12329 - On the margins: how demonetisation has affected refugees in India - The Hindu

On the margins: how demonetisation has affected refugees in India

Roshni Shanker

Ishita Kumar

NOVEMBER 07, 2017 00:15 IST

Ever since demonetisation was introduced, the government has been making a strong push for the adoption of digital payment systems. With the government now trying to make Aadhaar the basis for achieving a unified financial infrastructure, those without access to banking systems or Aadhaar will soon find themselves excluded from the economy. One such group will be the refugees living in India.

Although India has not signed the Refugee Convention and does not have a domestic asylum law, it has a history of being a generous host to refugees. However, refugees do not have a formal legal identity and are often wrongly perceived to be “illegal immigrants”. This ambiguous status has forced them to the margins and has left them wholly dependent on the parallel economy for their survival. Its collapse in the aftermath of demonetisation had a devastating impact on refugees, especially women, who lost every avenue for their sustenance. The lack of documentation to open bank accounts rendered them without the means to convert their cash into new currency, and virtually wiped out their entire savings. They struggled even to buy essential provisions or avail medical services.

Refugees in India typically have a refugee card; a limited number have temporary visas. Those who tried opening bank accounts with these documents report that banks refused to recognise these as valid documentation for proof of ID or residence. Now with Aadhaar becoming mandatory to access any financial service, it is not clear whether refugees are eligible to apply for the same. While the Aadhaar Act states that anyone residing in India for 6 of the 12 months preceding the date of the application is eligible to obtain the card, many refugees who fulfil this requirement report that they have been turned away by local Aadhaar centres. Thus, it is almost impossible for refugees to open a bank account. This has forced them to remain at the mercy of local agents and touts, which is contributing to the perpetuation of the parallel economy.

Need for a formal legal identity

As policies are created in the aftermath of demonetisation, it is critical for the government to take steps towards integrating such marginalised groups into the mainstream. It is recommended that the government confer a formal legal identity to refugees and issue uniform documentation to this community. With regard to Aadhaar, the first step would be to clarify whether refugees are eligible to apply for the same. There have been some concerns that the possession of Aadhaar would allow non-nationals to access schemes meant exclusively for citizens; however, this can be addressed by issuing a limited version of the Aadhaar card to refugees. Alternatively, the government can also explore the possibility of allowing refugees to use other forms of documentation such as their refugee card and visa, to access basic financial services. Without such measures, the core objective of demonetisation — eliminating the underground economy and achieving full financial inclusion — will remain an unfulfilled vision.

Roshni Shanker and Ishita Kumar work at The Ara Trust, a centre for refugee law and forced migration studies based in New Delhi

111449 - Three years of Modi’s systemic reforms presage the next seven - - Sunday Guardian

Three years of Modi’s systemic reforms presage the next seven

By Gautam Mukherjee | 20 May, 2017

Prime Minister Narendra Modi and BJP veteran L.K. Advani during the BJP National Executive Committee meeting in Bhubaneswar on 15 April. Photo: IANS

GDP growth will probably return 7.5% for this fiscal, and over 8% in 2018, after GST has contributed its mite.

There is not a thought that is being thought in the West or the East that is not active in some Indian mind.

E.P. Thompson

The unprecedented hallmark of the Narendra Modi administration at the three-year mark is an almost total absence of corruption and scams in high places. This is in sharp contrast to the procession of corruption charges against senior members of the previous dispensation, and indeed much of the present Opposition. Charges that are coming home to roost now. And yet, the BJP in governance is only almost clean. Vestiges of the mid 1990s Vyapam scam still cling to its state of Madhya Pradesh. Besides, not everything in the domain of the NDA allies, such as the Shiromani Akali Dal and Shiv Sena, comes up roses.

However, in a relativist world, the Modi government is determined to make its zero tolerance for corruption the leitmotif. Not content with running a clean administration, it is going after black money. Post-demonetisation, it has become easier. This plus the mother lode of benaami property, armed with a revived law, with teeth.

From erstwhile Comptroller & Auditor General (CAG) charges of crony capitalism, the Modi government claims governance victories out of auctioning coal and mineral mining blocks, as well as the telecommunications spectrum. Together, these are projected to earn more than Rs 5 lakh crore for the government.

Linking disbursements of government payments with the bio-metric Aadhaar card, bolstered by an Act of Parliament, has led to an avoidance of over Rs 50,000 crore in fraudulent payments.

Many millions of the unbanked poor have been recruited into the system, well before demonetisation, and its narrative of a cashless economy in its aftermath.

Demonetisation has not only turned the country far more digital financially, but has also netted nearly a crore of fat new income tax assessees. This, even as 96% of the existing assessees, with income under a taxable Rs 5 lakh, have been rendered practically tax free.

The government also has not shied away from tackling the Rs 10 lakh crore non performing asset (NPA) mountain. Using an ordinance for quick activation of the Banking Regulations Act, it has armed the Reserve Bank of India (RBI) with powers to go after the bad corporate debtors and their assets. Another law to seize assets of run-aways and absconders is in the works.

Apart from a clean administration and its physical clean ups as in Swacchh Bharat, inclusive of its toilet-building push, and the elusive Ganga Clean Mission, other great themes are also discernible. These are its beavering away at systemic, enabling, reform.

Juxtaposed with this is a revamping of India’s foreign policy and a raising of its profile. One, that not only acknowledges the importance of individual Indians in distress abroad for the first time, but is confident enough to trade favours with other countries. This, more often than not, on a bilateral basis.

A tinge of militarism, forced upon the policy landscape by frequent provocations from Pakistan and sly barbs from China, is a departure from the submissiveness of the previous government. Combined with a massive buying/manufacturing push in this area, India is clearly arming to take on both its unfriendly neighbours, if necessary.

Domestically, Narendra Modi and Amit Shah have shown their ability to win elections at various levels most of the time.

Collectively, these broad streams presage the progress to come.

Together they will transform not only our expectations of national growth/well-being and our place in the world, but qualitative skilling, jobs generation, and freedom of choice. Even those initiatives that have failed for now, such as the attempt to reform the judiciary, and reform labour laws, show promise.

And those that are working—solar and nuclear power development, satellites, missiles, space—are indeed good to behold.

A recent online poll conducted with 40,000 participants from 200 cities around the country, gives Modi a 61% approval rating for meeting expectations, and a 69% rating of optimism about the future.

The fact that notable reformist legislation, pending for years, such as the GST has been passed in the face of intense obstruction shows the determination of this government. Compared to the battle for GST, other path-breaking laws such as the Insolvency & Bankruptcy Code, the Land Acquisition Act, and RERA, to regulate the real estate space, seem almost facile.

The Indian government today, is, above all, on a massive infrastructure build-up to drive GDP growth, provide employment and boost modernisation.  It is building city metros for mass transportation, putting in new-fangled bullet trains and modernising the long neglected Railways.

Even the struggle to amalgamate the hearts and minds of the people in Jammu and Kashmir, while subduing the insurgency in the Kashmir Valley, is making dogged progress, much to the anger of those opposed to it.

Mixed results against the Maoists and other insurgents show that the government is reluctant to seek a purely military solution against such internal militants. However, the position, under intense provocation and many casualties, is hardening.

The old RSS/VHP/SS/BJP promise of a Ram temple in Ayodhya is inching forward, with the government content to back the judicial outcome expected to sanction its building.

In a departure from its much vilified past, the Sangh Parivar, in most of its components, has been unabashedly admitted into the mainstream. This, with deserved gratitude for its contribution towards the success of the NDA at various levels. Hindutva may not be everybody’s cup of tea, but it is, under the Modi administration, allowed to contend along with the Bishops, Maulanas and the Godless Communists. No one can accuse this government fairly of a lack of tolerance, given the virulence of the regular attacks against its policies and actions.

