If you thought that you had seen it all after the dramatic resignation of #DavidCameron (who of course had vehemently opposed the move) last year following a reversal in the nationwide #Referendum on Brexit, think again. In snap polls dubbed as the ‘Brexit Elections’ called for by the newly appointed Prime Minister #TheresaMay the ruling #ConservativeParty suffered terrible losses. So much so that the beleaguered Labour Party has been given a new lease of life and more worryingly the Conservatives are no longer a majority in the #Parliament left with 318 out of 650 total seats. That is a climbdown of 12 vital seats and it is no wonder then that the move is being dubbed as a self goal. In this melee the #LabourParty has made a neat gain of 29 seats riding on the back of their charismatic albeit controversial leader #JeremyCorbyn. Experts are still divided on what impact the General election results will have on the whole #Brexit affair but on one thing they will all agree. This ruling party is completely out of sync with the aspirations of the average British citizen.
#12 years after the #SecondWorldWar ended a group of European countries established what was the European Union in it’s earliest avatar. The premise was simple enough – countries doing trade together were less likely to go to war with each other. Interestingly #Britain was not even part of this original group and it entered into the fray only in the 1970s. In subsequent years Britain and the Union fought on everything ranging from immigration policies to #EU regulations and beef exports to even chocolates (the British had to fight a sustained battle to be allowed to sell home made chocolates in the rest of Europe) and suffice it to say that it was an uneasy relationship that has seen many more downs than ups. The first indication that the United Kingdom might actually exit the EU came as early as the 80s when #MargaretThatcher was the PM. She was however able to save the day by renegotiating many terms with the EU yet undeniably the first seeds had been sown.
The birth of the United Kingdom Independence Party (#UKIP) around the same time was no mere coincidence. In the #2014 European elections, UKIP won 27% of the votes setting the tone for things to follow. The then PM David Cameron under increasing pressure from people within his party and outside announced that if the #Tories won in 2015 there would be a referendum at the end of 2017. Cameron was in favor of negotiating terms and staying in the EU but clearly he could not gauge public sentiment. As global terrorism, economic slowdown and immigration woes all hit Europe together #Nationalism has taken centre stage. So it was expected that calling for a snap election promising a #HardBrexit would do the trick or at least Mrs May thought it would. Instead what UK is staring at is a hung Parliament for which the reasons are not difficult to see. The Conservatives never really mentioned how those in power hoped to tide over what is likely to be a messy divorce. After all exiting the world’s largest free trade bloc cannot be done on a whim.
As things stand today UK needs a leader with forcefulness of purpose, vision and foresight to guide them through what is a tricky phase and it seems quite clear that Theresa May is not that person. As Mrs May tries to cobble support and stay put as PM, how things will pan out with regards to Brexit remains unclear as of now. And somehow one feels this one has a twist or two still to come.One thing is certain though. Expect more fireworks.
GST stands for Goods and Services Tax. And with the present regime set to implement it across the
country by the first of #July there is perhaps no better time to know what it entails. For all of us, the people. Those in the know are calling it the biggest #TaxReform of post independence India. But a lot of confusion reigns in the minds of the common man many of whom are worried that the GST will mean paying more taxes. Than we already are, for just about everything. Equally wary is the business community which hopes that it is implemented properly lest their revenues take a hit. First things first. #GST is only applicable to those businesses whose annual #Turnover exceeds a sum of #TwentyLakhs. The two main goals that the GST hopes to achieve is one, to facilitate the ease of doing business. And two, to shore up the #GDP. Here is how.
A new word that many of us learnt thanks to the GST is ‘subsume’ consume one was familiar with but not this one. The basic idea behind the GST is to subsume (meaning absorb) various other taxes like service tax, #VAT(value added tax) Entertainment Tax, #Octroi and Luxury Tax just to name a few. GST was first implemented in the European country of #France way back in the 1950s. For the record more than 150 countries of the world has already enforced GST. And quite interestingly in many of these places GST has led to high inflation, citizen led protests and small businesses suffering, to begin with. That the current government carries a popular mandate and is led by a charismatic Prime Minister who is seen as someone unafraid to make bold decisions which is just as well. #PuertoRico introduced VAT last year to boost it’s sagging economy but the disastrous implementation only ended up making things worse for itself and the economy. In that sense the GST could not have been timed any better.
One reason for confusion surrounding the GST has to do with it’s #FourFold tax structure (0-5%, 5-12%, 12-18% and 18-28%) So while some items are not taxed at all there are many others that are taxed as high as 28%. So how is it decided where and under which slab to place which item? That is where the GST council comes into the picture. It consists of representatives from both the Centre and all states where it is to be implemented. So for decision taken 75% of the members have to give their explicit approval. In other words 18 out of 29 states have to agree with the Centre which is perhaps reason why getting GST off the ground has taken a long and sustained effort. That the ruling regime is in power in 14 of the total states (and more after the recent Assembly elections) surely gave it more breathing space. Also that the GST is expected to have a ripple effect on both domestic and international trade cannot be ignored. By even conservative estimates #6.5LakhCrore is what the gains from increase in external and internal trade are approximated to be. And that is huge.
