Arjuna Ubacha

Blackmoney: Govt. listened to us on Tipoff email id

2016-12-20T02:00:00.002-08:00

Blackmoney: Govt. listened to us on Tipoff email id

On 15th November in our article titled "Blackmoney: Politics & Way Forward" we had suggested that "The Government can setup toll free numbers, email ids and fax numbers dedicated to unearthing black money where any person can send a mesage about instances of blackmoney generation".
http://arjunaubacha.blogspot.in/2016/11/blackmoney-politics-way-forward.html

The Government has in fact listened and created an email id blackmoneyinfo@incometax.gov.in where people can send email to tip off the authorities about blackmoney.

It is a good way for the tax authorities to get information on blackmoney. However, given the paucity of staff, whether they can really act on it or not is another question. The Government may try to find out the names from these tip offs and match with their database to see if they need to take action on these guys. If there is concrete information provided in the tip off email, then I think it would be easier for the Government to take action. Generally the informant is paid 20% of the amount recovered. However, whether Government will do so based on the tip off email is not known.

Technically, any undeclared wealth is blackmoney. So whether income tax authorities will be interested in the small blackmoney offenders or not is not known. For example, recently there was a petition by people saying that the landlords should be caught as they insist on house rent payments in cash. In many cities the house rent is completely in cash. In cities like Delhi, the house rent is divided into two parts and two cheques are taken often in the name of landlord and his wife. One is shown as rent and the other as rental for lighting and other fixtures. And a third part is taken in cash in lieu of water bills. Though Delhi Government charges a pittance for water, often the landlord has to run his motor pump to pump water from the municipal pipeline and fill his overhead tank. These charges are often 60,000 and above per year per flat. Will the IT department prosecute a landlord for couple of lakhs of undeclared income per year?

Remember that there are millions of such landlords throughout India. Brining them under the tax net will result in more income tax for the Government and that can help lower the tax net.

However, there is also a negative side to the story. These information on the hands of unscrupulous Income Tax officials will only result in extortion for personal benefits and can create an era of uncertainty due to raids. People can also send false information in the tipoff email to implicate someone. So the Income Tax authorities need to do a thorough job.

The main question before us is the blackmoney generation by various businesses which are outside the tax net. A tea stall owner in bangalore sells tea at 15 rupees per glass and sells about 500 glasses of tea in the evening. There are also other snacks. So this small tea seller earns minimum 20 lakhs per year just from tea. Add the income from snacks like biscuits, samosas etc. These are all sold in cash. Ofcourse they are starting with PayTM as well. A plainclothes taxman standing infront of the stall in an afternoon can give very accurate results for their assessments. Sending information about such businessess should be encouraged in the tip off email id blackmoneyinfo@incometax.gov.in . Unfortunately, people feel that these are small shops and they won't report against them. If such businesses can also be brought under the tax net then it would be good for the economy. So guys and gals keep on sending emails to the Government about blackmoney.

Demonetisation: Income Tax department faces massive challenge

2016-12-14T22:15:00.001-08:00

Demonetisation: Income Tax department faces massive challenge

The fact that Notes Ban is more work for the honest and an opportunity for others is being proved time and again.

The #NotesBan announced on 8th of November resulted in unprecedented chaos. People have waited in huge queues to deposit their old 500 and 1000 rupee notes. There were initially huge lines to exchange these notes till the Government rescinded on their promise and stopped the notes exchange. There is still a huge queue infront of ATMs whenever money is loaded in the ATMs as most of the times there is no cash in the ATMs as well as in the banks.

There were indeed some people who had undeclared income stored as cash and they were initially stunned. But later they found out easy route to exchange their old notes by giving commission. Overnight a cottage industry sprung up to exchange old notes. Unscrupulous bank employees and Income Tax commissioners have teamed up to exchange old notes. So the people pay anywhere between 30 to 35% to exchange their notes.

The Government came out with Scheme to penalise people by charging a tax of 50% on their unaccounted deposits in the banks and these money had to be locked for 4 years. Obviously people prefer to pay commission as it is cheaper and also no one now believes that the Income Tax authorities won't harass them later.

In the Income Tax department the honest employees and the lower level staff are not involved in these commission business. They find that there is much more work involved due to the #Demonetisation . Two income tax staff associations have now written letters to the Prime Minister Mr. Narendra Modi. Income Tax Gazetted Officers Association and Income Tax Employees Federation have said that Personnel and Infrastructure are severely short.

They have written that "The entire department is totally demotivated due to the huge shortage of manpower in lower cadres and huge stagnation in officers's cadre. Must have adequate manpower, especially at key positions, be provided with proper infrastructure facilities so that the workforce stays motivated, committed and highly spirited at this moment".

Clearly it would be a tough task to inspect all the bank accounts. The Income Tax department can ofcourse generate and send queries to lot of people. However, following up their responses and deciding on those would be a massive challenge. That is not going to happen soon enough for the Prime Minister to get political mileage. So there is indeed lot of Psychological warfare inform of announcement threatening people of dire consequences if they don't announce their blackmoney. Read more: http://arjunaubacha.blogspot.com/2016/11/psychological-warfare-in-demonitisation.html

It seems to be strange that the team briefing the Prime Minister never thought about these issues before strongly suggesting the PM to go for demonetisation.

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Demonetisation & The Big Digital Divide

2016-12-14T01:02:00.001-08:00

Demonetisation & The Big Digital Divide

India is a huge country with a massive 1.3 billion people. This massive population is not homogeneous. There is a big division among this people. Apart from language, castes, religions Indians are also divided by the wealth they possess ie. whether they are rich or poor, literate and illiterate etc. Now, there is another stark division between Indians, that of digital literacy.

Since November 8th 2016, it has been a difficult time for people in India as the Government of India in a sudden move banned the Rupees 500 and Rupees 1000 notes. Now the Government is pushing for digital payments as it believes blackmoney generation is mostly through cash. This push for payments through online or digital wallet mode has now has focused on the digital literacy or awareness about online and digital payments.

Despite smartphone penetration, there are many Indians who despite being well-to-do don't own smartphones. They are not comfortable with internet and mobile technology. They still do their banking via cheques, bank drafts etc and prefer to make payments in cash. They still struggle to draw their money through ATMs. There are many who forget their ATM pin numbers and write it down behind the ATM cards. This massive population, despite being literate in the conventional sense is not aware about e-banking and mobile technologies. It would be difficult for these people to learn to start using cashless mode for their payments.

These days this educated mass of retired, senior citizens and others are feeling as if they are illiterate. "I don't know this PayTM thing" is the general refrain. At the fag end of their careers, a sense of inadequacy is haunting many such individuals. India Today is changing too fast for such citizens. Ridiculed by the 20 somethings and other people as oldies and other choicest abuses, the older generation is slowly bowing their heads for something which they don't need but is thrust upon them. The respect for the older generation is all but vanished. Is this the price to pay?

If people hurtle into depressions, then no one will know as in India the society is not mature to handle depressions and mental health issues.

Demonetisation will also lead to more and more Government departments completely shifting to e-tender modes. Today, many small time businesses find the e-tenders cumbersome and a big technological challenge. The way e-tenders have been implemented till date is very cumbersome. It is not user friendly. So unless people master the various technologies, it will be difficult to compete as they are already disadvantaged.

If the Government can come out with well thoughtout applications and deploys a huge number of people to increase the awareness then slowly people may start understanding the intricacies. However, there are many big ifs involved here and the Government seems to be pushing through things without much of prior thought. Hope there is some light at the end of the tunnel, so that the common man and woman can learn and pick up the threads in their lives.

Demonetisation: Human behaviour is like War

2016-12-07T05:54:00.000-08:00

Demonetisation: Human behaviour is like War

Prime Minister Narendra Modi has equated demonetisation as war, a war against blackmoney. Recent events prove that people believe Mr. Modi that this is war and are behaving as such.

The ban on Rupees 500 and 1000 notes has indeed created a warlike situation. The huge inflation during the UPA days, when food inflation was around 18%, had resulted in greater requirement of 500 and 1000 rupee notes. So when the Government announced that all the 500 and 1000 rupee notes had to be deposited in the banks, people were forced to deposit those. And since new notes were not printed, the Government only allowed people to withdraw 2000 rupees per day from an ATM, if you were able to beat the queue.

The situation is very tough as people don't have cash in hand. Most of the economy runs in cash. People often stand in queue in front of the ATMs for hours and return empty handed when the ATMs run out of cash. So there are frequent fights, fisticuffs, hurling of abuses at each other and at bank staff that goes on. A recent report also brought out the further ugly side of people. One person in West Bengal while standing in a queue fainted and the people didn't care to pick him up. The person lay there for 20 minutes before police found and shifted him to a hospital where he was declared brought dead.

In a war zone people don't grieve over dead bodies as they don't have time to retreat in view of the approaching army. They just move on to save their lives. Their survival instincts take over and ensure that they can do anything to survive. In one instance of a airline crash, the survivors were known to have turned cannibals and ate the dead people.

Our present situation has become similarly bad. Scarcity has induced a warlike situation and now people don't care to help someone who is exhausted and falls down resulting in deaths that could have been avoided.

