deal is not unheard of! If only, you had saved the money which you gave away to Ratan Tata for free, we would not have needed a loan from Japan at all.


PS: This article is based on my understanding of Economics, which is very basic as of now. But I found the same evidence in another report that backs my assumptions - https://thewire.in/177815/mumbai-ahmedabad-bullet-train-many-things-not-free/ . If any advanced economist feels I am wrong, I am willing to learn for the better :)

Thursday, February 2, 2017

Can Social Media bring Social Change?


Reflections from graduate coursework and a viral Facebook post
On November 18, a good friend of mine wrote a post on Facebook about a new and growing phenomenon of ‘social patriotism’. One of the categories of these patriots, according to him, was ‘the debater social patriots’ who vigorously debate about various issues on social media, and believe that such discussions can bring a social change. On reading his status, I self-categorized myself into this bucket of social patriots, but the question that kept bothering me was, can we really bring any social change through Social Media discussions or posts? 
Being in a graduate school at this point in time is really exciting, especially when you are studying public policy while there is Demonetization in India and Trump in the US. We get to apply a lot of learnings from our classroom to what is happening around the world. Just a month before this FB status, I had learned about ‘Non-Organizational Forms: Social Movements and Social Media’ in our Management of Organizations class. We learned how ‘Black Lives Matter’ movement was born out of Facebook and Twitter Hashtags, and how it gained national prominence within no time. Back in India, something like this had happened in 2011, during the India Against Corruption Movement, which mobilized thousands and thousands of people for the cause of the Lokpal Movement. As part of our course curriculum, we had readings like ‘fostering social movements with social media’ where we dissected the role of social media through class discussions. Somehow, within me, I believed that social media can be leveraged to bring a social change.
I decided to put this theory to test. Through my internship with Association for Democratic Reforms (ADR) in 2012, I had long known about the political parties misusing a law to hide their black money. As per the law, political parties in India are not required to declare the details of donors who give less than 20,000 rupees, while enjoying 100% tax-exemption. Many political parties, therefore, used this provision to declare incomes to the tune of 500 Crores per annum, all in small parts under the 20,000 cap, and get away without declaring the donors. This was a common practice prevalent from many-many years to accumulate black money, and despite numerous demands from ADR and other civil society members, no government acted on it. When the Central Information Commissioner (CIC) of India, in a petition by ADR, ruled that the six national parties would fall under the ambit of Right to Information Act, and would be required to declare their information, they openly defied the order. The Election Commission and Law Commission’s numerous recommendations for electoral reforms were totally sidelined for many years.
But something revolutionary happened on the 8th November 2016. The Prime Minister of India, Shri Narendra Modi, suddenly demonetized the 500 and 1000 rupee notes which accounted for 86% currency in circulation and gave a 50-day window to the people to deposit this money into the banks. According to him, this move that affected the daily life of every Indian for the next 2-3 months was aimed at removing black money and curbing corruption. The whole country backed him in this move and stood in bank queues for hours and days and months to deposit their hard-earned money into the bank. The government announced that anyone depositing more than 2.5 Lakh rupees in their account will be monitored, and questioned about the source of this money. If found guilty of getting this money from illegitimate sources, they would be taxed heavily. While the common citizen was burdened with numerous rules and scrutiny and was being forced to explain even sources of 50,000 rupees, the political parties were totally unaffected. They had the freedom to deposit large amounts ranging in hundreds of crores, by using the 20,000 exemption limit.
Now, this was not something new for the political parties, and those working for electoral reforms had long known about this issue, but there was no awareness in the general population about this misuse. I decided to use this opportunity to call out the hypocrisy of our government, and most importantly, test my null hypothesis (overdose of statistics classes?) whether social media can bring a change or influence policy decisions.
So, I put up a post on Facebook, explaining this loophole in a simple language that would appeal to a large number of people. Within a day, the post went viral. It was shared by 1700 people from my wall and also circulated on other mediums such as WhatsApp. A friend helped me convert that into an op-ed article, for YourStory - a popular digital media platform, from where it was shared by another seven to eight thousand people. In a week, it became a raging issue. People started discussing this on the social media. I received a lot of messages from friends and even unknowns, furious about the double-standards of our government, and wanting to do something on this front. Another friend urged me to start an online petition on Change.org. Within one week, the petition gained more than 14,000 supporters.
So, thousands of shares, likes and comments on Social Media, but what did it achieve? This is the common criticism against such ‘social media movements’. People share, and they forget. “Do you really think the Prime Minister will read your status and change the rule?” was the common criticism I received. Frankly, that was never my aim. My aim was to make more and more people aware about this issue, to build a social pressure on the government. I knew that the parties have paid no heed to recommendations of Law Commission or Election Commission, and have even gone to the extent of defying the orders of the CIC. So, the only hope to bring a change was through citizen pressure, because nothing can beat the power of citizens in a democracy, in my belief.
Did it work? Partly it did. My status was picked up by one of the topmost Hindi News channel of India (although without credits) who did a detailed investigative story on this. Various other media houses started questioning the government about this issue. At the same time, Election Commission shared a recommendation to reduce this cap from 20,000 to 2,000 rupees. In his election rallies, the Prime Minister was also forced to acknowledge this issue. And finally, today, in the Budget session of the Parliament, the government reduced this cap to 2000 rupees. While this may not radically change anything, as the income that could be hidden through 100 unknown donors earlier, can be hidden through 1000 unknown donors now. But given the scales, it had reached where it required 5 Lakh donors for 1000 Crores, the same would now require 50 Lakh, such donors, making it a little difficult. Therefore, I would still count it as a small positive step.
However, it would be grossly inaccurate for me to attribute this policy shift to a viral Facebook status. For there is absolutely no evidence to believe that this change happened because of tens of thousands of shares on Facebook, Twitter, and WhatsApp. But, despite these recommendations being made by the Law and Election Commissions from years, what made the government to act this time? Well, I would like to believe, that what changed this time, was a more informed citizen.
The aim of this post was not to take any credit for this change. For frankly, I cannot take any. If there is an organization that deserves credit would be ADR, who have been fighting for this for years, and where I learned about this issue. The aim was to reflect on my learnings from the course-work at my graduate school and to promote the practice of healthy discussion on social media. For I still believe, that ‘the debater social patriots’ can bring a change.

