Anarcho-environmentalism allegorised

The name Anaarkali in the present context has many meanings - Anaar symbolises the anarchism of the Bhils and kali which means flower bud in Hindi stands for their traditional environmentalism. Anaar in Hindi can also mean the fruit pomegranate which is said to be a panacea for many ills as in the Hindi idiom - "Ek anar sou bimar - One pomegranate for a hundred ill people"! - which describes a situation in which there is only one remedy available for giving to a hundred ill people and so the problem is who to give it to. Thus this name indicates that anarcho-environmentalism is the only cure for the many diseases of modern development! Similarly kali can also imply a budding anarcho-environmentalist movement. Finally according to a legend that is considered to be apocryphal by historians Anarkali was the lover of Prince Salim who was later to become the Mughal emperor Jehangir. Emperor Akbar did not approve of this romance of his son and ordered Anarkali to be bricked in alive into a wall in Lahore in Pakistan but she escaped. Allegorically this means that anarcho-environmentalists can succeed in bringing about the escape of humankind from the self-destructive love of modern development that it is enamoured of at the moment and they will do this by simultaneously supporting women's struggles for their rights.

Thursday, January 19, 2017

Agriculture to suit Water Availability

The farm that Subhadra has in Pandutalav has a limited supply of water from a borewell. So she has customised her Rabi sowing to suit this lesser water availability. Not only have the seeds of wheat, linseed, masoor and gram been sown at one feet distance from each other, watering is also being done through a small pipe only at the roots of the plants in limited quantities. This has resulted in more tillering in the case of wheat and more robust growth in the case of the other crops. Since the plants are at a distance from each other, there is space for a bicycle hoe to be driven between them for turning the soil and killing the weeds as shown in the picture below. In the background are perennial redgram plants around the borewell which are also minimally watered so as to ensure that they produce redgram throughout the year for use as vegetables.
This was followed by weeding around the plants and then a special organic fertiliser called Jeevamrit Ghol was applied. This fertiliser is prepared by fermenting a combination of cow dung, cow urine, gram flour and jaggery and then diluting it and applying it to the roots of the plants.
These processes require more labour but they produce more wholesome food with a lesser amount of water. Unfortunately there is no support from the Government for this kind of agriculture and so farmers in general are not prepared to adopt it. Subhadra can do this kind of agriculture as mentioned earlier because she can cross subsidise it from her earnings elsewhere. Its indeed a pity that given the serious problems of water scarcity, mal nourishment, illness due to pesticide and chemical fertiliser infested crops, soil, water and air and the looming crisis of climate change, the Government does not see it fit to support a switch to a more sustainable agricultural regime.

Friday, January 13, 2017

What Price Cashless Economy?!!

Once it became clear that those who indulge in the generation of black money had found ways and means to circumvent the "strategic strike against black money" that demonetisation was initially supposed to be, the Government shifted the goal posts and said that the aim was to usher in a cashless economy. Suddenly remove cash from the economy and even without adequate preparation to make it possible for those who are not part of the banking system in any functional way to adjust to this, hey presto, the Indian economy would become a digital one it was claimed. So here is the story of one man, who is at the bottom of the pyramid, who believed wholeheartedly in the Government's exhortation to deal only through banks.
Raisingh Patel is a sixty year old Barela Adivasi man who has about 2 hectares of farm land in Pandutalav village in Dewas district of Madhya Pradesh. He lives on his farm in a wooden hut along with his family which includes apart from human beings, animals and birds also as is the custom among the Bhils.
He harvested 23 quintals of maize from his farm this year. The local traders were offering Rs 1150 per quintal and were prepared to come and lift the maize from his farm and pay him in cash. However, inspired by the Government's pitch to go cash less and also the prospect of getting a better price in the grain market in Indore city, he decided to take his produce there and get paid by cheque instead. He got Rs 1350 per quintal and was given a cheque of Rs 31250 by the trader who has an account with the Bank of India. Raisingh returned to Pandutalav and deposited this cheque in his account with the State Bank of India. This is a Jandhan account that is operated through an off branch kiosk run in Pandutalav by an agent of the State Bank of India which has a branch in the nearby market village of Udainagar some seven kilometers away. Many Government Banks have initiated the outsourced kiosk system to manage the Jandhan accounts so as to lessen their costs of operation. Raisingh had deposited the cheque on the 4th of December 2016 the day after he got it in Indore on 3rd of December 2016. When even after 15 days the amount wasn't credited to his account he asked the kiosk operator in Pandutalav what was happening. The kiosk operator said that the cheque was in the process of being cleared. More time passed and Raisingh became anxious as to what was happening with the cheque. Finally after a month had passed the kiosk operator told Raisingh that the State Bank of India staff had said that since this was a cheque from a different bank with a branch in Indore they would not deal with it in his Jandhan account and he would have to go to Indore and deposit the cheque in a branch of the State Bank there.
This is when Raisingh became desperate and gave me a call describing his impasse. Initially my reaction was to go to the State Bank branch in Udainagar and argue with the staff there. However, already one and a half months had elapsed and if the State Bank staff dilly dallied further then the validity of the cheque would expire. So I took Raisingh to the nearest Bank of India branch in Bagli town some 45 kilometers from his village to open an account there. The staff there said that to open a normal bank account Raisingh would need an Income Tax Department Permanent Account Number (PAN) and as he did not have one he would have to once again open a Jandhan account in a kiosk. These Jandhan accounts allow only withdrawal of Rupees Ten Thousand per month and so he would have to wait for three months to withdraw his maize sale payment in totality. Since getting a new PAN in a remote area like Pandutalav takes at least a month we decided to open a Jandhan account with the Bank of India kiosk operator in Bagli. It will take two days for the account to become operational and only then will Raisingh be able to deposit his cheque in the account by going to Bagli once again. And after that he will be able to withdraw only Rs 10,000. We also applied for a PAN for Raisingh as the bank staff said that once he got the PAN he could upgrade his account to a normal one which does not have the Rs 10000 per month limit on withdrawals.
Raisingh got about Rs 4600 more by selling in the grain market in Indore but he had to pay Rs 2000 of that to the transporter so his net gain over selling on his farm was Rs 2600. However, he has had to spend around Rs 1000 of that in running around to get a new bank account opened with Bank of India. So this is how the cashless economy is manifesting itself for marginal agriculturists like Raisingh. If I had not intervened in between, he would have been in deeper trouble. The Jandhan accounts are a burden for the Banks and they do not want to provide such services as sending the cheques of other banks deposited in them for clearing since that involves more costs which are not met by these accounts. So instead of making bombastic announcements of India going digital and cash less and beating its breasts that millions of poor people are now art of the banked population, the Government should instead subsidise the operation of the Jandhan accounts and make it mandatory for banks to provide the account holders with quality service.