Life and death has no value for people today. Concern for life has vanished. The cash scarcity will continue for many more months as some reports say that the total capacity to print notes is only 300 crores a month whereas the total number of notes to be replaced is 2300 crores. Since this situation will remain for atleast six months, there may be longterm implications as people will henceforth get used to only thinking about themselves and not concerned about others. A community succeeds if it stays united. When people lift each other up, then society moves up. When people only mind their narrow selfish interests, it causes great harm to society as the society is torn apart. In such times, it is easy to sow seeds of conflict. Government should be worried that terrorists can take advantage of such conflicts.

Is Mr Modi soft on Blackmoney holders?

2016-12-04T09:32:00.001-08:00

Is Mr Modi soft on Blackmoney holders?

The Modi Government had run a Income Declaration Scheme (IDS) for people to declare their black money. The deadline for IDS 30th September. 64,275 people had declared black money under the IDS scheme totaling to Rs. 65,250 crores. The penalty under this scheme was fixed at 45%. So it was expected that the Government will get 29,362.5 crores under this scheme.

This had made the Modi Government tom-tom its success. It was said that this is much bigger than the Voluntary Disclosure of Income Scheme (VDIS) run by the Congress Govt. in 1997 as VDIS had got 33697 crores from 4.72 lakh people. At that time the Government had got tax of 9,729 crore under VDIS.

Though the Modi Government was declaring success vis-à-vis the previous VDIS, one should realise that the size of economy today is way bigger than in 1997 and the present value of 33,697 crore will be way much bigger.

Now, a series of events appear to blow a big hole in the IDS scheme.

First a person from Ahmedabad who was to pay a tax of 13860 crores declared that he didn’t have that money and had declared on behalf of others. However, other people didn’t give him the money to convert, so he can’t pay up. Next, a person in Hyderabad had declared 10,000 crores and it was found that he didn’t have even 1 crore and had just made up this story to get attention to his business.

This has resulted in the the total size of IDS declarations to drop by more than half and even smaller than the VDIS of 1997. It is to be seen how the Modi Government gives a positive spin to this disappointing news.

It should also be noted that last year, the Government had run a similar scheme for foreign blackmoney holders. There were only 644 declarations and only 2,428 crores of tax collection.

Now, the Modi Government has said that if anyone wants to declare their undeclared cash and deposits in the bank accounts then they will have to pay 49.9% tax. So this becomes the third disclosure scheme by Modi Government within a year.

Three voluntary disclosure of income schemes by the Government in such a short period of time is virtually unheard. People will lose their faith in the system and will feel that honest tax payers are being discriminated against. Blackmoney holders will feel that they will always get some more opportunity later and will be willing to take a chance.

This doesn't fit in with the narrative of a strong Government. The Government now appears to be begging before people. Mr Modi and his ministers should think hard why they are repeatedly failing.

Suggestions for Moving towards Cashless Economy

2016-11-30T09:00:00.002-08:00

Suggestions for Moving towards Cashless Economy

According to RBI, 60% of the Rupees 500 and 1000 notes have already been deposited in the banks. So the Government's calculation of blackmoney holders being caught is not going to be fruitful. Realising this, Modi Government has called for people to move into a cashless or e-payment mode. However, there is precious little that the Government has done till date to move more people into the e-payment/e-wallet mode.

So what should the Government do now?

PayTM has already launched massive advertisements featuring the Prime Minister. This is the second company after Reliance Jio to feature the PM in its advertisement. No company can do it without the permission of the Prime Minister. So I am sure the PM has given his blessings. Now the question is why the Prime Minister who always talks about swadeshi is promoting a company where the Chinese hold 40% shares? Unfortunately, that is likely to remain mystery.

Nevertheless, apart from PayTM ie promoting a private company the Prime Minister or his Government hasn't done much.

UPI:
The pilot for UPI or Unified Payments Interface was launched in April 2016 by the then Governor of RBI Dr. Raghuram Rajan, which powers multiple bank accounts into a single mobile app. Since August 2016 it is available for use. However, not much publicity has been done for popularising UPI. Details about UPI can be found here: http://www.npci.org.in/UPI_Background.aspx

The Modi Government should immediately recruit atleast 1 crore people for atleast one year to move from door to door and popularise UPI app among people. This will also result in sudden spurt in job creation as well as adoption of the UPI app among people. The amount of money required for recruitment as well as conducting this year long promotion can be budgeted.

Politically it will help the Government as the youth will be very happy to get a job as well as act as a change agent.

Bank Accounts for all:
The other important thing that the Government can do is that Government should make it mandatory for people to open a bank account for each child. The moment a child is born, a bank account should be opened and this process should be linked with the birth certificate registration and make it seamless. With Birth certificate and bank account an Aadhar number should be also created. So this will lead to complete documentation of all citizens and any benefits transfer can happen through the bank accounts. This will go a long way towards making our economy cashless and transparent.

Hope someone can whisper these suggestions in Mr. Narendra Modi's ears.

BlackMoney Penalty: Official method to recapitalise banks

2016-11-28T10:29:00.000-08:00

BlackMoney Penalty: Official method to recapitalise banks

Govt. has proposed to hold on to some of the money deposited in the banks if people can't satisfactorily explain the source of those money.

In the latest twist to the unfolding #Demonetisation drama, the Modi Government has proposed that people holding blackmoney can declare their blackmoney and pay 49.9 percent as tax and penalty. The breakup is as follows. Govt. will charge 30% as tax on the undisclosed income, plus there will be a 33% surcharge on it. And a 10% of the declared amount will be charged as penalty.

Apart from this, 25% of the declared income will have to be mandatorily locked-up in an interest free bonds for four years. Though the Modi Government doesn't officially say so, it expects this 25% to help in recapitalising the banks which have seen massive NPAs. For the record the Gross Non Performing Assets (NPAs) of Banks in March 2016 was 7.6%. And this figure was expected to increase to 8.5% by March 2017 and if the macro-economic situation deteriorated then it could increase to 9.3%. (Source: RBI Projections) http://arjunaubacha.blogspot.in/2016/11/compensating-citizens-for.html

For example, if it can get say 1 lakh crore voluntarily disclosed as previously undeclared and hence untaxed amount which we refer to as blackmoney, then 25% of it would be 25000 crores. So this 25000 crores would be locked up for 4 years and help in recapitalising the public sector banks.

The Government was expected to inject some 40,000 crores of rupees into the banks which would have been too little. So the Government is trying to get the funds from public to recapitalise the banks.

The Government has also said that if people don't declare their undisclosed income and then get caught, then they will face penalty of 85%.

Since 9th November, a lot of people have been illegally helping change unaccounted for cash of people by taking commissions of 30 to 35%. Some people who have more than 5 or 10 crores of rupees have also given some 50% as commission to some bank employees and Income Tax people to get new notes. So the Government's proposed 49.9% combined tax, surcharge and penalty may find some takers.

Since a lot of people out of fear of persecution by Income Tax department won't declare their previously undisclosed income, the Government is trying to threaten with the higher figure of 85% if they get caught. It is a common knowledge, that the Income TAx department is grossly unprepared to handle such massive volume of cases. So it would be a big help for the Government if more people come forward and declare their previous undeclared incomes.

Till date some 8 lakh crores of rupees have been deposited in the banks. The Government was expecting that this number will be much lower. If this rate of deposits go on, then most of the 1570 crore 500 rupee notes and 630 crore 1000 rupee notes will get deposited in the banks. That would be a nightmare scenario for the Government. They had thought that if some of the notes don't come back, then RBI will knock off that amount from their books as liability and then give back the same amount to Government as dividend. The creative ways many people have adopted to deposit their blackmoney in the banks has raised the tension of the Government. If the Government can't get back money in dividend from the RBI, then it can't have a lower fiscal deficit and also it won't be able to recapitalise the banks.

So the Government now has come out with this idea of a voluntary disclosure. However, the Government is not using the word voluntary disclosure because its Voluntary disclosure scheme has just ended on 30th September.

There are some people who have 8-10 crores of cash. Some of them who were previously despondent, may go and declare it to the Government. Since they were anyway giving 35% as commission to agents, so giving a bit more and buying peace of mind may be preferable to some. However, knowing the fear of the income tax department, not everybody will agree to declare. So the Income Tax team may need to do a lot of work. Recapitalising banks won't be such an easy job.

Nevertheless, already the banks are flush with cash deposited by people. All these money is locked up in banks, as people can't draw more than 2000 rupees per day. This is expected to last for six months. So the banks have got some respite for six months from the NPA problem. The last word on this is not yet heard. However, the cover of the Modi Government that this is a people centric move is slowly getting blown and the main aim to recapitalise the banks and give a positive spin to the PM's image is now becoming clear to many people.

Coercion to Go Cashless

2016-11-22T01:19:00.001-08:00

Coercion to Go Cashless

The 9/11 moment of Modi Government banning Rs. 500 and Rs. 1000 notes from 9th November (mid night of 8th 00:00 hrs) not only paralysed the economy but also ensured social functions like marriages stopped due to lack of cash.