For the consumer the news is not that good. Look around at all the countries around and you will realise that as far as indirect taxes go (which is what the GST is) India is all set to become the most taxed country in the world. Our main competitor #China has it’s highest tax slab pegged at 17% with just 6% for telecom, insurance & financial services. #Sweden which is usually quoted by the ruling regime when talking about such reforms charges only 12% on food and 6% on cinema. Be it Asia, the Americas or Europe nobody is close to 28% (struggling economies like Argentina & Greece are the only ones close)So while GST might be good for many in the long run, expect no relief in the short term.
Tighten your belts folks. We are heading into choppy waters.
It was one of the big electoral promises by the then Prime Ministerial candidate #NarendraModi. In the runup to the general elections of 2014 he announced that if voted to power, his party (the BJP) would provide a #Crore jobs to the unemployed youth of the country. That India has a population of over #130Crores of which a vast majority are under the age of 35 made it a promise that could change the fortunes of a nation if implemented in the right spirit. Three years down the line it seems like that promise has been belied. In a report published by the #LabourBureau in 2015 that covered eight of the key non farming sectors of India it was found that #Unemployment has instead risen alarmingly to a five year high of 5%. And their latest findings show that jobs grew by a paltry 1.1% in the last one year. With estimates that in the largest state of India #UttarPradesh itself there are over a crore unemployed people things are clearly not getting better. Any time soon.
And then there is the whole factor of #. Not quite the same as unemployment but as worrisome, it has to do with people working in jobs that not just pay less wages but are also low skill jobs. Case in point being the city of #Allahabad (in UP) where in December of last year over a lakh people applied for the job of #ContractualSweepers, many of whom were post graduates, engineers and some even had master’s degrees. And the number of vacancies – just 119. The Labour Bureau report states that under employment has gone up by 35% in the last couple of years which means thousands of young, skilled workers are languishing in jobs that offer neither job satisfaction, good money nor are there better career prospects for them. Their present is full of hardships and the future is bleak.
It is said that when it rains, it pours. A recent study predicts that about two lakh workers in the #IT sector are expected to lose jobs every year, for the next three years. First there was the recent change of guard in the US presidential elections which has resulted in unprecedented visa restrictions thanks to which even Indian companies doing business there have started employing local talent. In addition the global slowdown in IT services has also hit India hard. This will adversely affect the educated middle class in the country’s urban areas who have all benefited from the IT boom in the last two and a half decades. The first step that has to be taken to fix this crisis is to first acknowledge that there is one. And it is a big one that requires the present government to walk the talk. For once.
To be fair to the BJP it is not they have done nothing. On the contrary there have been a slew of initiatives by the government to try and address the rising unemployment problems. In fact the #MakeInIndia campaign is easily one of the flagship programs launched by Prime Minister Modi. Also this regime has taken many measures to bring in FDI but unless the foreign companies and investors are mandated to manufacture a chunk of their products in India itself this move by itself will not bear great dividends. Hope also stems from the skill development program of this government that has an ambitious aim of being able to create a skilled work force of one crore in the next three years. But be sure of one thing. Time is running out. And unless we act and fast dark days lie ahead.
When Prime Minister Modi announced late last year that printing and circulation of two high value
currency notes would be stopped with immediate effect there was widespread consternation that it would hit the Indian economy. And hard. In the end it was mostly small scale industries and financial institutions in the rural sector that faced some hardship. Almost six months later, even as these affected sectors are slowly making a recovery the after effects of demonetisation seems to have claimed an unlikely victim. ATMs. That is right. Automated Teller Machines or simply Any Time Money as these machines are better known are struggling to stay relevant in times when policy changes by the governing bodies (read Reserve Bank Of India) are having a negative impact on these ATMs. And on those who use these machines extensively. We,the people.
It was about 50 years ago that the first ATM came into being at a branch of the Barclays Bank in the city of London. The idea behind the ATMs was quite simple. To have a machine that could dispense cash without the need for human intervention (a bank teller in this case) at any time and at any place. The most important benefit of the ATMs was that a customer could withdraw only so much money as was required at that point of time. No need to carry large amounts of cash with you at all times which could be a risky affair in any case. ATMs not only made cash transactions more convenient but very safe as well. Though ATMs were initially started in the same physical location as the bank in question they quickly spread to off-premises locations like shopping malls, airports, railway stations, gas stations and even grocery stores.