Foreign Direct Investment (FDI) has picked up, aggregating to $156 billion in the three years, with $56 billion of it coming in 2016-17 alone. Likewise, Foreign Institutional Investors (FII) have, along with Domestic Institutional Investors (DII), taken the stock market to all-time highs at present.

Defence Manufacturing, just beginning to operationalise, alone has the potential to absorb $150 billion in investment per annum.

The Make in India programme has been most successful so far in the automotive and electronic industries, accounting for some $56 billion in investment.

FII jumps every time there are administrative reforms to widen and deepen the debt market in particular and as our companies at the top end get bigger. DII has grown substantially and the mutual fund industry is bigger than it has ever been.

GDP growth will probably return 7.5% for this fiscal, and over 8% in 2018, after GST has contributed its mite.

Inflation, thanks in part to persistently low oil prices and a strengthening rupee, has halved, falling to 4% from 8%. The fiscal deficit is now targeting 3.2%, with 3% in 2018.

Rural electrification and roads are other success stories. Every village is slated to be electrified by mid 2018. Two crore poor households have received LPG.

The Indian government today, is, above all, on a massive infrastructure build-up to drive GDP growth, provide employment and boost modernisation.

It is building city metros for mass transportation, putting in new-fangled bullet trains and modernising the long neglected Railways. The Northeast of the country is being inducted into the mainstream. The aviation sector too has been made more accessible.

Its divestment and privatisation drives have been muted, and the Modi government does not seem to be on a particularly strong privatisation drive in areas other than defence production.

Socially, it is on a drive to reform the narrative of India, from reservations, quotas and vote-bank based development to its sabka saath, sabka vikas platform.

This government appeals not only to India’s youthful voter, now in a 65% majority at least till 2035, but also to Muslim women, long suppressed by medieval practices, and the Shia minority, shunted aside quite often by Sunni, even Salafist majorities. This is being borne out by rising voting percentages in BJP’s favour, trending towards 40% or even more.

The old “secularist” versus Hindu “communal” divide seems to have collapsed decisively.

Meanwhile, Modi, supported in this by the Election Commission (EC) is pressing for simultaneous elections to be held for the Centre and the states. This will also free up more time to concentrate on governance.

In the end, is the “True North” for electoral politics changing towards a more inclusive polity? One composed of those not served by the old order. If that is so, it is the most hopeful prospect to emerge out of Narendra Modi’s first 1,000 days.

11209 - Cash deposits above Rs 2L to be disclosed in ITR forms - Deccan Herald

Cash deposits above Rs 2L to be disclosed in ITR forms

Cash deposits above Rs 2L to be disclosed in ITR forms

Chetan Chandak, Apr 30 2017, 23:58 IST

The government’s war against black money is finding its expression in every reform that it makes. The recent being the introduction of the new one-page ITR forms. Where these forms are making it way easier for taxpayers to file their returns than before, it also seeks details of cash deposits of more than Rs 2 lakh made during the demonetisation period. Taxpayers will now have to give details about the money (more than Rs 2 lakh) deposited between November 9 and December 30. Part E of the form will have columns for these details to be filled up by the taxpayer. 

The intention as specified by the government is only to collect data for the cash deposited by individuals and that they do not intend to send any notices to anyone through this exercise. The government has also clarified that they will not question any individual depositing cash below Rs 2.5 lakh during that period.

The intention of the government behind this can be manifold since it will generate a lot of database. 

Some of the possible areas of generating useful information can be as follows: 

Aggregation of all the amounts deposited across all bank accounts

This information will give the aggregate amount of cash deposited in all the accounts of an individual including the accounts where the taxpayer’s PAN is not registered. Hence, all the accounts that are not yet mapped to PAN numbers will be disclosed in the ITR form. 

To identify all those taxpayers who have deposited cash of more than Rs 2.5 lakh

Secondly, its main intention can be to identify those taxpayers who have deposited cash in excess of Rs 2.5 lakh during the demonetisation period. The tax department will try to reconcile the treatment of these deposits in the tax return and check whether the taxpayer has offered it under the Pradhan Mantri Garib Kalyan Yojna (paying 50% taxes and depositing 25% in the scheme) or has given some different treatment.

In case the tax department identifies that the taxpayer has failed to disclose it in the tax return or has offered it under the normal provisions of the act and paid the taxes accordingly as per the normal rate, it will further investigate into the reasonability of such treatment. If the taxpayer fails to provide proper justification, he may have to pay tax @60% + surcharge @25% of such tax along with education cess @3% totaling to 77.25%. In addition tothis he may also be subjected to penalty of 10% and prosecution under The Taxation Laws (Second Amendment) Act, 2016. 

The only way to avoid this penalty isto disclose the details of cash deposited during the demonetization period in the tax return. Further if the source of these cash deposits cannot be explained then offering it under the Pradhan Mantri Garib Kalyan Yojna as discussed above is a safe option. 

The government with all these measures is making sure that there is minimum hassle to even those who might have huge reserves of black money by taking advantage of the schemes. 

Apart from this, the new ITR forms have some more new fields that are marked mandatory like quoting of the 12 digit Aadhaar enrolment number. This will also help in tracking those who have not enrolled for Aadhaar. Statistics reveal that although 111 crore people in India are already enrolled under Aadhaar, there are only 25 crore PAN card holders. 

Government tax reforms in the recent times are all aimed at better compliance at the same time making sure that their intention to eradicate black money from the system is fulfilled. Although these measures might seem tedious for the common man at large there are larger benefits in these that will help make lives easier for everyone. 

(The writer is Head of Tax Research, H&R Block India)

10819 - The politics of demonetisation

The politics of demonetisation

Zoya Hasan

 JANUARY 28, 2017 00:15 I

As Parliament prepares to convene again after a winter session washed out due to the Opposition’s protest on demonetisation, it is worth asking why political mobilisation against the exercise is proving to be so difficult

Demonetisation has been the most hotly debated topic since November 8, when Prime Minister Narendra Modi announced that the high-denomination notes then in circulation would cease to be legal tender. In a single stroke, nearly 86% of the currency in an economy powered by cash transactions, with 54% people without bank accounts, was wiped out. The move disrupted the lives of ordinary people, led to widespread hardship for the poor, major job losses and over a hundred deaths. Despite the huge distress and disruption, the general sentiment seemed to be in favour of the decision.

The shock move invited widespread criticism. It provoked protests and a lot of anger and agitation, but most of it was directed against local irritants, particularly banks. There are numerous reports of angry crowds locking up banks and jamming roads to protest against the non-disbursement of cash.

 As for more organised opposition, the winter session of Parliament saw Opposition parties locking horns with the government over demands for a vote on demonetisation. The tussle between the government and the Opposition washed out the entire winter session. Opposition parties staged several protests in different parts of the country, but this did not coalesce into a larger expression of protest against the government despite the pain caused by demonetisation to the poor who have suffered overwhelmingly because of it. The question that needs to be asked concerns the relative importance of social and political influences that generated greater support than opposition against demonetisation.

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Diversionary tactic

Much of the debate on the demonetisation move has focussed on its economic consequences; not enough attention has been paid to the politics of this drastic decision which can possibly explain the lukewarm opposition to it. One of Mr. Modi’s big campaign promises was to end corruption. But that didn’t happen. The growing criticism of the government’s failure to deliver on the promise of bringing back black money stashed abroad and depositing ₹15 lakh into every bank account as promised at the time of the Lok Sabha polls led the Prime Minister to do something bold to offset the negative feelings in the context of impending State elections. It was seen as a dramatic measure that would enhance the regime’s credibility in fighting corruption and black money and divert attention from its perceived failures on this and other fronts. Instead of finding ways to tackle graft through the tightening of regulations and controls on real estate and political party funding, demonetisation was promised as the ultimate solution.