Since marriage is one of the most important social functions and Shri Narendra Modi was seen proudly claiming in Japan that even marriages have been stopped due to demonetisation, there was lot of brickbats and the Government then announced that any one person from a family having a marriage can withdraw Rs. 2.5 lakhs. However, that was not operational because banks had not got guidelines from the RBI to release funds for marriage. Currently people are only allowed 2000 rupees to draw from their savings accounts via ATM.

Now the RBI has sent its operational guidelines for dispensing RS. 2.5lakhs in cash and that has some shocking clauses.

being one an emotional The Modi Government with much fanfare announced that they are going to allow Rs. 2.5 lakhs withdrawal from your own bank accounts for marriage.

The person has to apply to the bank manager with proofs of advance payments already made towards the marriage for example booking of marriage hall along with the printed marriage invitation card etc. The marriage has to be on or before December 30th.

However, the most shocking clause is that the person has to mention whom the money will be paid and have to establish that those persons don't have bank accounts. So this cash expense can only be done to people who are out of the formal banking system.

If a person has a savings bank account, current account or Jan Dhan Yojana account, then money has to be paid by cheque or online transfer.

For example, if you are going to pay money for flower decoration, then you have to ask if the vendor has a bank account and then transfer money if he has. It is another matter that the vendor will have to pay cash for buying flowers from the women selling flowers on the street. Since the vendor have to pay cash to procure, he most likely won't accept the cheque from the person. Similarly there are many people who prefer to employ cooks to do the cooking themselves for the guests instead of giving the contract to caterers. So now visualise you buying paneer or cheese from the sweets stall who won't accept cheque. In some big cities, people the sweets stall owner may accept cheque but that is only in very few cases. You can create your own list and decide how difficult it will be for the person to do a marriage without cash.

The most important point here is that RBI is now clearly telling us that we are forced to use the banking system ie cheques, credit card, online transfer to make our payments and Cash is now pariah in this economy.

That is a very dangerous thing at this moment. US economy had credit cards since 1971. So people there use credit as second nature. In India, credit is seen as sin by many people and prefer to pay by cash. A minuscule portion of Indian economy is digital. Rest all is in cash. Insisting that we have to pay in cash is asking people to change their behaviour.

It would be easy for the educated people to do that. However, it would not be easy for others to do that.

Ethically it is not right to deny use of your own money. Government is the custodian of our money. So when you refuse to allow us to withdraw money from the banks, you are impinging on the rights of people. I can decide how to use my cash. The Government cannot just dictate that cash is bad. Unfortunately, that is precisely what the Government is doing.

Democracy doesn't run on coercion. Sanjay Gandhi realised it when he forcibly took people for vasectomy and tubectomy operations. That raised lot of hue and cry and India's family planning programme after that never made any progress. The Government should have understood that even good medicine cannot be forced down the throats of people, else they will rebel.

So what can Government do to increase use of e-wallet, online transactions?

1) The Government has to incentivise people to use online bank transfers, credit cards and cheques. When others see that there is an incentive in online transfers or cheque payments then they will prefer it.

2) Government has to do an e-wallet. Instead of allowing every bank to do one, it would be better if the Government comes out with an app. Instead of #PayTM which belongs to private companies with some 40% owned by Chinese (Alibaba is a chinese company), the Government has to encourage people to use a Government of India owned e-money app which can be named eRs . It would have all the security features and will also get the trust of people as it is Government owned. The Government can then tell people that they can get back say 1% as cash refunds if they use this app to buy and sell.

3) Ensure that first all property transactions have to be done through the above mentioned Government owned e-wallet say eRs. All highway toll booths to be only through the Government owned e-wallet. So the Government can immediately know the total income of each Toll vendor and hence the Toll vendor can't keep on charging forever. All railway travel bookings in AC classes to be started with e-wallets as well as all payments to Government to be done in the cashless mode. This will along with incentives for cashless mode will ensure adoption faster and help in smoothly moving to a cashless economy.

Compensating citizens for Demonetisation hardship

2016-11-21T00:21:00.000-08:00

Compensating citizens for Demonetisation hardship

Govt. should give Fixed Deposit rates and a 100% extra for all money in banks to individual account holders

The Government's unprecedented action of declaring the Rs. 500 and Rs. 1000 as illegal and the resulting chaos continues unabated. Everyday, the National Media - which is mostly Delhi centric - comes to know a little bit more about the hardship of people in farflung areas and tells us how devastating this has been for many people.

The Government is however happy. The banks are also happy. Why won't the banks be happy?

For too long the banks had hidden their NPAs (Non Performing Assets) from their accounts. Industrialists have been taking loan after loan, often refinancing the old loans with even bigger new loans. The previous RBI Governor Shri Raghuram Rajan, who had famously predicted the 2008 economic collapse, had forced the banks to come clean on their bad loans or NPAs.

The Gross NPAs of banks in March 2016 was 7.6%. In rupee terms the Gross NPAs stood at 5,94,929 crores at the end of March 2016. RBI Projection says this is expected to rise to 8.5% by March 2017. And it had also said that if the "macro situation deteriorates in the future, the gross NPA ration may increase further to 9.3% by March 2017".

The public sector banks, atleast a majority of those, are like personal fiefdoms of the Chairman of the bank along with a coterie of politicians. Not many can question them. For too long this nexus between bankers, industrialists and politicians had continued till Shri Raghuram Rajan as RBI Governor decided to bring this issue to public. Shri Raghuram Rajan forced the banks to make 15% provisions for restructured loans. Now that the NPAs have been made public and are reflected in the balance sheets of the banks, they required massive recapitalisation. So there were some demands of recapitalisation of banks to the tune of 70,000 crores. However, given the scale of NPAs, that was too less.

The withdrawal of Rs. 500 and Rs. 1000 notes and people being forced to deposit their own money, banks are now flush with funds with several lakh crores of money already deposited. So a few banks have even announced reduction in their deposit rates by .15 to .25%.

Unfortunately, it is a double whammy for the common man. His/her money is forcibly deposited in the banks and only partial withdrawal of upto Rs. 2000 is possible per day. So even legitimate cash kept by people is now tied up in banks. It is like a forced fixed deposit without any extra interest rate.

If the cash deposited by the public is unaccounted for then the public have to pay income tax, as well as some 200% penalty. Though under what section that penalty percentage will be applied is not known.

Government is expected to be for the people and Government has to be seen as "just" and "fair". Unfortunately, in this entire #Demonetisation episode the public has been brutally hit. So it would be fair for the Government to announce that all deposits in the banks will earn an interest rate equal to annual fixed deposit rates and a special 100% extra on amount of hardship to the common man. That would be too low and too less because this demonetisation exercise has taken more than 50 lives and have resulted in massive loss of legitimate business.

Unfortunately, this Government only demands sacrifice from people and doesn't appear to be concerned for the "sacrifices" and doing even a small bit to alleviate their stress.

Read BlackMoney Politics & Way Forward: http://arjunaubacha.blogspot.in/2016/11/blackmoney-politics-way-forward.html

Psychological warfare in Demonitisation

2016-11-20T08:34:00.002-08:00

Psychological warfare in Demonitisation

The Government of India on 8th November night declared that the 500 and 1000 rupee notes are not legal tender from midnight that is effectively from 9th November. This 9/11 moment is as momentous in its impact on India as was the 9/11 attack on the twin towers of America.

If one looks at the messages emanating from the Government, much of it is warning to the public about the consequence of certain actions. It is a strange situation where the Government is consistently telling people to not to do certain things and if they don't listen then they will be prosecuted. If people are doing something wrong then they should be prosecuted. Lets analyse some of the warnings of the Government.

Since the Government announced that the Rs. 500 and Rs. 1000 notes are no longer legal tender and needs to be exchanged in the bank or deposited in the bank accounts, people have been depositing the money in the bank accounts. The Government then announced that any deposits in the bank accounts above Rs. 2.5 lakhs will be investigated. So some people started depositing only Rs. 2.5 lakhs in each account.

Then the Government warned that deposits in the name of housewives will be questioned ie the Government can question the source of funds.

It was reported that the Jan Dhan Yojana accounts that were opened and were lying dormant were being used to deposit upto the allowed Rs. 50,000. The Government warned that such deposits will be investigate.

Now the Income Tax department of Government of India has announced that if anyone is depositing cash in someone else's account, then these cases will be investigated under the Benami Transactions Act. The person whose account the money will be deposited will be treated as "benamidar" and the person who is the original owner of the money will be the termed as the "beneficial owner". Under the Benami Transactions Act all the persons involved are liable to be punished from anywhere between 1 to 7 years of rigorous imprisonment (R.I).

Why Govt. Creating Fear Psychosis:

The question that can come to mind is why the Government is trying to induce fear in people? Why this effort to create fear psychosis? The answer is two fold.

It Helps Political Narrative:

The first is the political narrative. The Modi Government hopes to utilise this as their big bang war on corruption and black money and use it to fight the UP and Punjab elections in early 2017. They believe, that the poor people will buy the argument that though they faced some inconvenience, they helped down in hunting the rich and the blackmoney holders. If a soldier can fight for the country, why can you not suffer this huge inconvenience for the betterment of the country, runs the argument. Since it gives the poor the vicarious pleasure of hunting the rich, it is a kind of a de-facto class warfare. Instead of directly proclaiming themselves as communists, Mr. Modi believes they can usurp the class struggle theme of the communists and get an entirely different class of voters cutting across caste and religious boundaries.

