Monday, November 14, 2016

DEMONETIZATION IN INDIA: THE CASH DILEMMA




Since the past week with the series of events since the demonetization in India including the cash crunch felt at home to the social media messages that I have been reading, I have been thinking of writing about the situation from my viewpoint – it is just my opinion, my take on the situation and I am thankful to the constitution of this great country that allows me the freedom to express them.

I come from a family which has traditionally supported BJP because of its pro-development agenda but I have always had a problem with BJP’s hindu conservative and dictatorial tactics and had always looked for a third avenue to support (Congress not being an option because of corruption, vote bank populist tactics, etc.). Unfortunately AAP did not deliver and Kejriwal and his theatrical ways disillusioned all his followers including me. Having said that, without digressing from the topic, I wish to put forth some of my views on BJP’s latest act, i.e., demonetization of the 500 and 1000 notes, which has caused so much hue and cry that for the first time in Indian history since Independence, Indian media almost gave the US Presidential election a miss and has been doing so in its aftermath.

Being a doctor my view is more of that of the general population but having done an MBA it allows me to view this from the Macroeconomic lens too. 

So, first let’s talk about what is positive about this initiative. Demonetization of the 500 & 1000 notes as an immediate response to fake currency and terrorism is an admirable move but let me stress on the word “immediate” right now. This is not a long term solution for any of the two topics at hand as has been touted by many including BJP and its devoted supporters. What good has this step brought in then? It has stopped the inflow of “fake currencies” creating a parallel economy and stopped the “Hawala” flow of money for terrorism with immediate effect. But is this a long term effect? No, if demonetization is not done at a frequent interval of 10 years or lesser making the development of fake currencies unsustainable, eventually fake currencies of the current highest denomination,i.e.,  500 and 2000 will gradually find their way into the market and the same issues that the RBI is trying to battle right now through this strategy will eventually arise. The last demonetization of the notes of highest denomination (1000, 5000 and 10000) was done almost 38 years back in 1978 giving the fake currency developers within the country and in Pakistan ample time to run a profitable business. Now, had the imaginary "Nano GPS Chip (NGC)" been truly a part of the plan, it would have been a different ball game totally - a true master stroke - allowing much more stringent monitoring of tax evasion and fake currencies.

The other thing touted to be affected is Black money that Modi and his passionate supporters have been pushing as the major effect of this move. It is common knowledge that the black money (undeclared money) amassed in cash by many rich will either be useless or will have to be declared and deposited in the bank. Theoretically, this will help the country to earn through taxes and interests on the deposits and interests from the banks thus making it economically stronger. But that’s a theoretical assumption which includes two assumptions that a large proportion of the undeclared money is in the form of cash and that people will deposit the cash in the bank. Realistically speaking people don’t stack black money in cash. Rather, they stash it in the form of real estate assets in someone else’s name, Gold and undisclosed accounts in Banks outside the country ,e.g., Swiss Banks.


Modi announced that the nationalized banks received more than Rs 53,000 crore deposits in 2 days. It sounds big when you hear that figure but let’s break it down further with a bit of maths. We are a country of 127 crore population. Let’s assume that only 10 crore (around 8%) of that population, those that needed the cash immediately went to the bank on the first 2 days for exchange, what amount did they each deposit? Rs 5300 each. Is that an improbable figure? Would you or I or even a fruit seller or poor farmer not hold that much money? So can that money be equated to deposits from black money? Probably not. The ones with Black money would either have tried to convert it to Gold or other assets or desperately destroying or discarding it. Add a penalty tax to this scenario and destruction of cash becomes the most likely choice. Destruction of this asset does not help the economy in any way. The Ministry of Finance’s White paper on Black Money suggests that excessive tax rates increase black money and tax evasion. When tax rates approach 100 per cent, tax revenues approach zero, because higher is the incentive for tax evasion, greater the propensity to generate black money. Thus a penalty tax in this scenario will only lead to a destruction of the black money instead of reaping the fruits of their deposits. 