As a political decision, demonetisation was aimed at setting the agenda for State Assembly elections. The timing of the decision clearly indicates this: it was announced three months before five Assembly elections, particularly in the crucial State of Uttar Pradesh. It was unleashed as a political strategy to checkmate regional parties (by threatening their cash reserves) and expand the BJP’s support base in the Hindi heartland by projecting demonetisation as a pro-poor measure.

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Shifting goalposts

With this background in mind, it is possible to speculate about the political repercussions of demonetisation on popular discontent. The focus of discussion has been the inconvenience, not the policy of demonetisation — the acme of unreason (it is not open to question) — which exposed a deliberative deficit in the government and cast a shadow on its capacity to effect sound policies. In the event, the efforts to combat black money have been so far ineffective. The government has assumed that a significant portion of illegal wealth is stored in the form of banknotes when it is well known that it is not. By December 30, practically the entire stock of old bank notes had been deposited, thus undermining the government’s claim of extinguishing black money. This happened within a few weeks of the announcement. It put paid to hopes that the government can profit from old and unreturned notes as the Reserve Bank of India could transfer that money to the government to spend. Given the failure of the initial drive against black money, the goalpost was changed from curbing black money to cashless economy to digital transactions, all this to justify the move which had caused so much disruption.

Nonetheless, the 50-day deadline for depositing old notes allowed the government time to reposition demonetisation, which made it more difficult to trigger and sustain protests.

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‘Good’ intent, ‘bad’ management

Further evidence of the overwhelming influence of what might be loosely termed as political constraints emerges from the fact that even critics assume demonetisation was motivated by good intent, which makes it more difficult to go against it. This intent was supposed to include the elimination of black money, the curbing of counterfeiting, controlling terrorism and moving the nation to a cashless age. Most critics of the government have had to preface their criticism with a disclaimer acknowledging the laudable motivations of the exercise even as they bemoan its incompetent implementation. This shields the Prime Minister and the government from criticism, which is limited to inconvenience and time spent in accessing bank accounts. But the poor and people working in the informal sector have not only been inconvenienced, they have been dislocated and their livelihoods irreparably damaged. Standing in a queue or being late to work is an inconvenience, but collapsing businesses and losing jobs go beyond inconvenience.

At the social level, demonetisation was presented as a great moral project to clean up the national economy. It has been portrayed as a crusade against tax evaders to help the poor. Mr. Modi describes it as ‘redistributive justice’, ‘a war unleashed against the corrupt’ and venal elite flaunting their black money. Hence, many people believe that in trying to curb black money, Mr. Modi is acting against the unscrupulous rich hoarding piles of illicit cash. The idea that the rich are suffering because this was a measure that caused problems for them is undoubtedly appealing to poor people, but such resentment doesn’t translate into protest. In this case, it is actually thought to explain or excuse the pernicious effects of demonetisation. Martha Nussbaum argues in Hiding from Humanity: Disgust, Shame and the Law that disgust is a questionable formation, one that has the social function of maintaining hierarchies, while the really democratic act would be to criticise and undo social hierarchies. The same could be said about the formation of resentment in perpetuating social fault lines rather than undoing it.

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Climate of fear

Three other reasons can be adduced to explain the relative shortage of protest. First is the general climate of fear and the government’s intolerance of dissent which deters people from expressing opposition against the move. Second is the Indian obsession with black money. For the past few decades, black money has become the single greatest marker of what is wrong with India today. Successive anti-corruption movements have played a major role in creating this perception. Thanks to Bollywood films and their good-and-evil stories with an unremitting focus on corruption and black money, they fire the popular imagination like no other issue can. Hence, visible action against black money successfully channels the anger of the people in favour of those who are seen to be doing something to eradicate it.

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Third, to strengthen his position, the Prime Minister has repeatedly offered the trope of nationalism so that anyone opposing demonetisation is denounced as corrupt and anti-national. The analogy with a war against corruption is also designed to do this, to make people participate in a sacrifice for ‘cleaning up’ the nation. Thus, the Prime Minister compared the war on black money to the external aggressions India faced in 1962, 1965, 1971 and 1999 (Kargil), when the ‘intrinsic strength’ of citizens was on display. He went on to add: “Such collective energy and patriotism is understandable in the face of external threats. However, when crores of Indians unite to fight a war against internal evils, it is unparalleled.” Hyper-nationalism and grandiloquent rhetoric are constant responses of this government every time it finds itself on the defensive.

Any discussion of public protests must also take into account the fact that large and visible protests are not spontaneous, they are usually an outcome of mobilisation by political parties; but parties have been stymied because mobilising against demonetisation can be instantly condemned as support for corruption. ‘Only black money hoarders are opposing demonetisation’ was one unvarying refrain of the ruling dispensation. In the face of this kind of propaganda, no one can afford to be seen as directly opposing measures to clean up black money and weed out counterfeit currency. The public also fears that opposition to demonetisation will make them appear corrupt and immoral.

The lack of large-scale protest is by no means an expression of popular support for the government’s decision but it has been interpreted not just as acquiescence but endorsement of the demonetisation move. The Prime Minister has repeatedly claimed that people overwhelmingly support his policy. One might ask how he is privy to this sentiment given that he is a master of one-way communication and hasn’t deigned to speak in Parliament, leave alone talk to people. Most likely the support is deduced from the fact that so far the BJP has not lost any elections, local or otherwise, since demonetisation. This reasoning suggests that as long as there are no large street protests and people continue to vote for the BJP, there is no need to accept the downside of this decision and the social obligation to address public grievances arising from it.

Zoya Hasan is Professor Emerita, Centre for Political Studies, JNU, and Distinguished Professor, Council for Social Development, New Delhi.

10818 - Cashless Biometrics and India’s Demonetization Experiment - Corbett Report

https://www.corbettreport.com/cashless-biometrics-and-indias-demonetization-experiment/

Cashless Biometrics and India’s Demonetization Experiment

Corbett • 01/24/2017 • 7 Comments

by James Corbett
TheInternationalForecaster.com
January 24, 2017

Well, that didn’t take long.

In the wake of India’s demonetization of the 500 and 1,000 rupee notes last November, I wrote an editorial (“Crisitunity in India’s Cash Crunch“) where I noted that one significant reason for the drastic move was the chance to rein in India’s sizable informal economy:

“In India, they call cash gleaned from counter-economic activities ‘black money.’ It’s not known to the government, it’s not stored in the banks, and it’s not taxed. In other words, it’s the would-be technocratic overlords’ worst nightmare. It’s impossible to know the size of this ‘black money’ pool (can we call it something cooler, like ‘freedom funds’ or something?) but it has been estimated to be as much as 20% the size of the total Indian economy. Now with the vast bulk of those freely-gotten gains being brought back into the banking system (or exchanged with a valid form of government identification), it will come back under the purview of Big Brother and his friend, Uncle Taxman.

As if on cue, earlier this month the Indian income tax department began asking banks for data on their customers’ bank deposits between April and November of last year so they could better analyze the cash that was being turned in for signs of “suspicious” activity. And now, the latest from the Hindustan Times:

“People who deposited huge amounts of cash in their bank accounts after the Centre’s demonetisation exercise may get multiple notices from the Income Tax department through the rest of the year.