PS: For why this change in the cash limit, is only a partial step forward, read this article.

Saturday, December 31, 2016

नोटबंदी - यह काले धन के ख़िलाफ़ युद्ध तो बिलकुल नहीं है!

कल्पना कीजिये कि भारत और पाकिस्तान के बीच युद्ध छिड़ जाये जिसमें हम, पंजाब और कश्मीर के बॉर्डर पर तो ज़बरदस्त आक्रमण कर दें लेकिन राजस्थान की सीमा खुली छोड़ दें तो क्या आप उसे 'युद्ध' कहेंगे या युद्ध के नाम पर एक भद्दा मज़ाक? कुछ ऐसा ही 'युद्ध' हमारे प्रधानमंत्री श्री नरेंद्र मोदीजी ने नोटबंदी के रूप में 'काले धन' के खिलाफ छेड़ा है। पिछले 50 दिनों में चुनावी रैलियों से लेकर जापान तक, और 'नमो ऐप' के सर्वे से लेकर पिछले हफ्ते की 'मन की बात' तक, हर जगह मोदीजी ने नोटबंदी को 'काले धन के खिलाफ युद्ध' कहकर संबोधित किया है। लेकिन इस युद्ध में जहां एक ओर आम जनता के लिए रोज़ नए नियम बन रहे हैं, गरीबों के जन-धन खातों पे पाबंदियाँ लगाई जा रही हैं, वहीं देश की लगभग 2000 पॉलिटिकल पार्टियों को इसकी पहुँच से बाहर छोड़ दिया गया है। इसी सन्दर्भ में देश के मुख्य निर्वाचन अधिकारी श्री नसीम ज़ैदी जी ने पिछले महीने ये आशंका व्यक्त की कि "देश के कुछ राजनीतिक दलों का उपयोग काले धन को सफ़ेद करने में किया जा रहा है।"
जन प्रतिनिधित्व कानून 1951 के तहत राजनैतिक दलों को 20,000 से कम मिले चंदे से सम्बंधित जानकारी चुनाव आयोग या आयकर विभाग को नहीं देनी होती। और वे इस प्रकार बिना दानकर्ता की जानकारी दिए, छोटे-छोटे टुकड़ों में अनगिनत राशि एकत्रित कर सकते हैं। पिछले महीने छपे एक लेख में ये आशंका जताई गई कि इस लूपहोलका फ़ायदा उठाते हुए पार्टियां बिना किसी जुर्माने के बिना कोई इनकम टैक्स दिए, अपना सारा 'काला धन' सफ़ेद कर सकती हैं। इस दावे को परख़ने के लिए ABP न्यूज़ ने दिल्ली में पंजीकृत कई राजनैतिक दलों के दिए हुए पतों पर जाकर जांच की, तो पाया कि सच में बहुत सी पार्टियां केवल 'कागज़' पर ही रजिस्टर्ड थीं एसोसिएशन फॉर डेमोक्रटिक रिफॉर्म्स (ADR) की एक रिपोर्ट के अनुसार हमारी पार्टियों की कुल आय का दो-तिहाई से ज़्यादा हिस्सा इन 'अज्ञात स्त्रोत' से आता है। वर्ष 2014-15 में भाजपा को 505.26 करोड़ और काँग्रेस को 445.22 करोड़ रूपये इन 'अज्ञात स्त्रोतों' से प्राप्त हुए। वर्तमान में देश में 1700 से ज़्यादा पार्टियाँ चुनाव आयोग के साथ पंजीकृत हैं, और आशंका है कि इनमें से काफ़ी पार्टियां