The Black money held by political parties for the upcoming election will also be affected. In 2011, the MC Joshi Committee on black money had found that the two major national parties (Congress and BJP) claim to have incomes of merely ₹5 billion (US$74 million) and ₹2 billion (US$30 million). But this isn't "even a fraction" of their expenses. These parties spend between ₹100 billion (US$1.5 billion) and ₹150 billion (US$2.2 billion) annually on election expenses alone. BJP may have had an upper hand in this situation with time for the conversion of the undeclared money into assets elsewhere but the demonetization action will still give everyone an almost level ground during election as the cash distribution prior to election for votes will decrease for all. During the 1978 demonetization in the Janata Party regime under Morarji Desai, then-RBI governor I.G. Patel disagreed with the measure and accused the Janata coalition government of trying to cripple the corrupt predecessor governments instead of simply eradicating black money. Thus the accusation from the current opposition on the current measure too which will have a similar effect on the other political parties including Congress.

Does this move result in deflation and generate profits for RBI? It’s a complicated situation – our cash reserve remains the same and that black money or fake currency was never a part of the circulating economy and thus there will be no profits in the accounting books and RBI will thus not be sending out dividends to your accounts and has been stated in some speeches. Former Reserve Bank Governor, Rangarajan in his article “Currency ban may cause meaningful wealth destruction” in Mint suggests that the immediate effect will be that of a lower growth due to the adverse effect on the heavy supply side sector like the transport industry. The real estate and jewellery sector will also be affected because of an avoidance of cash transactions. There will be a disinflation but eventually, once the cash disbursement process normalizes, everyone will try to convert their cash into assets including deposits (where the government will win) and real estate and jewellery leading to an inflation again due to the increased demand.

Now let’s talk about the most important effect of this move - the general public – 80% of the country agrees to demonetization as a good effort floating on the anti-Pakistan, anti-terrorism sentiments post-Uri attacks knowing that the move will affect the fake currency inflow from Pakistan and the Hawala flow of money for terrorism but it is also the same population which is exasperated having to stand in queue for hours everyday for a few thousands and having to do so frequently because enough is not being disbursed at one go. The timing of this move is also inappropriate as it is harvest season, festival season and wedding season – all situations that require heavy cash transactions. The hardest hit here are the farmers, the small scale home-run businesses, the auto and taxi drivers and the street vendors. With limited cash in hand, the buying power of the cash-strapped general population is extremely low and limited or no transactions are occurring with these vendors. Many of the farmers and street vendors do not have bank accounts so neither can they sell nor earn through cashless banking.In Odisha, Bali Jatra at this time provides an income avenue for hundreds of poor Odia farmers post-harvest season wherein they sell organic small-scale household items. This move at this time has almost ensured a sure loss for these vendors who, in many cases, make one-fourth of their annual income in Bali Jatra. Their plight is saddening and so is that of many farmers who are unable to sell their produce. The effect of this is yet to be seen. Unfortunately there is no easy measure of gauging this loss of economy and how it compares against the probable profits (from deposits and interests) of this demonetization. Is there a justification for this timing? Probably not. It was probably more politically driven than strategically to affect the upcoming elections as was the case in 1978.

Let’s talk about the execution now – the banks did not have enough cash and their ATMs had not been modified to be able to hold the new 2000 notes. Firstly, no matter how covert the operation, there could have been some notice to banks to ensure adequate amount of 100 notes. Secondly, everyone knew of new 2000 notes being planned to be introduced even if they did not know of the 1000 and 500 ones being replaced. At least some effort should have been made to ensure that all the ATMs could accommodate the 2000 prior to this notice. This would have ensured a smoother transition ensuring smaller queues and lesser inconvenience.

In 1978, when the high denomination notes of 1000, 5000 and 10000 were made illegal for transaction, the buying power of the Rupee was much higher and families were able to sustain with just 100 a month. Thus only the rich were affected but now, an average Indian family earns and requires anywhere between Rs 10000 to 25000 in a month for sustenance (Per capita income on purchasing power parity USD 5350). Thus people in every economic strata poor, middle class and rich are affected.