It is ofcourse a different matter that this chaos is resulting in a severe disruption of India's predominantly Cash only economy and the GDP is likely to contract. According to initial estimates the economy will take a year to come back to the days before demonitisation.

Income Tax Department will drown with work:

The Second reason for creating this fear psychosis is that the Income Tax department is not geared to handle this massive amount of work.

Only 2.87 crore Indians had filed personal income tax in the assessment year 2012-2013. Out of this 2.87 crores 1.62 crores didn't pay any income tax. So one can realise that the work of the Income Tax department is to analyse the data and work on this number.

Till last year there were some 31 crore bank accounts and then the Government is supposed to have added some 20 crore bank accounts under Jan Dhan Yojana. So roughly 50 crore savings bank accounts may be in India. Since the Government is forcing people to deposit the Rs. 500 and Rs. 1000 notes in the bank accounts, it is expected that the money will be deposited in many of these accounts. Due to computerisation it is easy to get data of high amounts of money deposited in the banks.

However, now the Income Tax department has to scan through data of deposits in atleast 50% of the bank accounts. I am assuming 50% because many of the Jan Dhan Yojana accounts are supposed to have been used by people to deposit money. So the workload of the Income Tax department is going to increase by atleast a massive 10-12 times. From roughly 2 crore plus accounts to some 25 or 30 crore accounts, the workload increase is going to be humongous. So it would be in their interest to discourage people to not deposit blackmoney in different accounts.

India with a population of 1.3 billion is much more than any other country except China. The sheer scale of work here is a challenge. To add to that challenge is this unprecedented action of the Government forcing people to deposit their cash in the bank accounts. One thing is for sure, neither the blackmoney holders can sleep in peace, nor the income tax guys will have any respite from work, work and more work.

Is possession of lot of old notes a crime?

2016-11-19T10:29:00.001-08:00

Possession of lot of old notes a crime?

The Income Tax department is now conducting raids across the country based on tip-offs. In one case, in Delhi, a doctor was arrested when he was loading lot of cash in his car. A sum total of 69.86 lakhs was recovered from him in 100 rupee notes.

A man by the name Nazer-e-Alam was arrested in Delhi on Nov 18th with Rs. 1000 notes worth 96 lakhs. Alam was arrested under Section 103 of Delhi Police Act which is about possession of property for which no satisfactory explanation can be provided.

Though the above two cases appear to be same, however there is a big difference.

Technically, all our notes are legal tender. However, the Government on 8th November declared that Rs. 500 and Rs. 1000 are no longer legal tender. It is not known under what act this declaration was made. Though some may consider that Government declaring the notes not being legal tender is akin to Government reneging on its promise. Every currency note is a promissory note and is guaranteed by the Central Government. Nevertheless, that is not a point of discussion for this article.

When the notes are no longer legal tender, these notes are just pieces of paper. So When a man possesses a large amount of these notes like Nazer-e-Alam, technically he cannot be charged for possession of assets disproportionate to his known income. Neither can he be charged for possession of property for which no satisfactory explanation is provided because the notes he is in possession off is no longer legal tender. Since it is no longer currency and is worthless, unless and until deposited in a bank, technically any lawyer can successfully argue and rescue him.

The sudden declaration by the Government has caught many small time traders and businessmen with cash which has not been declared to the Income Tax authorities. So they are expected to use people couriers to transport such cash from one place to another. It is expected that some of them will get caught and will be tried under various sections. However, it would be interesting to watch how the prosecution will unfold.

However, when people are found with Rs. 100 notes which are perfectly valid legal tender, there would be no respite from the income tax authorities from prosecuting the arrested persons.

Indian economy predominantly runs on cash. Demonitisation cannot happen overnight. It would take sufficient effort by the Government to move much of this to digital cash. Not many people understand how to use e-wallets. Not many trust those as well. It would help if the Government of India comes out with an e-wallet which would be readily acceptable in all places. There would be trust factor if the Government steps in as the Government would be responsible for security. The Government though at the moment seems to be letting the PayTMs of the world run with the ball.

Notes Ban: Terrible Implementation shows No Planning

2016-11-17T22:49:00.001-08:00

Notes Ban: Terrible Implementation shows no Planning

The Government of India order to declare the current Rs. 500 and Rs. 1000 notes as not legal tender has initially said as a well planned move against black money. Shri Arun Jaitley, Union Finance Minister as well as Shri Rajnath Singh, Union Home Minister has reiterated the Government stand that the Government had thought through the move and implemented it. However that appears to be complete hogwash.

It seems that the number of Rs. 500 notes withdrawn are 1570 crores. And 630 crores of Rs. 1000 notes were withdrawn by the Government order. The total capacity of Government of India's currency press is 300 crore notes a month. So it would have taken some 7 odd months to print replacement of Rs. 500 and Rs. 1000 notes. So the Government decided to print Rs. 2000 notes in lieu of Rs. 1000 notes. Nevertheless, it appears that it will take some 3-4 months atleast for the Government to fully print replacement currency. So the queues will last for a long time.

The Government initially said that people will be able to draw RS. 2000/- from their ATMs per day and from 19th onwards they will be able to draw Rs. 4000. However, the Govt. again raised the limit to Rs. 2500 and dropped the promise of raising the limit to Rs. 4000/- per day. Clearly they realise that it is impossible.

The initial order said that people will be able to exchange Rs. 4000 worth of old Rs. 500 and Rs. 1000 notes by filling a form. Now that limit has been reduced to Rs. 2000. People will old currencies can however deposit all the money in their bank accounts. However despite the Jan Dhan Yojana accounts not many in India have bank accounts. So that makes it very difficult for people.

The Government has also allowed people to withdraw Rs. 2.5Lakhs if a family has a marriage. This appears to be a fallout of Mr. Modi sarcastically saying in Japan that even marriages have been stopped and the people were heard laughing. The Government has now decided to fight that negative image by ensuring that anyone in the family having a marriage can draw Rs. 2.5L. So this again shows that the Government had not thought about this before ordering its implementation.

The Government realised that many people are going to exchange notes. Some of the people are visiting again and again. So to stop it the banks were asked to put indelible ink on the finger of people while exchanging old notes. However, there was shortage of such ink, so the banks were advised to use the ink that dhobi's use to mark clothes. Now the Election commission has written to the finance ministry that that since this ink is only for use in elections, the finance ministry ask the banks to stop using it. This again shows how this Government is grappling with a bad idea which was implemented without planning. The Government is moving from one knee-jerk solution to another.

Mr. Modi had come to power by promising efficiency and development. Certainly this muddle headed idea and its poor implementation has left his carefully crafted image in tatters. If this impasse continues for some more days, which it is likely to be, the anger against the Government will rise and no amount of giving it a positive spin will suffice.

His past actions tell us that he will try some other big bang announcement to make people talk about it and forget the pain of notes ban. We haven't heard the last word yet on this issue.

Read the previous article: http://arjunaubacha.blogspot.in/2016/11/blackmoney-politics-way-forward.html

BlackMoney, Politics & Way Forward

2016-11-15T23:49:00.001-08:00

BlackMoney, Politics & Way Forward:

In the 2014 Lok sabha elections, you all would have seen the unprecedented money power. 20,000 crores was spent by BJP. Do you know how much is the official income of BJP in 2014-15? It is 1475.44 crores. So you guys think that the election was fought with “white” money?

According to grapevine, Mukesh Ambani is supposed to have given some 4000 crores. Do you think he gave all that in cheque?

Wake up guys!

Many years ago, Ratan Tata had proposed State funding of elections. It was rejected. Without adequate funding, good guys can never contest elections. Only the rich, corrupt can contest elections. Today they spend anywhere between 6 crore rupees to 10 crores for an assembly election and it varies according to the importance of the seat. That is way more than the stipulated amount that is shown to the election commission as election expenses. Majority of the money spent in elections is black money. During elections when the blackmoney comes out and is pumped into the economy, it becomes legitimate earnings for some and gives rise to a boost to the economy as it has a multiplier effect.

Nevertheless, funding of elections have to be streamlined, else politicians will continue to have a reason to generate blackmoney.

And don’t think the black money is generated only by rich.

Many of you would be paying house rent by cash. Any money that is not accounted for ie declared to the income tax is black. In Delhi, people pay part of the house rent as cash. This is because the owner insists on payment in lieu of pumping water to fill the overhead tank. Much of delhi is like that.

And if you every paid money to the traffic cop for a traffic violation, then that would have been without bill and it is a blackmoney. Did you request the TTE to allot you a berth in the train and given him some money. That is blackmoney. Next time run after the TTE and record video and see what he does. :)

A road side food vendor earns much more than many salaried employees. A TV report suggests a chaat wala in Bhubaneshwar earns 32000 profit per day. That is after paying the mandatory haafta to the police. How many common men and women earn that much money after tax? And all that is black. In Bombay, road side eateries have declared some Rs. 50 crores income. http://economictimes.indiatimes.com/news/economy/policy/roadside-eatery-owners-declare-rs-50-crore-under-black-money-scheme-in-mumbai/articleshow/54618396.cms

The generation of black money is relentless. Modi Govt. has done nothing to stop the generation. Neither it has done anything to hunt the super rich who have already converted their black money to white.