इस प्रकार आराम से अपना 'काला धन' सफ़ेद कर रही हैं, जिसकी चिंता हमारे मुख्य निर्वाचन अधिकारी भी जता चुके हैं। ऐसे समय में जब आम आदमी के लिए हर रोज़ नियम बदले जा रहे हैं, और तरह-तरह की पाबंदियाँ लगाई जा रही हैं, इस बात का आश्चर्य होता है कि चुनाव आयोग सिविल सोसायटी की भरपूर मांगों के बावज़ूद सरकार राजनैतिक दलों को इसके दायरे में लाने के लिए कोई कदम उठाती हुई नहीं दिख रही।
राजस्व सचिव श्री हसमुख अधिया जी के इस बयान कि 'पोलिटिकल पार्टियों द्वारा नोटबंदी के बाद बैंक में जमा की गई राशि की कोई जांच नहीं होगी' के बाद जब देश में एक आवाज़ उठी तो वित्त मंत्री श्री अरुण जेटली ने तुरंत एक प्रेस रिलीज़ जारी करते हुए कहा कि नोटबंदी के 'बाद' किसी भी राजनैतिक दल को कोई छूट नहीं दी जा रही। लेकिन उन्होंने ये नहीं बताया कि इन दलों को ये छूट तो नोटबंदी से 'पहले' से मिल रही है। उसी रिलीज़ में उन्होंने ये भी कहा कि "सभी दलों को अपनी ऑडिट रिपोर्ट और वार्षिक आय खर्चों का ब्यौरा चुनाव आयोग और आयकर विभाग को देना होता है" लेकिन ADR द्वारा RTI से प्राप्त किये गए इन दस्तावेजों की रिसर्च से पता चलता है कि वास्तविक सच्चाई इससे काफी अलग है।
हालांकि ये सच है कि राजनैतिक दलों को प्रतिवर्ष अपनी ऑडिट रिपोर्ट जमा करनी होती है, लेकिन इस ऑडिट रिपोर्ट में भी उन्हें 20,000 से कम के टुकड़ों में मिले चंदे की जानकारी देने की पूरी छूट है, जो कि बसपा की 2013-14 की ऑडिट रिपोर्ट से भी विदित होता है। और तो और क्या सिर्फ अपनी वार्षिक आय खर्च की जानकारी देने से पार्टियों की जवाबदेही सिद्ध हो जाती है ? भाजपा द्वारा जमा की गयी 2014-15 की वार्षिक स्टेटमेंट को ग़ौर से देखने पर ज्ञात होता है कि उन्होंने मात्र एक वर्ष में 2.1 करोड़ रूपये 'मनोरंजन' पर खर्च कर दिए। अगर इस पर कोई सवाल नहीं उठाये गए, तो क्या भविष्य में कोई किसी पार्टी को 21 करोड़ या 210 करोड़ 'मनोरंजन' पर खर्च करने से रोक सकता है? इस प्रकार का अनियंत्रित आय खर्च, राजनैतिक दलों को क़ानूनी रूप से अपने 'काले धन' को सफ़ेद करने का अवसर प्रदान करता है।
ADR द्वारा किये गए एक और विश्लेषण में ये निकल कर आया कि वर्ष 2013-14 में 1703 पंजीकृत राजनैतिक दलों में से केवल 69 ने अपनी आय का ब्यौरा, केवल 14 दलों ने अपनी ऑडिट रिपोर्ट चुनाव आयोग को जमा करी, जबकि बाकी 1620 पार्टियों (लगभग 95%) की स्थिति अज्ञात है| तो सवाल ये उठता है कि जब इस देश के 95% राजनैतिक दल बिना किसी जवाबदेही के अपना आर्थिक प्रबंध कर सकते हैं, तो क्या 'नोटबंदी' को 'काले धन के खिलाफ युद्ध' कहना सही होगा?