So, to summarize my take on Modi’s demonetization strategy – great move but needs to done frequently enough to sustain its effect, bad timing – politically driven, execution not planned well and thought through keeping the inconvenience to general public in view leading to a sluggish phased implementation.

Thursday, November 20, 2014

HIV AIDS Response in India – Now isn’t the time to quit


In the recent few years there has been a receding response to HIV AIDS globally. From PEPFAR and Global Fund to Health Ministries in various countries including India - there seems to be a growing mindset that HIV AIDS has received greater attention than other diseases of greater importance and thus funding from the same needs to be diverted to other diseases or effective programs. On the other hand, developments in recent years have convinced AIDS activists, scientists and campaigners that it is possible to halt the AIDS epidemic by 2030. Advanced and effective antiretroviral medications against resistant strains with lesser side effects and simple tools like circumcision which have been proven to protect against infection have increased hopes for a world with zero new HIV infections. 


While there are many diseases that require attention, the reason HIV/AIDS had such priority attention all these years was because of its potential to cause high mortality and rapid transmission without any intervention. As per UNAIDS, currently only 13.6 million people out of 35 million are on ART, which is far too low. Millions of people still die of AIDS-related causes every year because they cannot get the medicine they need. UNAIDS estimates that annually 1.6 million people die of AIDS-related causes and about 2.3 million people become newly infected. Thus, the total number of people living with HIV grows by 700,000 each year. If we bring the number of new infections closer to 0, we will have AIDS under control.

AIDS Healthcare Foundation’s 20×20 global campaign to scale up access to antiretroviral therapy (ART) for at least 20 million people by year 2020 aims to spark a renewed vision on this scenario —that investing in treatment scale up will yield humanitarian and economic benefits that far outweigh the initial costs. This campaign seeks to change the global mindset and reinterpret the AIDS response not as a burden, but as a smart long-term investment that will pave the way to ending AIDS, boosting economic growth and saving millions of lives.


At present the HIV infected community in India has greater woes than losing priority attention. The ART programme in India is facing a stock-out crisis in many states – from condoms in Haryana to ART in Delhi and Mumbai and HIV test kits in many others. Thousands on ART are receiving weekly supplies instead of monthly supplies and many who cannot cope with this inconvenience are missing out on their doses. The prevention efforts for parent to child transmission have been shaken by blows of frequent non-availability of Nevirapine syrup in many centres. From bad forecasting due to inadequate IT infrastructure for the same to delayed payment and MoU renewal with the logistical support (RITES) to procurement delays to cancellation of tenders to delayed approvals of contracts, the reasons for stock outs in the 17 year old National program are numerous. The bureaucratic delays in awarding contracts for procurement in the Ministry of Health add to the trouble. Unlike many developed countries, Health in general does not get its due in India with only 2% of the GDP being invested into the same.


While the Union health ministry is rolling out an online database of medicines stocked at government-run health centres and a centralized agency, the Central Medical Services Society (CMSS), for drug procurement and distribution which will replace RITES, it is yet to be seen how the central government sustains this programme financially and how they coordinate with state governments which actually look after procurements and distribution of drugs. Simply replacing an agency will not help, sensitivity to the impact on public health in absence of supply will have to be increased. Most state governments have poor drug procurement and distribution systems which need to be strengthened. One of the reasons for this is inadequate funding for drug procurement and distribution.



There have been recent instructions to State AIDS Control Societies in India to cut down on their expenditures. Clearly AIDS is no longer a priority for the government as there are more successful programs and chronic diseases that the funds are to be diverted to but what about those who have already been identified and those that have already been put on treatment? How does the fund crunch affect them? Will the lack of funds to procure essential medicines not affect availability of stocks for them in view of the recent stock-outs? Will we not create a greater public health hazard by allowing development of resistant strains of the virus due to the rampant non-adherence in absence of drugs? India has the 3rd largest population of estimated people living with HIV AIDS in the world. Of the estimated 2.1 Million people living with HIV AIDS in India, only 1.5 Million are aware of their status and registered for care and of these only 0.78 Million are on treatment. This means 2/3 of the estimated population still needs to be initiated on treatment and around 1/3 of the estimated population is not even aware that it is infected with the virus. Without identifying this population and initiating them on treatment, curbing the spread of the epidemic is a distant dream. Thus an equal focus to HIV testing as well as treatment needs to be continued to be able to curb the spread of the epidemic.  