The gems and jewellery industry had grown by 97.1% in FY 2015-2016. Most of that is due to the cash getting converted to gems and jewellery. Govt. mandated the use of PAN card for high value transaction. However, people know how to bypass it by breaking the purchases into instalments as well as lot of those not being shown in the books and through fake id proofs.

The people who are hit by the Rs. 500 and 1000 notes ban are the poor and small time traders. In Delhi when a maid goes to convert her 1500 rupees which she had got as salary by giving it to the sabji wala, the sabjiwala thela guy gives 300 worth of sabji for each 500 note.

An industrialist has got 80 employees. He signed contract with all his employees and gave them 5L each to be deposited in their account as well as their wifes account (2.5L each). So he made some 4 crores white. This is one of the methods adopted. People are ingenious and can figure out a loophole to deposit their notes in the bank accounts.

The challenge is the significant loss in sales in the markets. The economy is hit. There is partial impact of this on some guys who had blackmoney. However for a large economy like India, this is way too less. We order food/groceries online paying through card to tide over the problem. The poor cannot afford to do that. In smaller towns the number of banks are too less and due to lack of media coverage we don't get to know the suffering of the people.

Note ban is More to do with Politics:

There is so much of data these days. The Government should have put people to analyse it. This kind of data analytics is called “big data”. However, the Government decided to create fear in the minds of people to benefit politically.

Else, there was no reason to say that any deposit over Rs. 2.5L in bank will be taxed. What was the point in making that announcement? Let people deposit all their money and then the Government could have just gone and caught the people who had deposited huge amounts and asked them to justify it.

What was the need to announce that the Government is tracking the Jan dhan yojana accounts where money is being deposited. It is simple politics my friend to tell you guys that the Government is actually hunting down the people with blackmoney. It wants you all to have vicarious pleasure in participating in that blackmoney hunt. Remember the Roman era where people used to applaud the bloody man vs animal sports? The psyche is the same. The Govt. makes the aam aadmi feel the same about hunting blackmoney guys. Unfortunately, due to the poor implementation, the poor people instead of applauding the Government have become collateral damage. The Supreme Court has rightly said that it is Carpet bombing.

Citizens can help unearth BlackMoney:

The Government can setup toll free numbers, email ids and fax numbers dedicated to unearthing black money where any person can send a message about instances of blackmoney generation.

Some bhakts say that banning Rs. 500 and Rs. 1000 will lead to more PayTM which is good. Tell me why going with a Chinese company is good?

Govt. App for e-money:

I would prefer that all buying and selling be done via an app linked with mobile and that app should be owned by the Government. It should have voice assisted features, so that even a layman can understand how to use it.

If there is any hacking then the Government should be responsible. When it comes with sovereign guarantee, people will definitely use it.

And the Government will then know all the users using the app to buy and sell even small things like samosa in the road side. Let the Government take the lead. It would be the biggest e-money payment mechanism in the world.

Why bow before chinese and use PayTM? If that can be done, then the entire India will stand up and applaud Modi. No amount of tears can move me. Only visionary work can. I still have hopes that Mr. Modi can do good things based on his mandate, without disrupting lives of common man and making him/her collateral damage in his politics.

Edit: Readers have emailed that there is a National Payments Corporation of India with its UPI (Unified Payments Interface) gateway, where some 30 banks are linked. So one can directly pay from your account. It was done during Raghuram Rajan's time and hasn't got much publicity. May be the Hon'ble Prime Minister can promote it instead of being shown in PayTM advts. However, we are not sure if this UPI will work in toll booths and other places.

Read the Next article: http://arjunaubacha.blogspot.in/2016/11/notes-ban-terrible-implementation-shows.html

Real Demonitisation is Yet to Come

2016-11-10T06:32:00.001-08:00

Demonitisation of Rs. 500 and 1000

Much has been said about the move of the Central Government to suddenly declare all the 500 and 1000 rupee notes to be worthless and needs to be replaced in the bank and post office and how it impacts black money. However, a lot needs to be done as the impact is not as one expect it to be.

It is a very easily understood thought that anyone who has stored Black Money in form of cash will do so in higher denomination notes. So 10,000 notes of Rs.1000/- will become a crore. Whereas one needs to use 20,000 notes of Rs. 500/- each to make it One crore rupees or 1lakh ie 100,000 notes of Rs. 100/- each.

There are many small traders, businessmen who keep unaccounted for cash at home or in godowns. So these people are going to get affected. These people can deposit that money in the banks in their accounts. However, that means attracting a penalty of 200% if the IT department feels that these are part of unaccounted for wealth.

However, it is a well known fact that most of the people convert their black money to white by investing in real estate. Some put up shops and establishments as a front to convert their ill gotten wealth that have been amassed as bribes or other dubious means. Many people invest in gold, diamonds etc.

The bigger players either stash it in Swiss bank accounts or send it abroad and get it back via Participatory Notes (PN Notes). The Government doesn't ask any questions about the PN notes. Several years ago the move by the Government to seek more details about Participatory Notes had spooked the share market and the Government had to backtrack. So the big fish is always out.

The Government however is not tackling black money generation. Much of our economy runs on cash. When I asked a road side Momo seller in Malviya Nagar, New Delhi, he told me that every evening he sells Rs.3000 - Rs.4000/- worth of Momos. The Momo seller infront of Hauz Khas Metro station sells anywhere between Rs. 13,000/- to Rs. 15,000/- per evening. And there are many more such road side vendors. All these people are out of the tax net. Ofcourse, the police man on the beat collects Rs. 10 and Rs. 20/- everyday.

The Tandoori Chicken that I order from the eatery never gives a bill. None of the restaurants give a standard bill. They just write a cash memo which is not a proper bill. The medicine stores give a bill only if you ask. And they threaten that they will have to add VAT extra and then inflate the bill.

The Government has to bring all these people under the tax net. Today there is technology to fall back on. With mobile phones becoming ubiquitous, we should mandatorily force people to use mobile phone linked electronic cash which is directly linked with the bank accounts. The Government can come out with a mobile phone payment gateway which doesn't charge people per transaction. Let it be run by a Government agency and all such data can be mined by the Income Tax department. If it is done by Government, then we know that the Government will be responsible for its security.

This electronic payment linked with mobiles should be used everywhere to pay toll, parking fees, any payment anywhere.

The Government has to be creative, use technology and think ahead to curb the menace of Black Money.

It is said that the Government has been planning this removal of Rs. 500 and Rs. 1000/- notes for a long times. However, the timing seems to be aimed at disrupting the roadshows of Akhilesh Yadav, Chief Minister of UP and the money power of Samajwadi Party. How much actual effect this move has on the rival political parties is not known. However, according to grape vine, SP and BSP are hit hard. How this changes the campaigning in UP will not be known accept for whispers here and there.

Nevertheless with this move, the BJP has something to talk about for the next two years. Whether this demonitisation will be able to overcome the perception of their lack of results by the Modi Govt. will be known later.

Why Kanshi Ram's death is important for BJP

2016-10-13T05:24:00.000-07:00

Why Kanshi Ram's death is important for BJP?

BJP leader demands CBI enquiry into Kanshi Ram's death

Kanshi Ram, the founder of Bahujan Samaj Party (BSP) had died in 2006 after ailing for more than two years and finally perishing due to a heart stroke. Mayawati was Kanshi Ram's understudy, and had offered her everything to him in his journey to create a party for Dalits. In the later years Mayawati's clout had increased and when Kanshi Ram was ailing, Mayawati was accused by Kanshi Ram's family that she tightly controlled who can meet him. Now BJP wants a CBI enquiry to look into Kanshi Ram's death.

With the Samajwadi Party imploding due to civil war within the first family, there is not much hope for that party in the 2017 UP assembly polls. So now BJP wants to believe that its principal opponent is the Mayawati led Bahujan Samaj Party (BSP).

Dalit's are generally consolidated under the BSP. During the 2014 UP elections, a part of the Dalit community and other castes had deserted Mayawati. However, with the lynching of Dalits in Gujarat and other parts of the country over cow vigilantism, the dalits have again moved towards BSP. With roughly 24% of the UP voters comprising of castes which are categorised as Dalits, it can give the BSP a major tailwind.

So BJP wants to derail this and since there is no other issue, it has fallen back to a 10 year old death of the BSP's founder, Kanshi Ram. BJP wants to test the impact of this accusation, so K. P. Maurya, BJP's UP State President has said that Kanshi Ram's family wants the issue to be investigated. If this issue gains traction, then other BJP leaders, namely Amit Shah and PM Narendra Modi will raise it.

If the Kanshi Ram card is played well, then there can be some doubts raised about the role of Mayawati in Kanshi Ram's death and some dalit's may not vote for BSP. However, the cow vigilantism causing untold agony on dalits' is a much more recent issue and dalits will not back BJP. Instead, there is likely hood of the dalits moving on to Congress which will upset the calculations of BJP.