“The department – which has started sending notices to those who deposited currency over Rs 2 lakh [200,000 rupees, or about US$3000] after November 9 – directed its officials to ensure that “genuine” cases are dissolved at the earliest. Probes would then be undertaken against those found to have “fuzzy” sources of income. The mammoth exercise could go on till the next financial year, sources said.”

The article goes on to note that “using risk-based data analytics of cash deposits in bank accounts to distinguish between genuine and not genuine cases, the tax department has become capable of targeting even entry-level operators.” Not only that, but we now learn that “the government has begun analysing deposits in new accounts and loan repayments as well as transfers to e-wallets and advance remittance for imports during the last 10 days of deadline to turn in junked notes.”

In other words, the poorest of the poor and the previously unbanked have now been duly identified and branded as tax cattle, ripe for the fleecing (to mix a metaphor). No surprise there.

Indeed, as Satya Sagar points out in our recent conversation on the demonetization scheme, if this scheme were really about cracking down on so-called “black money,” it’s a colossal misstep. Only 6% of the so-called “black money” is actually held in cash, as those looking to evade the taxman invest it in real estate, gold, or foreign bank accounts, and much of the “illicit” cash that is flowing around the system is used as slush funds, bribes and kickbacks to corrupt politicians.

Instead, this campaign can be seen as an attempt to accomplish, among other things, the identification and registration of the previously unbanked and untaxed masses, and the kick-starting of India’s nascent cashless-payment economy.

The first aim is particularly interesting in light of India’s ongoing efforts to force its 1.2 billion residents into the world’s largest biometric database. And the second aim is particularly interesting in light of Norbert Häring’s recent report on how a little-noticed USAID program seems to have been the “catalyst” for this demonetization experiment:

“Not even four weeks before this assault on Indians, USAID had announced the establishment of ‘Catalyst: Inclusive Cashless Payment Partnership,’ with the goal of effecting a quantum leap in cashless payment in India. 

The press statement of October 14 says that Catalyst ‘marks the next phase of partnership between USAID and Ministry of Finance to facilitate universal financial inclusion.'”

But the effort to biometrically register the population and the effort to transition into a cashless economy are, in fact, intimately related. As Häring notes, Alok Gupta, Catalyst‘s “Director of Project Incubation,” was an original member of the team that developed Aadhaar, the Indian government’s biometric identification system. And wouldn’t you know it, the latest word from the World Economic Forum at Davos is that India is going to skip right over card-based cashless payments and go straight to biometric e-payments. According to biometricupdate.com:

“The chief executive of India’s leading economic development agency told attendees at the World Economic Forum in Davos that the country could introduce biometric payments within three years, thereby eliminating the need for cash and typical electronic payment methods, including: automated teller machines, along with debit and credit cards.”

That’s right, Amitabh Kant, the head of the National Institution for Transforming India, a government-run policy institute, told the assembled globalists at Davos that India would leapfrog straight over the card-based economy and into the world of biometric payments. As he was creepily quoted by CNN: “Each one of us in India will be a walking ATM.”

This is the direction that things are going in India. And, as I will discuss later this week on The Corbett Report, what is unfolding right now in India is no more than a test run for what will soon be implemented around the world should the globalists get their way.

10743 - Cash shortage to end by mid-January: NITI Aayog CEO Amitabh Kant - Indian Express

Cash shortage to end by mid-January: NITI Aayog CEO Amitabh Kant

He said nearly 30 crore people who are without mobile connections can use Aadhaar and thumb impression or Iris connection for digital payments.

By: PTI | New Delhi | Published:December 16, 2016 3:55 pm

People queue outside a bank to withdraw cash and deposit their old high denomination banknotes. (Source: Reuters)

Cash shortages following the demonetisation of high value currency notes will end by mid- January, NITI Aayog CEO Amitabh Kant today said. Disruption in the economy was inevitable after this step, taken as India aspires to have become a USD 10 trillion economy, said a statement by industry body Ficci, quoting Kant. He heads the high-level committee set up the government to identify all possible modes of digital payments across sectors as it pushes on with its drive towards a cashless economy.

“The committee is well on its way towards establishing and monitoring an implementation framework with strict timelines to ensure that nearly 80 per cent of the transactions in India move to the digital-only platform,” Kant said. According to the statement, he emphasised that for sustaining a 7.5 per cent growth, digitisation is important as India cannot afford to have a parallel economy generated by high level of cash transaction.

India is the only economy in the world with 1 billion biometric authentications and 1 billion mobile phones, Kant said, adding that it has the digitisation infrastructure to leverage the JAM trinity — Jan Dhan, Aadhaar and Mobile. Noting that Aadhaar-enabled payments was the biggest disruption in India, he said nearly 30 crore people who are without mobile connections can use Aadhaar and thumb impression or Iris connection for digital payments.

In the next 6-7 months every smartphone user would be able to make Aadhaar based payment using a device based on inter-operating system, Kant said, pointed out that as India moves towards digitisation transaction costs would come down.

Highlighting various incentive schemes taken by the government to promote digital payments such as ‘Lucky Grahak Yojana’ and ‘Digi Dhan Vyapari Yojna’, the NITI Aayog CEO assured merchant-traders that in their move towards digitisation there would be no harassment by tax official by way of scrutiny of the previous years of books of accounts.

10740 - CEA wants real estate, electricity charges to be part of GST - The Hindu

CEA wants real estate, electricity charges to be part of GST

TCA Sharad Raghavan

DECEMBER 15, 2016 11:58 IST

Arvind Subramanian says the Indian economy, as far as macroeconomic condition is concerned, is very stable.

As the country comes to terms with the demonetisation of Rs. 1,000 and old Rs. 500 notes, Chief Economic Adviser Arvind Subramanian spoke at an Assocham event on various issues.

Excerpts from his speech:

>> It's fair to say that the Indian economy, as far as macroeconomic condition is concerned, is very stable.

>> Both the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) have come down. Current account deficit is very low and is being financed by Foreign Direct Investment. We have been reducing the fiscal deficit consistently.

>> From the domestic point of view, there are many legislative achievements in 2016. Aadhaar Bill is very important for the Jan Dhan Yojana, Aadhaar, Mobile numbers (JAM) mission.

>> Legislation has been passed to institutionalise monetary policy.

>> The bankruptcy code is very important in enabling exit from operating in India. Entry has become very easy, but exit is still a problem.

>>GST constitutional amendment bill is the 'mother of all achievements'.

>>FDI policy has been liberalised considerably. FDI surged in Q2, which is a very encouraging sign.

>>Domestic challenges: how to manage demonetisation over the next weeks/months until remonetisation can be done fully.

>>Then there is the twin balance sheet problem of the corporates and the banks.

>>International challenges: US interest rate rising and dollar getting stronger. But I am less concerned about this since the Indian economy is still strong macroeconomically.

>>The other challenge is to keep an eye on the currency situation in South East Asian countries and in China.

>>Third international challenge is that if we need strong growth, then exports have to grow 15-20% every year. But the question is, can the advanced economies buy our exports? Can they handle service exports from us?

>>GST: We should aspire to simple, clean rates that are lower rather than higher. This will help in fight against black money.

>> Sale of land and real estate need to be part of GST. That way the input tax credits can enter the system. Stamp duty can be kept separate.

>>Need to bring electricity charges as part of GST.⁠⁠⁠

>>Manufacturing push: if China did manufacturing for 25 years, why can't we do services for 25 years?

>> Fed rate hike: it was anticipated and expected. The Indian economy is very well cushioned to handle it. The RBI took the possibility into account during its latest review.