20×20 is not an abstraction: if we all commit to getting at least 20 million people on treatment by 2020, we will take a conscious, critical step toward ending AIDS.



Tuesday, March 01, 2011

Sunrise over Kanchenjunga - Cellphone captures

Conducting a workshop then travelling from Kalimpong to Darjeeling and then working on the report and sleeping late night and then waking up 3 hrs later at 3:30 a.m. on a cold chilly November morning to travel to Tiger hill to catch the sunrise (Oh! and I missed out bathing in the icy water) . It does sound painful ... but it was worth it and I must thank the wonderful Bishop Lepcha for making all the arrangements for the visit! You have to see it to believe why the pain didnt matter once I reached there ...

Finally atop Tiger Hill ! And there's something faintly visible out there



Gradually getting brighter ...

Didnt realize there were so many out there ...

Sunrise happening on the other end ...

Could hardly tell if it was a mountain or just another cloud

All that snow gradually getting brighter with diffused sunrays hitting it

More people gather in ... and hawkers selling coffee

Hands getting numb but have to wait for that view everyone's waiting to catch ...

Now that's pretty ... but that's not it

Now look at what's happening to the skies ...

The sun rises and gold starts flowing from the peak

a bit more gold ...

Quite some gold ....

And my numb fingers can drop off now ... I have had the glimpse of gold  that many people staying in Darjeeling haven't

A Heap of Gold for everyone to salivate ...

Not just the 3rd highest peak ... its probably the prettiest one too

Saturday, February 26, 2011

Key to happiness ...

Its been such a long time since I opened this site that I thought they might have declared my page dead  and wiped it off by now. Fortunately they haven't !!!

Its been a tough time out there - work, depression and more work - some depression associated with work and some with other events in life and then getting involved in more work to mask the depression.  This whole cycle of events had so taken over my life that I forgot about all those small things that kept that smile on my face that everyone associates me with. Small things like humming a song that I love or catching up with a friend or just sitting down to write like I am today to let it all out. I believe I had gone into some cocoon in the last few months dissociating me from the virtual presence of happy moments around me.

The key to happiness, as I believe, is that we deal with the things that make us unhappy taking a concrete decision as early as possible on how to go about it, delivering on the decision taken, accepting the results of the decision and moving forward without any lingering thoughts of all that happened. Increase the amplitude on all those small things that make you happy and life seems like a flowery smooth ride. Its a constant battle between your imagination and the reality but you have to walk that tight rope in between them if you want to stick to that smile even in worrying times. If you fall from the rope towards reality, you have to face it in its crudest form and bear the mangling but if you fall towards imagination, you will land on flowers. The key though is to not walk deeper into the flowery woods unless you want to freak out everyone around you or get called insane or "whacko" or "bonkers" or whatever they call people like that where you stay.

Remember the Jim Carrey movie "Yes Man" that was out a couple of years back? Everything was flowery for him when he staid positive by saying "Yes" to everything and things changed the moment he started saying "No". Saying "Yes" dissociated him from reality and the masking thus made him unpredictable and happy. The problem with masking your unhappiness is that you never deal with what is causing it - you let them linger and just seek for momentary happiness but the thing about unhappy circumstances is that they have a habit of coming back and striking you on your face, jolting you out of your imaginary world. All these days of masking had made me some sort of a freak who was unusually happy sometimes and unusually angry whenever I was getting shaken back to reality. Fortunately, since I stuck to myself and avoided long duration company all these days, no one really noticed it to start saying that I've gone cuckoo. I would've put myself in an asylum had I been staying with the different me in the last few months; all those nervous giggling would have freaked me out. I think I was acting somewhat like Dr. Asthana from Munna Bhai MBBS everytime he would get stressed out. (Oh come on! Its just one bollywood reference in the whole page so dont make a big deal about how crappy my writing skills are. You know I can't do without those references.)