It will be very important how the next steps of Congress plays out in UP. If Priyanka Gandhi indeed campaigns in a major manner and holds continuous roadshows/street side meetings/rallys in many constituencies, then it will help congress a lot. The messaging that Rahul Gandhi achieved in UP during his Kisan Yatra will be reinforced by Priyanka Gandhi's Yatra and people will genuinely start believing that Congress is now a force in UP. In that situation, the dalits can definitely start moving to Congress.

The fact that Congress is collecting Kisan Mang Patras, which is a form to collect the loan status of farmers and the farming community also has dalits as well as upper castes, it will become easier for dalit's to move into Congress in the hope of getting their farm loans waived.

Nevertheless, there will be many claims and counter claims between BJP and BSP on the Kanshi Ram issue and Mayawati will try her best to keep her flock together. The coming weeks and months will tell us who wins this strategic and tactical battles.

Reasons for Volteface over Surgical Strike

2016-10-08T10:30:00.000-07:00

Reasons for Volteface over Surgical Strike

Rahul Gandhi in one of his speeches in UP unequivocally praised Prime Minister Narendra Modi saying that the "surgical strike" is the first good think that the PM has done in the last two years. It was surprising praise, because that sound bite can be used by BJP against congress. Other political parties were guarded in their praise as they either congratulated the army or the Government.

So what was the rationale behind directly praising Modi? Some feel that Rahul Gandhi acted like a statesman and praised where praise is due. There was another view, that Rahul Gandhi acted like an immature politician by directly praising the PM.

However, on 6th October in the concluding rally of his Kisan Yatra, he came out hammer and tongs against Modi and accused him of playing politics over our soldiers sacrifices. He said Modi is doing "Khoon ka Dalali" by exploiting the death of soldiers, who have died fighting for the country in the border, to get credit for himself. He said "the soldiers who spilled their blood for the country and carried out surgical strikes, you are hiding behind them and trying to cash in on their blood. They have done their work, now you do yours. Help the farmers, give the army a hike in the seventh pay commission; it is your responsibility and that is what you have been elected for". These were pretty strong words and expectedly the all the BJP leaders and its allies as well as most of the sympathetic media jumped in to bash Rahul Gandhi, accusing him to be doubting the army.

Modi has used far stronger words. Nevertheless, one thing that becomes apparent from this episode is that Rahul Gandhi is not briefed by the Old generation Congress leaders who were ministers in the UPA Government. After Rahul Gandhi praised Modi for the Surgical Strikes, it was P. Chidambaram, former Home Minister in UPA Government who said that there have been surgical strikes in the past but the Government never took credit for it. Chidambaram directly told this to a TV Channel. Later the Congress party came out with the dates of atleast four such incidents in the recent past.

Rahul Gandhi could have avoided praising Modi, if Chidambaram and other Ministers in the UPA cabinet would have advised him. Rahul not being a part of the Manmohan Singh Government has resulted in this lack of information. It is well known that many of these old guard are against him. During the 2014 Lok Sabha, many of these old guard didn't contest elections. Chidambaram declined to contest but pushed and got his son Karthi to get the ticket in his place. Ofcourse he lost the election.

Similarly many around the country didn't contest and allowed Rahul Gandhi to take the sole burden of fighting the Modi wave and lose "spectacularly". They have felt that it would be enough to bury him with this defeat. Some of them are said to be resisting Rahul Gandhi's elevation to the role of President of the Congress party in the place of Sonia Gandhi. The younger generation like Sachin Pilot, Jyotiraditya Scindia etc were junior ministers in the UPA cabinet and may not have been privy to these information.

It is to be seen how Rahul Gandhi handles such non-cooperation by the Congress old guard and whether it results in similar spectacular stumbles.

UP Elections: Rahul's Kisan Yatra Resonates

2016-10-07T05:02:00.002-07:00

UP Elections & Rahul's Yatra

Election for UP legislative assembly is sometime in early 2017. However, the first move has been made by the Congress.

Rahul Gandhi, the VP of Congress Party took out a high profile 26 day long rally across 146 constituencies of UP. The Congress party which had a dismal run in the 2014 Parliamentary elections, and which has been reduced to only 28 MLAs in UP assembly is betting big on UP elections to turnaround its fortunes.

It has hired Prasanth Kishore, who was the brain behind the Chai pe Charcha and other campaigns for Modi's 2014 victory as well as Bihar Election victory for the Nitish Kumar led JD(U)-RJD-Congress. Congress apart from the win in Bihar as a part of the Nitish Kumar led alliance doesn't have much to show. It has also lost the Assam elections. The thinking is that if Congress continues to do bad in UP, then any revival of Congress won't be possible.

Congress has signed the agreement with Prasanth Kishore's organisation for both Punjab and UP elections. Whereas, Congress is in a strong position in Punjab, UP is where the problem lies.

Sonia Gandhi and Rahul Gandhi are the only two MPs of Congress from UP. There are no Congress leaders with mass base in UP. In this backdrop, the 26 day long Rahul's UP roadshow is somewhat unthinkable. And more importantly, doing such a long duration roadshow with more than six months before the elections can easily be forgotten. So what is the plan of Congress?

Prasanth Kishore seems to have correctly identified the problem. Congress has been out of power in UP for the last 27 years. SP, BSP and BJP have had power in UP, either alone or in various combinations. Congress has been an also ran party in UP, which is India's biggest state.

It takes time to convince people. So Prasanth Kishore first did a big rally of Rahul Gandhi in Lucknow. He forced local Congress leaders to book the biggest ground and tasked each one of them to mobilse supporters and fill it. That success led to people believing that they can do it. Then he held a roadshow with Sonia Gandhi in Varanashi. Psychologically Varanashi being the constituency of Narendra Modi, a lot of Congress leaders were not comfortable. Nevertheless, that became a success and led to people believing that there is support for Congress.

After that Rahul Gandhi's roadshow termed as "Kisan Yatra" covering 48 districts, 146 constituencies, 3438 kms starting from Deoria to Delhi was started. It was completed in Delhi yesterday ie on 6th October.

Even before Prasanth Kishore tying up with Congress, Rahul Gandhi had succeeded in pushing the Modi Government with his successive and well timed jibes of "Suit-boot ki sarkar" and terming the Govt. as anti-farmer. This had led to the Government dropping the Ordinance on land acquisition. Prasanth Kishore has successfully taken that theme and branded this roadshow as Kisan Yatra. This is to appeal to all the farming community.

This is a good move because, at the moment the allegiance of the UP electorate is fragmented along caste and religious lines. Whereas, the Samajwadi Party (SP) attracts the Muslims and the Yadavs, the Bahujan Samaj Party (BSP) attracts the backward classes. The forward classes as well as other had voted en-masse for the BJP in the Lok Sabha elections due to the unprecedented hype created by Modi to bring development.

Stressing that the development plank of the BJP is only for a few industrialists and the farmers are increasingly marginalised and committing suicide, the Congress wants to cut across various casts and bring the farming community to Congress.

Also, Congress has been attacked as only pandering to the interests of minorities. So the suggestion by Prasanth Kishore to have a brahmin face as the Chief Ministerial candidate of UP was a master stroke. So now Sheila Dixit, three time Chief-Minister of Delhi, is the Chief Ministerial candidate of Congress. And informally it has been told to everybody that out of the 400+ seats of UP, close to 25% ie. 100 seats will be given to Brahmins.

The Brahmins with about 9% population can cause a major swing towards Congress. Muslims are known to vote strategically in many places. Once they know that Brahmin vote is for Congress, then they too will vote for Congress. This will ensure a winning combination. Ofcourse, we know that not everybody will vote en-masse. Nevertheless, it is a good theory and is plausible.

Even before the announcement of Sheila Dixit as the Chief Ministerial candidate, the names of Rahul Gandhi and Priyanka Gandhi were floated. It was well known that Rahul Gandhi being in the centre will not be the Chief Minister and also Priyanka Gandhi will not jump in officially. So it was basically to create lot of hype and discussion. At a time when Congress was not in news, this led to several days of discussions in various channels and important column space in newspapers. Clearly this shows that Prasanth Kishore is a guy who thinks strategically and knows how to create events out of thin air to get people excited.

The success of Rahul Gandhi's Kisan Yatra can be gauged from the fact that the ruling Samajwadi Party created some roadblocks by not allowing roadshows in certain places. Clearly, the other parties despite continuing to trash Rahul Gandhi, have taken notice.

It is said that Prasanth Kishore's team on behalf of Congress has collected Kisan Mang Patra's which contain details of agricultural loans of farmers from UP. This would come in handy not only as a political tool to press for their case, but also help in data analytics and in targeting future messages to these people.

It would be interesting to see the next moves of Congress and Prasanth Kishore to understand how they want to take the UP visit forward. Clearly, we see an approach which is often used in USA politics and had not been used before in India. There will be several efforts from other parties to change the narrative by staging events, else Rahul Gandhi's congress will run away with the credits. So interesting times indeed for people who are interested in politics and to see how one can position and reposition a brand. Watch this space. There is more to come....