>> Rising oil prices: don't focus on the ups and downs. When oil prices go up, nimble producers will also increase production. Don't think oil prices will surge to a level that the Indian economy can't handle.

10728 - Demonetisation a catalyst for a cashless society - Live Mint

Demonetisation a catalyst for a cashless society

It is pleasing to see smaller merchants such as tea stalls, grocery stores as well as consumers in rural and smaller cities embracing digital payments

Arvind Gupta

Photo: Abhijit Bhatlekar/Mint

The Modi government’s demonetisation decision, replacing 86% of currency, was undeniably disruptive. No major disruptive decision comes without upheavals and it will be foolhardy to suggest that the removal of Rs500 and Rs1,000 notes from circulation hasn’t inconvenienced most people, especially those on the wrong side of the socioeconomic and digital divide in India—the poor. Yet, the exercise was neither a knee-jerk reaction nor was it without consideration for the poor. In fact, it was just the opposite and reflective of the inclusive motto of the Prime Minister and his government’s ‘sabka saath sabka vikas’ theme.

Removing high-denomination currency notes fits well with the government’s successful efforts at financial inclusion, through Jan Dhan, and using technology as an enabler, through Digital India, to improve the socioeconomic condition of the most marginalized sections in our society. The central idea behind this vision is not just about connectivity, but about how to leverage that connectivity in enabling consumers, small businesses, traders and farmers to harness technology for efficiency and productivity.

The Jan Dhan-Aadhaar-Mobile trinity and less-cash initiatives are the backbone of far-reaching reforms, development and a growth agenda. Each and every Indian can now have access to full financial services through the revolutionary IndiaStack. 

IndiaStack is open innovation at its best, with tight integration with Aadhaar identity, digital locker and payment systems available to all to build their innovations on top of these platforms. The data exhaust from the digitization efforts will make our society truly data rich, which in turn can be leveraged for a host of applications, including better credit facilities for small and medium businesses, customized insurance and savings products, among others.

Prior to demonetisation, the bulk of transactions were conducted through cash. Since then, it has reduced considerably and this move has proven to be a catalyst for consumption to be digitally driven and payments to go cashless. However, it must be acknowledged that large parts of the poorer sections of society, especially in tier-2 and 3 cities as well as in rural India, are not financially literate and distrustful of the formal banking system. In many cases, even if they have bank accounts, they are unaware and unable to use digital payments systems. That is the real challenge for the new-age banks and fintech disruptors. They need to ensure that a consumer trusts and uses digital payments as comfortably as cash.

It is pleasing to see, since the demonetisation drive, the number of smaller merchants such as tea stalls, grocery stores as well as consumers in rural and smaller cities embracing digital payments through mobile wallets, bank point-of-sale machines, among others. But in order to make digital payments pervasive and sustainable, India not only needs to focus on continuing to roll out digital infrastructure, but also proactively educate its citizens on the long-term benefits of digital transactions.

The payment supply chain should work on smartphones, as well as on feature phones in areas of low connectivity with confidence. There are already villages in states such as Gujarat and Haryana where digital payments are the norm, be it in grocery shops or managing welfare payments from the government. But this needs to be replicated around the country.

The digital transformation of cash is also a cost savings to the entire financial ecosystem and not just the public purse. From printing to cash management to physical infrastructure to securing and dispensing of currency, cash is very expensive. Banks and our government must think out of the box to pass these savings to consumers as incentives to embrace digital transactions.

India must use the demonetisation drive to harness its innovation and political capital, to ensure those who are on the wrong side of the digital and socioeconomic divide, especially in rural Bharat, can effectively function in a less-cash society.

So, while it has thrown up many challenges, this bold decision by the government definitely acts as a catalyst to ensure all parts of our society can be part of India’s growth story. The government cannot do it alone—all of us need to play our part in it.

Arvind Gupta is a digital innovator and Eisenhower Global Fellow, currently heading the BJP’s information & technology department. The views expressed here are personal.

His Twitter handle is @buzzindelhi

Arvind Gupta

10727 - Demonetisation Is A Welcome Disruption For The Indian Economy - Swarajya

Demonetisation Is A Welcome Disruption For The Indian Economy

Balamurugan - Dec 14, 2016, 4:44 pm

SNAPSHOT

India has been arguing over the gains and pains of demonetisation since the announcement was first made.

The Indian public has a record of embracing disruption, and it’s always benefited the country greatly.

Demonetisation will prove to be highly beneficial for the economy in particular.

The scrapping of high-denomination currency notes is an unparalleled event in Indian history. An exercise of this nature, where 86 per cent of the currency was sucked out of a system that affects 1.25 billion people, has never been attempted in recorded human history. How this will pan out over the next few weeks and months, and what its intended consequences (tackling black money, counterfeits) and unintended consequences (the switch from cash to digital money, greater financial inclusion) will be will occupy the public discourse for many weeks to come.

One particular question that bothers many well-meaning commentators is, will the Indian public, a lot of them poor and illiterate, be able to cope with a less-cash economy? The answer to the question probably lies in the phrase used by one of the greatest modern economists, Adam Smith, “invisible hand”. It implied that an individual’s interests and survival instincts – for his own benefit – will have unintentional benefits to the society at large.

This writer believes that the Indian public is very enterprising and has, in the past, adapted to disruptive changes with more agility than many commentators give them credit for. This assertion is based on historical evidence.

Computerisation

The first known disruptive change in this writer’s life came in the form of computerisation. The effort was led by Rajiv Gandhi with professional guidance from Sam Pitroda. All opposition parties were up in arms at the time, particularly the left unions, who professed that jobs will be lost in an India that is still illiterate and who wanted to perpetuate an inefficient India that relies on manual book-keeping. Their disdain for computers was well known from the time when their stalwart Jyoti Basu refused to allow the offloading of a supercomputer in Kolkata port. In essence, they were attempting an infant murder of computerisation. But people stood behind the concept of modern India and today, the results are there for anyone to see. The Indian Railway Catering and Tourism Corporation (IRCTC) is one of the largest e-commerce players in the world. Our banking system is now entirely computerised. Our Information Technology services are the envy of several countries. The “invisible hand” forced more people to learn how to use computers, and a new sector was born.

Election process

The election process was the second disruptive change. In those times, Indian elections were known for their notoriety. There was rampant booth capturing, bogus voting, violence and wielding of money power. Every general election used to cost lives. Then came a focused man, T N Seshan. He took on everyone, made tall claims that he would give voter identity cards and electronic voting machines (EVMs) and conduct peaceful elections. Many of us laughed at that prospect in the beginning. He and his successors have demonstrated ever since that an election without muscle power is possible. The “invisible hand” of self-interest has pushed voters – literate and illiterate alike – to adopt voter ID cards and EVMs to protect their democratic right and today, the Indian election process is a model for many democracies around the world. It is a different matter that the visible hand of politicians still leads to the wielding of money power.

Toll roads

The introduction of toll roads was the third disruptive change. In his early days in banking, this writer met the then chief executive of Volvo India who was setting up a new plant to manufacture trucks and buses with air-conditioned cabins and higher tonnage for longer hauls. He was convincing this writer on why we should finance those vehicles even though they were priced at three times that of the competing Leyland and TATA vehicles. He was passionately saying how the golden quadrilateral project proposed by Atal Bihari Vajpayee was going to change the way Indians travel. This writer was sceptical on the willingness of Indian truck operators to pay tolls (and their ingenuity to find alternate routes to avoid tolls). However, when the truckers saw the benefits that they would accrue from good roads in the form of fuel savings, faster travel and lesser maintenance costs, they rapidly adapted to this disruptive change, all in their interest.