Anyway speaking of bollywood, A. R. Rehman is back in the news with If I rise from 127 hours (I've got to watch that movie !). This one's with Dido (Remember 'Here with me' from the TV series 'Roswell' ? Apparently its from her album 'No Angel') and the song's been nominated for the Oscars. Notice the way they enunciate the lyrics - its hardly understandable. I had to do a search on the lyrics to convince myself that they were speaking english (although the first few words of each stanza are decipherable). But I guess that's exactly what makes the song such a different experience along with the liberal use of the instrument - harpejji.




The song has won the Broadcast Film Critics Association Award for Best Song and Denver Film Critics Society Award for Best Song and has been nominated for Academy Award for Best Original Song, Houston Film Critics Society Award for Best Original Song, Las Vegas Film Critics Society Award for Best Song, and Satellite Award for Best Original Song

Friday, May 21, 2010

From a Nature Lover's camera

We have a nice old mango tree in our backyard. While building our house, my father wanted to chop it off  since he feared it will damage our building structure. It took a lot of assuring from my side and a dream from his mother to make him comfortable about leaving granpa tree untouched. Once we had the building ready, he once told me that he was glad he gave in to my suggestion of not cutting it as it makes our house more prettier and keeps it cool.

So you can tell from the story that I love nature and call me a tree hugger but there's nothing that brings me more joy than seeing a tree filled with lush green leaves swaying in the wind and nothing that brings me more sorrow than seeing a tree being felled to build more houses or widen roads. Flowers bring joy to everyone and so do birds so my feelings are no exception but animals of the other kind are a different story. I like them in the jungle or in the zoo. Now if I don't stand in front of a snake, a bear or a tiger smiling and enjoying its beauty while it crawls/prowls towards me does that make me strange? If I don't stand and smile enjoying the way a monkey jumps from one place to the other while it slaps me does that make me strange? Hopefully not many will say it does. Nevertheless I like capturing anything from the nature - a pretty flower (or a bunch of them), a rain bathed tree, a colorful fruit, a silent river, thundering clouds or an animal of any kind (not the creepy carnivorous kind - at least not while in direct contact with them) in my camera.

*Please click on them to view larger images


A couple of hours before I was to travel to NJP station from Jalpaiguri to board my train back to Sealdah, all of a sudden the sky turned dark with clouds moving in from nowhere and winds gushing at a speed of at least 100 kmph. As much as I was nervous about not making it to the station on time, I could not help but get hold of my camera to take a few clicks of those amazing clouds.

On our way back from visiting a site in Kalchini, all of a sudden we found ourselves in the midst of a storm. When it stopped there were trees all over the road so we had to find alternative ways to get to the main road from the jungle but while we did so, we could not help admiring the beauty of the lush green jungle drenched wet after the rain  glistening in the light of the sunset.


The puddles created by the rain stopped our vehicle at one point and when we got out of the car I realized I was standing in front of this tree - the same tree that I had purposefully stopped in front of in my last visit to take a picture. What a coinicidence? In english "nature calls" means something else (we're not going to talk about that - thankfully) but well, this was another type of a call from nature. The arch of the tree looked even more prettier after the wet shower.
 

One of the good parts of visiting the various catholic health facilities is that I get to enjoy and take pictures of their well maintained gardens (and orchards in some cases). 


It is that time of the year - there're Lychees everywhere - especially in North Bengal. All the Catholic facilities coincidentally have at least one Lychee tree. Those sparkling red lychees looked so pretty (and not to mention mouth watering) on those lush green leaves that it seemed I was looking at a Christmas greeting card filled with all those red on green. So the camera obviously  had to come out of the bag ...

Kaiser Daily Global Health Policy Report