पिछले हफ्ते ED के छापे में ये निकल कर आया कि नोटबंदी के बाद बसपा ने 1000 500 के नोटों में 105 करोड़ रूपये अपने खाते में जमा किये, जो कि चुनावी चंदों को पारदर्शी बनाने की ज़रुरत को पुनर्बलित करता है। हालांकि इसके बाद पार्टी की प्रमुख, सुश्री मायावती जी ने कहा कि उन्हें ये चंदा 31 अगस्त के बाद से देश भर की जनता से छोटे-छोटे टुकड़ों में मिला है और ये पूरी तरह से क़ानून के दायरे में है। ग़ौरतलब है कि चुनाव आयोग को जमा किये दस्तावेज़ों के अनुसार पिछले दस वर्षों में बसपा को एक भी चंदा 20,000 रूपये से अधिक के रूप में नहीं मिला है।
तो ऐसे समय में जहां आम नागरिक को 5000 रूपये अपने खाते में जमा करने के लिए भी दो अधिकारियों को जवाब देना पड़ रहा है, वहीं राजनैतिक दलों को सैकड़ों करोड़ रूपये अपने खातों में जमा करने की छूट क्यों दी जा रही है, वो भी बिना इस आय का स्त्रोत बताये, और बिना कोई आयकर जमा किये। इसके ऊपर कानपुर की रैली में मोदीजी ने पूरे दम-ख़म के साथ कहा कि ये नियम तो काँग्रेस के समय से चलते रहे हैं, और उनकी सरकार ने इसमें 'एक कौमा या फुल-स्टॉप भी नहीं बदला' लेकिन अगर मोदजी नोटबंदी को काले धन के खिलाफ 'युद्ध' मानते हैं तो वो चुनाव आयोग की नियमित सिफ़ारिशों के बावजूद इन नियमों को बदलने का कोई प्रयास करते हुए क्यों नज़र नहीं रहे?
जब प्रधानमंत्री जी के अनुसार देश के भिखारी भी 'स्वाइप-मशीन' का इस्तेमाल कर रहे हैं, और वे पूरे देश से कैशलेस जाने की अपेक्षा कर रहे हैं, तो वे स्वयं नेतृत्व दिखाते हुए भाजपा अन्य राजनैतिक दलों को कैशलेस क्यों नहीं घोषित कर रहे? क्यों उनकी सरकार जिसके पास लोक सभा में पूर्ण बहुमत है, जन प्रतिनिधित्व कानून में संशोधन करके या तत्कालीन एक अध्यादेश पारित करके इस 20,000 रुपए वाले अनुच्छेद को हटाने का कोई प्रयास नहीं कर रही? क्यों CIC के आदेश की अवहेलना करते हुए कोई भी पार्टी RTI के दायरे में नहीं है? इन तथ्यों को देखते हुए यह बात तो साफ़ ज़ाहिर है कि जब तक राजनैतिक दलों को हज़ारों करोड़ रूपये जमा करने और खर्च करने की खुली छूट है, तब तक नोटबंदी को 'काले धन के खिलाफ युद्ध' कहना सरासर गलत होगा, क्योंकि किसी भी 'युद्ध' में एक मोर्चा खुला नहीं छोड़ा जाता।