Other disruptive changes

The story of Indians embracing the mobile telephony revolution has been told several times. In fact, several sceptics initially derided mobile phones as a rich man’s toy. But today, it is an incredible success story to watch everyone, a vegetable vendor, a plumber, a student or a pensioner, speak on a mobile phone, which would have been entirely unimaginable even just a decade ago.

The most recent disruptive change is the Aadhaar. Former Prime Minister Manmohan Singh, with the help of entrepreneur Nandan Nilekani, attempted the most audacious experiment of providing an Aadhaar unique identity for every Indian. It was a mammoth experiment for 1.25 billion people. The sceptics had a field day. Can we create social security equivalent to the US? The intellectuals were against Aadhaar on the grounds of right to privacy and the possibility of excessive state control on individual lives. However, a billion people enthusiastically adopted Aadhaar when they understood the incentives that would come with it. Nilekani and his team delivered the largest and most cost-efficient system of the world.

These examples and many others from Indian history clearly indicate that Indians are highly enterprising and adopt change quite quickly when they see the incentives associated with it. It is no one’s case that one should be forced to start using digital money through government fiat. But suitable incentives, such as the ones recently announced by the government, can help accelerate the process of moving India to a less-cash economy.

Today, the country has more Facebook users than those who do mobile banking or use e-wallets. Government initiatives and incentives can bridge this gap and move India to a less-cash economy soon. The benefits of such a shift are enormous for the country in terms of tax compliance, black money, counterfeits and more, and should therefore be embraced.

10726 - For some establishments in Delhi, demonetisation has meant more profit - Hindustan Times

For some establishments in Delhi, demonetisation has meant more profit

DELHI Updated: Dec 14, 2016 13:58 Ist

Abhinav Rajput  Hindustan Times

Petrol stations became the most sought after place as the government allowed banned currency here till December 2.(Arun Sharma/HT FILE)

The demonetisation of Rs 500 and Rs 1,000 currency notes caused losses to businesses ranging from a grocery store dealing in few thousands rupees to a car company with turnover in crores. However, for some establishments the cash crunch had resulted in increased customers and profits.

Departmental stores

Several departmental stores in Delhi said that their business had increased after demonetization as the customers wanted to pay through credit or debit cards - a facility that the neighbourhood kirana stores did not have. A shopkeeper at Gourmet Fresco in Defence Colony market said, “We now get several customers from the neighbouring Kotla area also as most of the shops there do not have swipe card facilities.” The shopkeeper at Radha Krishna Store, a departmental store in Central Delhi’s Bengali Market said the only thing that has changed after demonetization is that while 80% of payments were earlier in cash, the equation has now reversed. The owner of a departmental store in Khan Market said that they now get customers even from areas like Safdarjung and Lajpat Nagar. “For us it is a win-win situation as we are earning more than we did earlier,” he said. Similarly, the owner of Soni Super Market in New Ashok Nagar said that since there are very few stores that have card facilities in the area, his shop’s sales haver gone up three times.

Aadhaar Enrolment Centres

Aadhaar Cards are made by Enrolment Centres under the guidance and rules laid by Unique Identification Authority of India (UIDAI). Most enrolment centres in Delhi said that the demand has doubled since the demonetization was announced. Ashish Vijay, a resident of Sarita Vihar, who runs one such enrolment centre said, “I recently had a camp in Saket where more than 250 people participated. Earlier, such camps saw not more than 150 people. Jitender, a resident of Mandawli, who runs an enrolment centre said, “Earlier, we had to request people for space to set up a camp but now the RWAs are calling us to set up counters.” This is primarily because people think that it will soon be mandatory for people to link with bank accounts with Aadhaar, he added.

Point of Sale (POS) or swipe machines

Most banks said that there has been an overwhelming demand for POS machines. A POS machine, loosely referred as a swipe machine, is used to make card payments and is installed in shops by private vendors in partnership with banks. Banks make an estimate of the sales and set the limit to which cash could be swiped. Banks also monitor the transactions. A banker with the Indian Bank in East Delhi said that since demonetisation he had received requests from 20 businessmen for the machines — far more that the requests received over six months. A State Bank of India official said that earlier the bank had to request businessmen to take swipe machines but now traders make repeated calls for the machine as the bank is struggling to meet the surge in demand.

Safal and Mother Dairy outlets

The government’s rule that old ₹500 and ₹1,000 notes could be used at Mother Dairy and Safal stores increase the footfall at these shops. A Safal outlet owner in Defence Colony said that sales reached up to ₹2.5 lakh on some days after demonetization. “We sold goods for around ₹30,000 on an average but for at least five days after demonetization was announced, the sales touched more than one lakh figure. Several goods were over and more than 50 people were in queue on some days.” Another Safal shop owner in Mayur Vihar said his sales had increased more than thrice and people who never came to his shop were now visiting.

Petrol stations

Petrol stations became the most sought after place as the government allowed banned currency here till December 2. A petrol station owner in Safdarjung said that for a week after December 8 — the day when demonetization was announced — the sales were at least three times more but people mostly paid in old currency. Another owner in Mayur Vihar said that though the station earned more than twice for a week after demonetization the business had seen a decline since December 2.

10725 - Rural jobs hit, government wary - THE ASIAN AGE

Rural jobs hit, government wary

THE ASIAN AGE. | SREEPARNA CHAKRABARTY

Published : Dec 14, 2016, 3:07 am IST

Eye on polls, Centre seeks to soften note ban impact.

After note ban, there has been a slump of 23 per cent in employment generation through the MGNREGA as compared to the month of October. (Representational image)

New Delhi: With Assembly elections in five crucial states early next year, the Centre is scurrying to mitigate the debilitating effect demonetisation has had on rural workers dependent on the national job guarantee scheme. The government is gearing up to provide Aadhaar-enabled payment systems to MGNREGA workers.

Most rural workers are not only illiterate, but also lack access to digital economy. Some even do not have basic mobile phones, leave alone smartphones. Thus Prime Minister Narendra Modi’s surgical strike on black money has dealt a body blow to these workers.

Data shows that there has been a slump of 23 per cent in employment generation through the MGNREGA post-demonetisation as compared to the previous month. Those who could not manage to get jobs under this scheme jumped to 23.40 lakh, almost twice the number in October.

A worried Union government is now chalking out a plan to ensure Aadhaar-enabled benefits transfer to such workers.

“Moving money into their bank accounts is not the problem. The issue is how these workers withdraw money in this time of cash crunch. Thus we are looking at various options to facilitate this,” a top official of the rural development ministry told this newspaper.

“Traditionally there has always been a slump in MGNREGA in October-November, it is true that this year it has been more,” the official, who did not wish to be named, said.

Following the demonetisation, a high-level meeting was called by the rural development ministry which was attended by Niti Ayog CEO Amitabh Kant. Chief Secretaries of all states and most district magistrates were also consulted through video-conferencing.

The plan is to provide point of sale machines at all PDS shops from where food items can be bought through bio-metric scanning and handing out micro-ATMs to banking correspondents called Bank Sakhis to dispense door to door cash.

There are around 10.88 crore active MGNREGA workers out of whom only 3.7 crore have their bank accounts linked with Aadhaar. “We have requested that the process to verify and link the rest nearly 7.5 crore accounts of MGNREGA workers should move faster,” the official said.  