Of late, in far-flung rural locations of developing nations where there is a scarcity of electricity solar power has been used to run ATMs. Today there are about three million ATMs installed across the world and thanks in no less measure to their utility value the number of ATMs is only rising every year. But all that is set to change. At least in India where the aim is to reduce cash transactions and move towards a digital economy, some of the leading private banks have decided to levy what they term is a transaction fee for cash withdrawals. That is after a customer has exceeded the number of free transactions that varies from one bank to the other. Additionally if a customer withdraws money from an ATM where he/she does not have an account, these transaction fees can change accordingly too. But wait here is the catch. A transaction need not even involve cash withdrawal. It could even be as simple as inquiring about your account balance.
There is good reason why ATMs have become such a big hit in India. Indians by nature like to save money and unlike the Americans do not depend on credit cards. So withdrawing small amounts of cash as and when required suits us all just fine. But thanks to these new stringent rules people have been hit hard and a new trend has been observed across cities and towns. Where people are now withdrawing almost all the money that gets credited to the account, as soon as it does. As a result many ATMS are running dry especially at the start of every month. And sadly this new development flies in the face of the basic idea behind an ATM, that of Any Time Money. If it is of any solace, these new rules are only applicable in the metropolitan cities as of now. But if things continue unabated like this, the day is not too far away when ATMs will become like the dinosaurs. A glorious relic from our past that is now extinct.
It was a Tuesday night. On 8th November 2016, when the Prime Minister of India appeared on live television to announce the demonetisation of high value banknotes, it drew strong reactions from all quarters. Spontaneous protests erupted across the country as cash shortage hit ordinary citizens and lengthy queues outside cash dispensing machines (read ATMs) became a common sight. Small scale industry was the worst affected and the rural economy of the country spun into a tizzy. Thousands lost their jobs and were left without a source of livelihood. Economists were bitterly divided in their opinion even while the international community closely watched the developments. Though supporters of the move termed it as revolutionary those opposed to it likened it to political hara-kiri (The word hara-kiri with roots in Japanese history literally means ‘suicide by disembowelment’) The PM, in an attempt to assuage the frayed nerves of a bewildered nation, appeared on television. The message was clear and unambiguous – keep the faith. Cut to March 11, 2017. Results from elections in India’s largest state of
#UttarPradesh (for the record, it is bigger than United Kingdom) came out with a landslide victory for the ruling party, BJP. The nation had reposed faith in Narendrabhai Damodardas Modi. Yet again.
It was in 2014 that the right leaning nationalist party, BJP had been voted to power with an overwhelming mandate from the people. The country had been ruled for ten years before that by the Grand Old Party, the Congress and anti incumbency had kicked in. There was widespread discontent with a government that was perceived to be neck deep in corruption and nepotism. The flamboyant leader of the opposition, #NarendraModi was seen by the vast majority as a powerful agent of change. Hailing from the land of the ‘Mahatma’ Modi’s image as a common man (he started out as a tea seller) prepared to take on the mighty & powerful endeared him to the masses. In the urban pockets of the country he was seen as a development oriented Chief Minister who made Gujarat into a ‘model state’ His opponents called this a carefully cultivated image and the whole development story a big facade. There were more serious allegations, of being authoritarian and of indulging in divisive politics. But come election time, all the muck thrown at the man simply failed to stick. Modi became the 14th Prime Minister of India.
It has been three years since NaMo (as he is sometimes fondly referred to) was voted to power and while his legion of supporters call this the best time since India attained independence almost 70 years ago those opposed to the PM call it underwhelming at best & organised chaos at worst. But what about the masses? That is a different story altogether. The Prime Minister’s flagship campaign, the Swachh Bharat Abhiyaan aims to end the sordid practice of open defecation in the country (more than half of rural India still do not have access to toilets) thus paving the way for better health and sanitation. The other big ticket campaign of NaMo is the Jan Dhan Yojna that aspires to provide financial independence to the man on the street. With over 20% of India not having a bank account till date, the number of people affected is more than the population of Japan. The third and most recent move of the Prime Minister, that of demonetisation aimed to usher in a digital economy and reduce the menace of #BlackMoney.
The opposition went hammer and tongs at each of NaMo’s signature campaigns terming them as badly planned, terribly executed and misplaced adventurism. The last straw was #Demonetisation, they said. The country would teach the ruling party a lesson they would not forget, they insisted. The narrative that was built in the countdown to the assembly polls being that the results would be a referendum on not just the abject failure of demonetisation but on the three years of misrule by NaMo. Modi never one to back out of a good fight took up the gauntlet and publicly declared that this election was a litmus test for him. Thus he made this an election all about himself. With results going emphatically in his favour, NaMo has again proved to be the darling of the masses. Is it calculated risk taking or is it knowing the mood of the nation? Is he a visionary or merely a charismatic rabblerouser? Go figure.