Surgical Srikes: Another take

2016-10-04T23:09:00.000-07:00

Surgical Srikes: Another take

With the DGMO press conference announcing Indian soldiers to have crossed the Line of Control (LoC) and inflicted large casualties on militants preparing for infiltrating to India, all hell have broken loose.

It has been proclaimed as the ruling party's answer to Pakistan and even the Modi Government's 56 inch chest bravado. In many circles it has been said that for the this has happened for the first.

Unfortunately, the situation is such that everybody in India has to agree and praise the Government of its "guts" and "attacking" Pakistan. Else, one will be immediately branded as anti-national.

It has been said that Indian soldiers have crossed the LoC and moved upto 500meters and in some cases upto 2 kilometers and attacked the terrorists and successfully come back.

After the initial brouhaha about these "surgical strikes", voices have been raised about the authenticity or the extent of these operations and have asked for the video proofs, which the army is supposed to have documented during the surgical strikes. No one would have demanded for publishing the videos, if it would not have been announced that there are video recordings of the operation. By the way, no name has been given to this operation. All operations ie significant actions have a code name.

Military observers will vouch that these kinds of actions have happened in the past. Earlier it used to be frequent. However, after the setting up of barbed wire fences and more patrolling, these situations have reduced. In one earlier instance, Pakistan troops had entered India and cut off the head of one soldier. So our troops are boiling and are capable of cross-border incursion and striking down targets if and when they are given orders.

India has field guns, like the Bofors, which can fire and strike some 28kms into the enemy territory with precision. These field guns were not used. Our soldiers have shoulder fired missile launchers which can strike down enemy posts across the border. Snipers can even take down militants some 7kms away. These snipers check the wind velocity, terrain and fire accurately from a distance of 7kms and instantly neutralise the target.

Recently, the former home mininster Mr. Chidambaram said that in January 2013, Indian soldiers had crossed the LoC and carried out operations. This was done without fanfare as the army chooses not to publicise such events. The then ruling party, the congress led UPA Government didn't choose to announce it. Now the BJP-led NDA has made it a policy and is reaping the political benefits.

The Indian army is normally not partisan and doesn't favour any political party. However, if the Government of the day orders to disclose any information, then it has to.

It appears that some activity has taken place. Pakistan has announced that 2 of their soldiers have died in some local firing. We are not sure of the exact nature of the action unless the Government chooses to disclose. If the hype is more and substance is less, then we will obviously not see the videos.

In the absence of any photo or videos released by the Government, there are lot of fake photos circulated by interested parties. One of the photos shows some militants lying near a broken building. However, this photo was lifted from internet. Interestingly that photo was of militants killed by Pakistan army in 2012 after they massacred school children.

In this intensive propaganda war, truth becomes diffused and difficult to detect. So people either keep quiet or believe whatever they want to believe. This is not the last of such incidents. Many more of such incidents are likely to happen.

It is said that with the BJP on the back foot in the UP elections, they are going to create more such situations in early 2017 to influence the UP electorate.

Rosberg wins RussianGP from Pole

2016-05-01T11:41:00.001-07:00

Rosberg wins RussianGP from Pole

Nico Rosberg of Mercedes led from the Pole to win the Russian GP 2016 as his main competitors were battling troubles.

Rosberg’s team-mate and luckless Lewis Hamilton drove a great race from the 10th position and challenged him for a race win. Hamilton had reduced the gap to Rosberg to 7.5 seconds by the 36th lap but then the water pressure in his car started falling. So he somehow nursed his car back to the finish line and he would be happy to salvage 2nd place in this race. Kimi Raikkonen of Ferrari finished in third place.

Lewis Hamilton later said that he was absolutely in no doubt that victory was within his grasp till the water pressure problem derailed him from his quest. He said “I had the pace but I had a problem with the engine again, so I had to back off”. However he also praised the team for the effort they put in solving the problem after qualifying. "Firstly I'd like to thank the guys who flew over from the factory last night, and my mechanics who worked from 2am to get my car ready, because without them I wouldn't even have got to this point. It happened, I just had to try and nurse it home and I'm grateful I finished. We just need to do a better job. It seems to be my side of the garage having a hard time, but I have absolutely every confidence and faith in them”.

Sebastian Vettel of Ferrari was hit by Daniil Kvyat of Red Bull and had to retire from the race. Given his teammate Kimi scoring a podium finish Vettel would be ruing his luck.

Valtteri Bottas and Felipe Massa of Williams scored 4th and 5th positions. This ensures that Williams is poised for a strong finish in the Constructors championship.

Fernando Alonso of McLaren made a superb start and scored his first points of the season when he finished in 6th position. However, he was down by a lap. Kevin Magnussen who was the reserve driver for McLaren last year and was unceremoniously released by them is driving for Renault this year and scored his first points this year as he finished in 7th position.

Romain Grosjean of Haas, the team that has made its debut this year in F1, scored 4 points as he finished in 8th position. This is the third time in four races that he has scored points for Haas. Sergio Perez of Force India was 9th and scored 2 points. Jenson Button of McLaren scored the last available point by finishing in 10th position.

Nico Rosberg leads the 2016 championship with 100 points. He is followed by the defending World Champion Lewis Hamilton at 57 points. Rosberg has now seven race wins in a row and is tied with Michael Schumacher. In the Championship race, Kimi Raikkonen of Ferrari is third with 36 points and his teammate Sebastian Vettel is fourth with 33 points.

There are 17 more races to go and we expect a spirited fightback by Lewis Hamilton. May the better driver win.

#RussianGP 2016 Results

Rosberg scores RussianGP Pole as Hamilton Suffers

2016-04-30T07:33:00.000-07:00

Rosberg scores Russian Pole as Hamilton suffers

Nico Rosberg easily raced to the pole in the Russian Grand Prix at Sochi as luckless Lewis Hamilton couldn’t race in Q3 due to power unit problem.

Ferrari’s Sebastian Vettel finished second and 0.706s slower than Rosberg. However, he has changed a gear box unit and it means 5 slot penalty. So Sebastian Vettel drops down to 7th.

Valtteri Bottas of Williams came third. Now he will be promoted to 2nd in the starting line up for tomorrow’s race.

Kimi Raikkonen of Ferrari finished in fourth and now will start in third place. Along side Kimi Raikkonen will be his former teammate Felipe Massa of Williams.

Daniel Ricciardo of Red Bull and Sergio Perez of Force India will start in 5th and 6th places respectively.

Daniil Kvyat of Red Bull, the local lad and favourite of the Russians will start in 8th place after Sebastian Vettel.

Max Verstappen will start in 9th. Lewis Hamilton had qualified for Q3 based on his Q2 timings but couldn’t race in Q3. So he finished 10th. We will wait to see if he drops down further in the starting grid due to any changes to his power unit. In the last race in China, Lewis started from the pit stop and finished in 7th position. However, he was hit by one of the cars. He would be hoping that he doesn’t get involved in any accident which further mars his race.

Hamilton said it is the “same failure as I had last race. I went back out in Q2 at the end to get a better lap and lost the same power as I lost in China. Nothing I can do”.

Lewis Hamilton is 39 points behind Nico Rosberg. So today's car problems adds to his challenges and his hopes of winning this years title may be vanishing.

#RussianGP Qualifying 2016

Rosberg scores third win on the trot

2016-04-17T05:24:00.000-07:00

Chinese Nightmare ends with 7th place for Hamilton

Lewis Hamilton had a nightmarish Chinese Grand Prix 2016. First he had a gearbox change and 5 place penalty added to his qualifying position. Then he had an ERS failure during qualifying and had to start at 22nd position. Though he drove through the field, Felipe Nasr of Sauber hit him and due to the heavy damage he had to be content with the 7 th place finish. Hamilton needed a humongous 5 pitstops to complete his race.

Rosberg continued his winning streak by adding the third race in this years calendar to his kitty. His job was made easier when Sebastian Vettel of Ferrari hit his teammate Kimi Raikkonen. Vettel came second with a massive 37 seconds behind Rosberg. Daniil Kvyat of Redbull scored a podium finish. He was followed by his teammate Daniel Ricciardo in 4th. Kimi Raikkonen of Ferrari was 5th.

Felipe Massa of Williams was 6th and finished 3 seconds ahead of Lewis Hamilton of Mercedes.

The Toro Rosso duo of Max Verstappen and Carlos Sainz finished in 8th and 9th positions. The final points paying position was taken by Valtteri Bottas of Williams.

After scoring points in the first two races, the Haas team didn't score a single point in this race. Esteban Gutierrez finished in 14th and Romain Grosjean on 19th position for the Haas team.

The defending champion Lewis Hamilton is now on the backfoot. His teammate Nico Rosberg has won all the three races this season and has 75 points. Hamilton now has 39 points due to two second place positions and the 7th place in China. Daniel Ricciardo is on 36 points and is followed by Sebastian Vettel in 33 and Kimi Raikkonen in 28. These initial points are pretty valuable and it will now put Hamilton under severe pressure to up his game.

Nico Rosberg wins the Bahrain F1 Grand Prix

2016-04-03T09:58:00.000-07:00

Nico Rosberg wins the Bahrain F1 Grand Prix

Nico Rosberg won the Bahrain F1 Grand Prix. Kimi Raikkonen finished in second position as he did last year. Pole sitter Lewis Hamilton finished in Third.