10718 - How demonetisation has affected the homeless - Business Standard

How demonetisation has affected the homeless

The Geeta Ghat shelter for homeless men in Old Delhi is unnaturally crowded in the afternoons these days

Geetanjali Krishna  |  New Delhi 

December 13, 2016 Last Updated at 02:04 IST

The Geeta Ghat shelter for homeless men in Old Delhi is unnaturally crowded in the afternoons these days. Usually, during the day, it empties out as men go out in search of work. “These days, as many as 60 men are hanging around here, unemployed, during the day,” says Gufran Alam, a field worker from Centre of Equity Studies that oversees the shelter. “Many of them have not gone for work for as long as a week!” For these migrant rickshaw pullers, labourers and beggars, life is a day-to-day existence in which they have to buy everything they consume. Why, then, are so many of them out of work?

“It’s not that we haven’t been getting any jobs since the government abruptly announced note-bandi this November,” clarifies Ashwini Kumar, an occasional inmate at the shelter. Wedding contractors hire people like him for behind-the-scene odd jobs during large parties. “But contractors are paying us only in old notes,” he says. Since only a small fraction of the men living in the shelter have bank accounts, most resort to commercial moneychangers, who, they allege, are now charging a commission of 50 per cent on old notes. “I last worked for two days last week, when the contractor paid me Rs 1,200 in old currency,” says Kumar. “When I found that I could only exchange it for Rs 600 in new notes in the market, I decided it was just not worth it to seek work right now!” Like Kumar, another inmate Sushil Kumar Chakraborty, an occasional cook who gets part time work with caterers, says he, too, prefers to sit idle rather than work and get paid in old currency. “I don’t know how long can I stay without earning,” he says. “I guess I’ll wait till I become desperate.”

The few among the homeless who are fortunate enough to have bank accounts, have a different story to tell. Sushil Kumar Jha, a tuberculosis patient who is being treated at the Geeta Ghat recovery shelter, works when he can as a waiter in weddings and parties. “The last time I worked and was paid in old notes, I exchanged them for whatever I could get in the market,” he says. He did not even try to deposit the money in the account as he wasn’t up to braving the long queue at the bank. “I haven’t the faintest idea how banks work, and worry what will happen to my hard-earned money once I deposit it,” he says. “I feel more comfortable when I have all my belongings with me.”

Chakraborty, Jha and Kumar echo the sentiments of an estimated 200,000 homeless people in the capital. Illiterate, disempowered and bearing a deep mistrust of the system, few of them possess voter cards, Aadhaar Cards or bank accounts and none can withstand the job/income loss that demonetisation has caused. Fieldworkers estimate that there are about 1,000 men who stay in government shelters along the banks of the Yamuna. “Not even a handful of these have voter ID or Aadhaar cards,” says Alam.

Without these key means of identification, these people find it hard to get employment in the organised sector, and also stand no chance of receiving government social security benefits.

Yet, they are merely symptoms of a larger malaise. “Whether it is the homeless, or the transgender, there is a significant number of people in Delhi who don’t have Aadhaar cards and Jan Dhan accounts and are suffering the ill effects of demonetisation,” says Anjali Bharadwaj of Satark Nagarik Sangathan. Harsh Mandar of Centre for Equity Studies (CES), observes that the plight of destitute women beggars in the Jama Masjid area is pitiable. “Dependent on alms that have virtually dried up because of the cash crunch, many are now in a very bad shape,” he says. “The government has not thought about the people who are the neediest – the country’s millions of informal workers, farmers, migrants, nomads, tribals, single women, disabled, sick and old people, street children – in its sudden decision to demonetise our currency!”

Since the November 8 announcement, CES and several other NGOs have been working overtime to enable more people to obtain Aadhaar cards and bank accounts. Most hit the same old circular roadblock. “To open a bank account, one needs an Aadhaar card. For an Aadhaar card, one needs to show address proof, which these homeless people don’t possess,” says Alam.

While the Election Commission is supposed to periodically set up camps to issue voter ID cards to the homeless, these are few and far between. “And, the last few have been poorly advertised and held in places with hardly any homeless population,” he adds. CES had filed 400 applications for voter ID cards, of which only 65 have been accepted. The rest were rejected because of the lack of photo ID.

“Although the poor and homeless are used to life’s hardships, the uncertainty brought by this new government policy on demonetisation is no less than a calamity,” says Mandar. There are neither any easy solutions nor shortcuts to the problems, big and small that economists and activists are seeing on the ground every day. “We’re going to be seeing the effects of demonetisation on India’s most vulnerable citizens for a long time to come,” says Mandar. History will tell whether Prime Minister Narendra Modi’s policies on demonetisation and digitisation will transform the lives of the poor, but one thing is for sure. Winter has come, and it promises to be a bitter one.

10713 - Demonetisation: Seizure of currency notes in recent raids shows Modi govt's lack of preparedness - First Post

Demonetisation: Seizure of currency notes in recent raids shows Modi govt's lack of preparedness

S MurlidharanDec, 12 2016 17:30:51 IST

The freshly minted currency notes tumbling out of cupboards of crooks in raids across the country bears out the apprehension voiced by many including yours sincerely in these columns. One feared that the exchange facility was fraught, a virtual powder keg that could explode.

And the fear it turns out was not unfounded. Alas the government had not buried its head in the sand ostrich-like. Small crooks have engaged the services of poor with the ubiquitous Aadhaar cards to get their demonetised notes exchanged in return for a small service charge that exceeded their daily wage or earnings. But bigger crooks as always thought big. They presented genuine and fake Aadhaar cards before the pliable bank officials with supple conscience in order to get the permitted quantum of new notes. To wit, 1,000 Aadhaar cards was capable of laundering Rs 45 lakh given the limit of Rs 4,500 per person the RBI had mandated that was later on brought down to Rs 2,500.

This explains the seemingly impossible act of piling up of so much of new currencies by crooks who have been raided within a month of their launch. The bank officials have obviously winked at the massive wholesale laundering in return for a mess of pottage. It is believed that some Rs 70 crore worth of crisp new notes most of them of the recent Rs 2,000 denomination were found on various raids across the country. This may on surface appear small but could well be the proverbial tip of the iceberg.

Exchange was a bad idea right from the beginning. It was bound to tantalize as much the crooks with black money as bank officials with supple conscience. Aadhaar is not a fool-proof identity document. There have been reports of it being issued without due diligence. And crooks would have merrily printed fake aadhaar cards without any pang of conscience perhaps lulled by the smug belief no harm would befall them. But they had obviously underestimated the policing and sleuthing powers of the government just as the government had underestimated the vile capabilities of the crooks.

In the light of skeletons (cash) tumbling out of cupboards and sacks, it is now clear why common folks had to be denied cash all through the first month post demonetisation. The government should try to find a way out and put back the impounded new notes into circulation after they are inspected and registered by a magistrate. If there are any procedural legal hurdles to this, they must be gotten over quickly.

Apart from exchange counters at banks, petrol bunks were another fecund source to launder. They exist in large numbers across the length and breadth of the country. Crooks could have easily exchanged demonetised currency notes and gotten the legitimate ones in return for a small commission. To be sure, the laundering through this route couldn’t have been as brisk and large as through banks given the fact that they do not have access to new notes but only to the existing Rs 100 notes by and large.

Normally one is wiser in hindsight but there were people with seen-it- all experience who were from the day one worried about exchange and other escape routes like petrol bunks and mother dairy outlets. The government ought to have insisted on deposit of the demonetised notes into bank accounts, period. While this would have gotten it greater flak as being too peremptory and draconian, it would have been the right step in a country where crooks take a foot when given an inch.

Banks could have been asked to open as many deposit counters as possible. And new accounts should have been opened for those without bank accounts but in possession of the demonetised notes. The Modi government has obviously bungled by giving too many escape routes and by not gearing its mints to the daunting task of printing new notes on war footing. It should tell the nation how much money was exchanged while the facility lasted. The government did well to pull the chestnut out of fire after a lot of hemming and hawing with indelible ink etc. but it seems a lot of damage had already been done.