P.S. At the time of publishing this, Modi has anointed a controversial Hindu cleric to head the state.of UP. Thereby setting the cat among the pigeons. Yet again.
Two days after the Indian government demonitised two high value currency notes (Rs 500 & Rs 1000) the impact of the move has already started showing in some sectors. This can be first attributed to the fact that almost 86% of the transactions in the country happen with these two denominations of currency. Let us look at some pros of this momentous move by the current regime.Hawala transactions – If media reports are to be believed, hawala transactions which are considered like a parallel economy in the country have been the hardest hit by this demonitisation. It is said that on an average, two to three thousand crores of money changes hands on a daily basis via hawala. And according to Interpol, it accounts for 40% of country’s annual GDP. Since those caught with hawala money are usually let away with a fine, it has led to many international terror groups to do their dealings using this method. Not surprising then that hawala operators have shut shop for the time being
Curbing of counterfeit cash – The inside story is that every year, hundreds of crores in fake money is pumped into the market every year. In fact, intelligence agencies in the country have claimed that nefarious elements in the neighboring country of Pakistan have been making and circulating lakhs of crores in Indian markets with an aim to cripple the Indian economy. The other purpose is to fund terror and anti national activities in India using this fake currency. The sudden and unexpected stoppage of notes which are of these two types of denomination has caught these criminal elements off guard.
Reduction in hoarding – It is common knowledge that in almost every political party, the practice is to hoard cash in a staggered manner over a period of time especially if elections are due to take place soon. And a lot of this cash is unaccounted for. With many states of India set to go for elections starting next year, corrupt parties will all feel the heat. Likewise in the realty sector, many folks with access to black money tend to invest it on acquiring land as a result of which prices always remain sky high. With demonitisation, it is expected that prices of high value assets like land, gold and jewellery among other things will come down substantially.
Big dip in inflation – Last but surely not the least is the long term impact of demonitisation. Prices of goods and materials cutting across industries are expected to come down gradually but surely. But for this to happen, it is equally pertinent that a slew of measures are initiated by the government of the day to make sure that the impact of demonitisation is not diluted with the passing of time. For those who are good at circumventing the law will eventually find ways in which to work around demonitisation of currency. So it goes without saying that there has be no letup. The pressure must be kept on. For as long as the need be.
To conclude, demonitisation is a good start. And as the saying goes well begun is half done. But then there are much bigger and bolder initiatives that the government of the day needs to undertake. The road ahead is long and there are many more miles to go before the malaise of black money is got rid of.
A couple of days ago, the Prime Minister of India, Narendra Modi came on national television and made an important announcement before the whole nation. Two high value currency notes, that of 500 INR and 1000 INR were both withdrawn from circulation in the next few hours. The initial reaction of the people at large was of panic, followed by confusion and lack of clarity. This process of taking out a certain currency from circulation is what is termed as demonitisation. Like in most such cases, the government of the day has given citizens a few weeks time to deposit the demonitised notes with the banks. But what was exactly the reason for this sudden move? What are it’s implications for the country and it’s people at large?
This is not the first time in post independent India that demonitisation has taken place. It was about 38 years ago (in the year 1978) that a government undertook this step. And even back then, the move was made with the sole intention of curbing the rising menace of black money. Today after almost four decades, this process has been initiated to tackle the same problem. That of black money. As part of the process, the government has taken a few measures to ensure that the move yields maximum dividends. One of them involves strictly monitoring large deposits coming into banks. Where deposits over 2.5 lakhs are taxed and if found to be disproportionate with income, the person is likely to be penalized.
A survey conducted by a global agency found that cash accounts for 85% of all global transactions and a lot of these transactions are not easy to monitor neither are they properly accounted for. And many of these are not even strictly legit. One of the reasons for demonitising currency is to try and encourage people to move towards cashless transactions using debit/credit cards, cheques and online transfers. These types of transactions are much more easier to keep track of. The other aim of demonitisation is to ensure that people living in hinterlands & rural parts of the country most of whom do not even have bank accounts take that first step towards opening a bank account in their name.
But it is extremely crucial to understand that demonitisation cannot be that one step which will completely rid any country of corruption and black money. At best, it will be a small but decisive step in the right direction. Which is why four decades after demonitisation was first done in India, the use of black money has only become more rampant today. This clearly means that there are fatal flaws in the system that miscreants have been able to exploit to their benefit. It also indicates successive governments have taken very few concrete steps in order to stem the rot let alone rid the system of this menace.
So if the government of the day believes that demonitising some currency notes will be the panacea to all problems, they are clearly mistaken for nothing could be further from the truth. For it is only a matter of time before those who bucked the system will do it all over again. This is just the beginning and there are many more challenges ahead. Be sure of that.