Lewis Hamilton again started from the pole for the second time this season and again he lost the lead to his teammate Nico Rosberg. In turn 1 Rosberg squeezed in and then Valtteri Bottas of Williams hit Hamilton from behind. Hamilton went down and then showing his characteristic grit moved up by overtaking other drivers. As defending champion this was a case of limiting damage ie reducing the deficit to Nico Rosberg who is leading the race by virtue of his two back to back wins.

Hamilton chose a different strategy than Rosberg. In the first pit stop, Hamilton shifted to medium tyres whereas Rosberg took the softs. As a result the gap between Rosberg and Hamilton grew. In lap 19, Rosberg was 11.3 seconds ahead of Kimi Raikkonen of Ferrari, who in turn was 9 seconds ahead of Hamilton.

Disaster stuck Sebastian Vettel in the formation lap and his engine failed. This is his first DNS (Did Not Start) in his Formula 1 career. In the opening lap Carlos Sainz and Sergio Perez made contact and Sainz got a puncture. In Lap 10, Jenson Button of McLaren lost the ERS and stopped. In the next lap, Esteban Gutierrez of Haas retired.

Daniel Ricciardo of Red Bull finished in 4^th. Romain Grosjean of Haas finished in 5^th. It was the best finish for the Haas team and confirms that they are going to finish in good position in their debut season.

Verstappen of Toro Rosso finished in 6^th. He was followed by Felipe Massa in 7^th. Massa was 1 lap down. Daniil Kvyat of Red Bull finished in 8^th. Valtteri Bottas of Williams finished in 9^th. Vandoorne of McLaren finished in 10^th and last points paying position. Vandoorne was drafted in place of Fernando Alonso who was declared medically unfit for the race.

Magnussen finished in 11^th and was followed by Marcus Ericsson in 12^th.Wehrlein of Manor was 13^th followed by Felipe Nasr in 14^th.

It was a bad day for Force India. Nico Hulkenberg of Force India was 15^th followed by Sergio Perez in 16^th. Haryanto finished in 17^th.

Final Results in Bahrain F1 Grand Prix 2016

Nico Rosberg scores Surpirse win at Australia

2016-03-20T01:15:00.001-07:00

Nico Rosberg scores surprise win at Australia

It was a poor start from Lewis Hamilton and Nico Rosberg in the Australian Grand Prix. Ferrari cars of Sebastian Vettel and Kimi Raikkonen were leading the race with 1-2 positions however, Mercedes could stage a comeback following a accident between Fernando Alonso of McLaren and Esteban Gutierrez of Haas. The race was red flagged to a stop.

The Mercedes duo recovered with Lewis Hamilton finishing second to Nico Rosberg. Sebastian Vettel of Ferrari was third. Unfortunately his teammate Kimi Raikkonen didn’t finish the race.

Australian Daniel Ricciardo was the crowd favourite being the son of the soil and gave his fans some joy as hi finished in 4^th place driving a Red Bull racing car. Felipe Massa of Williams was fifth.

However the most interesting was Romain Grosjean’s 6^th place finish for debutant Haas team. It may be pertinent to mention that Haas had got the go ahead to debut in Formula 1 in 2015. However, they decided to prepare for one more year and race in 2016. Their strategy seems to have paid off. Unlike Manor racing, Haas also had a good outing during the testing.

Nico Hulkenberg of Force India finished in seventh followed by Valtteri Bottas of Williams in 8^th. Toro Rosso’s Carlos Sainz and Max Verstappen were 9^th and 10^th respectively.

Results of Australian Grand Prix 2016

Rank	Name	Team
1	Nico Rosberg	Mercedes
2	Lewis Hamilton	Mercedes
3	Sebastian Vettel	Ferrari
4	Daniel Ricciardo	Ferrari
5	Felipe Massa	Williams
6	Romain Grosjean	Haas
7	Nico Hulkenberg	Force India
8	Valtteri Bottas	Williams
9	Carlos Sainz	Toro Rosso
10	Max Verstappen	Toro Rosso
11	Jolyon Palmer	Renault
12	Kevin Magnussen	Renault
13	Sergio Perez	Force India
14	Jenson Button	McLaren
14	Felipe Nasr	Sauber
15	Pascal Wehrlein	Manor
	Marcus Ericsson	Sauber
	Kimi Raikkonen	Ferrari
	Rio Haryanto	Manor
	Esteban Gutierrez	Haas
	Fernando Alonso	McLaren
	Daniil Kvyat	Red Bull

Hamilton's 50th Pole in anti-climax qualifying

2016-03-19T04:50:00.000-07:00

Hamilton Scores 50th Pole in Anti-climax Qualifying

The Australian F1 Grand Prix is the first race of the season. Today it was perhaps the most anti-climax start to a season as the Qualifying was bizarre.

Normally there is a mad race to start your last lap before the chequered flag is waved. Today there was no activity at all. Most of the drivers were eliminated. Ferrari decided that they can't better the timings and didn't come out again. There was no action. We had time to take a few winks, so to speak. Fans are asking what happened.

F1 was too complicated to understand with the frequent rule changes. The qualifying was one of the most followed aspects of the race. It used to be good to watch. Now, instead of fixing F1, they messed up with the one part of F1 which was ironically working and didn't need fixing.

They tried to create more action but forgot that these are real cars and not robots or puppet dancing. It is just terrible to watch. F1 authorities (Bernie are you listening? ) seem to be in a race to increase their stupidity quotient.

Rio Haryanto is penalised 3 grid slots for pit lane collision with Romain Grosjean in the Final Practice 3 today morning.

For the records, the following is the Qualifying results in Australian F1 Grand Prix 2016:

1. Lewis Hamilton, Mercedes
2. Nico Rosberg, Mercedes
3. Sebastian Vettel, Ferrari
4. Kimi Raikkonen, Ferrari
5. Max Verstappen, Toro Rosso
6. Felipe Massa, Williams
7. Carlos Sainz, Toro Rosso
8. Daniel Ricciardo, Red Bull
9. Sergio Perez, Force India
10. Nico Hulkenberg, Force India
11. Valtteri Bottas, Williams
12. Fernando Alonso, McLaren
13. Jenson Button, McLaren
14. Jolyon Palmer, Renault
15. Kevin Magnussen, Renault
16. Marcus Ericsson, Sauber
17. Felipe Nasr, Sauber
18. Daniil Kvyat, Red Bull
19. Romain Grosjean, Haas
20. Esteban Gutierrez, Haas
21. Rio Haryanto, Manor
22. Pascal Wehrlein, Manor

Nico Rosberg leads Mercedes 1-2 in Mexican Grand Prix

2015-11-01T12:52:00.000-08:00

Nico Rosberg leads Mercedes 1-2 in Mexican Grand Prix

Nico Rosberg of Mercedes started from the pole and led the race. There was a chance for Hamilton when there was a safety car deployment due to Vettel being on the wall. However, Rosberg moved away cleanly during the restart. However, Nico Rosberg continued to lead and win the inaugural Mexican F1 Grand Prix race. Lewis Hamilton simply couldn’t overtake his teammate.

Valtteri Bottas of Williams finished third.

Daniil Kvyat of Red Bull was fourth. Ricciardo clashed with Sebastian Vettel at the start but didn’t face any problems to finish in fifth. Felipe Massa of Williams was sixth.

Nico Hulkenberg of Force India was seventh. Sergio Perez of Force India drove a great race with worn out tyres. His tyres lasted 51laps and he finished in 8th position.

Max Verstappen of Toro Rosso was 9th and was followed by Romain Grosjean of Lotus in the 10th and final points paying position.

Kimi Raikkonen of Ferrari started on 19th place as he incurred a 35 place grid penalty due to change of engine, gearbox and other components of the engine train. Fernando Alonso of McLaren started on 18th and Jenson Button of McLaren started last on 20th position. Who would have imagined that three world champions having a total of 5 world championships between them would start at the very back of the F1 Grid.

This shows the asymmetry in the engine development. With two time world champion Fernando Alonso losing power in the opening lap itself and retiring his Honda powered McLaren car, the engine again came into focus.

Kimi Raikkonen who had a clash with Valtteri Bottas two races ago had another in lap 22. Valtteri Bottas of Williams tried to go on the outside of Raikkonen in turn 4 and couldn’t find any space to complete the move and the accident was inevitable ending Kimi’s race. Raikkonen’s rear part of the car was damaged and his great drive from the back of the grid was over. Raikkonen had his sights on podium but there is as they say many a slip between the cup and the lip. The stewards decided that it was a racing incident and didn’t give any penalty.

Sebastian Vettel of Ferrari started in third position but suffered a puncture due to accident with his previous team-mate Daniel Ricciardo of Red Bull. Though he came up through the field but soon he spun and went back. His tyres were damaged and he couldn’t do much. Later he picked up his pace after a pit stop but his race came to an end in Lap 52 when he crashed into the wall. With it ended a miserable weekend for Ferrari. They had expected a lot but ended up with a double DNF.

Felipe Nasr was the other driver who retired. He had a fire in his brakes.

Results of Mexican F1 Grand Prix 2015