10646 - Why Nandan Nilekani is bullish on demonetisation; all you need to know - Financial Express

Why Nandan Nilekani is bullish on demonetisation; all you need to know

Nandan Nilekani is confident that demonetisation of old Rs 500 and Rs 1000 notes by Prime Minister Narendra Modi will help India achieve in 3-6 months what it could have got done in 3-6 years

By: FE Online | Published: November 29, 2016 4:33 PM

Nandan Nilekani had unsuccessfully fought on Congress ticket in 2014 General Election. But, in a bipartisan manner, Nilekani credited both the UPA and Modi government for India’s march towards digitisation. (Source: Facebook)

Nandan Nilekani, former Chairman of the Unique Identification Authority of India, is confident that demonetisation of old Rs 500 and Rs 1000 notes by Prime Minister Narendra Modi will help India achieve in 3-6 months what it could have done in 3-6 years in terms of the digitisation of Indian economy for financial services.

Nilekani, who was roped in as the chairman of UIDAI by the UPA government, has always batted for cashless transactions and digitisation of the Indian economy. He believes that the sudden “shock” of demonetisation announced by PM Modi on November 8, would leapfrog Indian Economy into a digitised cashless economy in the next 3-6 months.

“From my perspective, the shock to the system, I think, will give a big boost to digitisation. In the last seven years, the infrastructure for digital financial services — Aadhar, UPI the JAM infrastructure, USSD and micro-ATMs — have been laid down. What, I thought, would take 3-6 years to roll out, I now believe that, with the urgency of the matter, will happen in 3-6 months,” Nilekani said in an interview with NDTV on Monday.

Explaining his “theory” further, the co-founder of Infosys said that India is going to see a “massive acceleration of the digitisation of Indian economy for financial services” in the next 3-6 months.

For instance, he said India has about 1-1.5 million PoS (point of sale) machines installed in the last 30-40 years. The PoS machine allows card-based transactions. He said the number of PoS would “double or triple in the next 3-6 months.”

Similarly, there are about 130000 micro-ATMs, which allows people to do cashless transactions in rural areas. The number of micro-ATMS would also increase up to a million or more, he told the channel.

Talking about the pain caused to scores of people, especially the poor and daily wagers, who are still not part of the formal economy, Nilekani said, “There will definitely be some amount of short-term pain in the coming weeks. But you are going to see that this acceleration is going to benefit everybody.”‘

Despite the “pain”, he said, “you are going to see very high financial inclusion.”

When asked if India’s march towards becoming a cashless economy should have been incremental, Nilekani welcomed the demonetisation, saying India has all the infrastructure ready to transform into a cashless economy.

Nilekani had unsuccessfully fought on Congress ticket in 2014 General Election. But, in a bipartisan manner, he credited both the UPA and the Modi government for India’s rapid march towards digitisation.

He said the UPA government under PM Manmohan Singh created the Aadhaar system, but the credit for applying the Aadhaar system to so many schemes goes to PM Modi.

He further said the demonetisation and the subsequent digitisation efforts would transform India from a “data-poor to a data-rich” country. With more data on the financial transactions of citizens, it will be easy for the government to identify genuine beneficiaries of public welfare schemes.

10644 - Those who oppose demonetisation must come to the help of those in cashless distress - Economic Times

Those who oppose demonetisation must come to the help of those in cashless distress

November 30, 2016, 12:03 AM IST T K Arun in Cursor | Economy, India | ET

Reducing the use of cash in the economy and attacking black money are wholesome goals. The Opposition’s criticism of demonetisation will carry no conviction, if it has nothing constructive to offer on how to achieve these goals. Akrosh does not cut it.

What can, however, is the Opposition parties mobilising volunteers to help ordinary people use their bank accounts to make payments. Anyone can, in principle, pay for vegetables or dal by transferring money from her own account to the vendor’s, clicking a few buttons on her phone — any old phone, it does not have to be a smartphone. The only requirement is that both the buyer and the seller must have bank accounts that are linked to their phone or Aadhaar. And they must know how to operate their accounts using a phone.

Stand With the Poor…

Demonetisation is not much of a challenge for those who live cosseted in an electronic banking ecosystem. The salaried classes who do not have unaccounted income and do not have to undertake a cash-intensive operation such as a wedding are unlikely to be majorly inconvenienced, except for having to pay their support staff with money they can spend. You can switch your shopping to big retailers that have card-swipe machines or you could explore the possibility of the small retailer accepting electronic transfers.

But if you are in Bettiah, Bihar, you will probably be unable to buy or sell anything without cash. The price of cauliflower in Bettiah’s mandi is reportedly down to Rs 1 a kilo, from Rs 20 BD (Before Demonetisation, what else?). The cauliflower grower is in distress. People who are unable to buy vegetables are in distress. Workers at the mandi are in distress. When distress is acute, the prime responsibility is to alleviate it, not try and score political points.

Another cash transaction because of lack of connectivity? Will fix it right now!

Suppose India were in the midst of a man-made famine of the kind Mao imposed on his country, with his order to finish off sparrows, compliance with which led to a population explosion among locusts that ate up the crops, resulting in mass starvation over 1959-61. What would the hungry masses appreciate more, the Opposition trying to organise soup kitchens or the Opposition staging protest marches in their name?

Right now, people in rural India are in distress. The Opposition cannot distribute cash. Cash has to be printed at the mint and distributed by the RBI across the country. While this proceeds apace, what people need is the means to make payments, in the absence of the usual medium of transaction: cash.

People can make use of the National Unified USSD Platform, created by the National Payments Corporation of India, to pay wages, and buy things using bank accounts. People just need to learn how.

USSD is a communication protocol used by telecommunication service providers to establish a two-way data connection between subscribers’ phones and designated computer servers. On any phone, if you dial *99# and press call, you get a basic banking menu. It begins with asking you to enter an identifier code for your bank. This is where you lose the typical villager.

…Not Just for Them

To transfer money from your account to another person’s using a phone anytime, any day, you need to know your bank’s code and must have generated two numbers: your mobile money identifier (MMID), a seven-digit number, and your four-digit Mobile Personal Identification Number (M-PIN). Armed with these, you are ready to send money, provided you know any of (a) the intended recipient’s MMID and phone number, (b) his account number and the Indian Financial System Code (IFSC) number of the bank/branch and (c) just his Aadhaar number.

Is it sensible to expect a barely literate/numerate villager to remember so many numbers? The only number he needs to remember is his four-digit M-PIN. Other numbers can be written down. A would-be recipient can always provide his own Aadhaar number to the payer.

If people do not have Aadhaar, they must be enrolled. Those still without bank accounts must be helped to open them. These accounts must be linked to their phone number and Aadhaar.

Then, they must be trained to use these resources already available in the system, to replace cash. Is helping the government achieve its goal the best way to oppose it? Reducing cash use is not a Modi-exclusive goal. The NPCI was set up in 2008, it started working in 2009. Aadhaar was envisaged and kicked off by the UPA. NUUP was fully functional before 2014. Now, when rural Indians are in dire straits, the goal should be to help them out.

If Opposition volunteers do not chip in, they can watch volunteers of the Sangh Parivar do the job and take credit for providing relief when people need it most.

How can the Opposition do its bit on black money? It can start collecting funds openly and disclose all of it, rather than just a fraction, as has been the practice so far. This would be a paradigm shift. But the country demands it. Whoever takes the lead will reap a big harvest.

DISCLAIMER : Views expressed above are the author's own.