Wednesday, January 11, 2017

The Salt of the Earth

There are many outstanding people in the villages who are an asset to the Bhils' fight for their rights in Western Madhya Pradesh. One such stalwart is Deep Singh of Bisali village in Dewas district. He is a "Burwa" or traditional medicine man who treats patients with a combination of natural herbs, leaves and roots and the chanting of mantras to propitiate the Gods and shoo away evil spirits after first assessing the pulse of the patient as shown in the picture below.
He practices medicine with diligence. This includes mobilising his community to protect the forests adjacent to their village so that they have enough trees and plants of medicinal value from which he can get his herbal medicine. He then processes and prepares this medicine. However, he is not a die hard burwa in the sense that when he realises that his medicine will not be able to cure the patient he refers them to allopathic doctors. He himself was suffering from eczema and could not cure it with herbal medicine and so he took allopathic cure and is now free of the problem. Consequently he has tremendous respect in the community.
What is more important from the Bhil Adivasi mobilisation point of view is that Deep Singh uses his influence for building up the identity of his tribe. He is a fierce advocate of Bhil autonomy and has been to jail a number of times in the fight for their rights. He has also spearheaded a cultural movement to establish the traditional Bhil culture. He is a "Gayan", the traditional Bhil bard who sings from memory the Bhil creation myth and other epic songs. He can be seen below singing one such epic along with support singers called "jhelu"s in a night long celebration at a memorial for Bhil martyrs that has been constructed on his land.
The singing goes on for the whole night but here is the Youtube link to a small portion of the Gayana which is a paean to Khatri, the God of War, who is being propitiated along with the spirits of the Bhil martyrs whose memorial statues are in the background. This celebration of the martyrdom of Bhil heroes is held every year on April 2nd and is attended by thousands of people from all over western Madhya Pradesh who are affiliated to the Adivasi Ekta Parishad.
Finally, Deep Singh has also initiated an important project to conserve and promote traditional seeds and agriculture of the Bhils. Such men are the salt of the earth and are doing their work quietly to save humanity from its impending doom!!




Monday, December 19, 2016

A Philathropist With a Difference

A few days ago we received the news that Nico (Dr. Nicolaas Nobel), as he was popularly known, had passed away after a short illness at the ripe age of 83 on November 29th 2016 at his residence in Noordwijk in the Netherlands. This is a loss of a philanthropist with a difference. Dr Nico did not just collect and donate funds for philanthropy but took an active part in ensuring that the funds were indeed well spent by regularly travelling to the field and forming a deep understanding of the local context of the beneficiaries. The Rani Kajal school in Kakrana would not have been what it is today without his thoughtful support.

 Dr Nobel studied Law at Leiden University in the Netherlands. He subsequently worked in Amsterdam as a tax-lawyer and as a publisher of articles and newsletters about Dutch and international tax law. As a student, Dr Nobel became friends with an Indian boy studying at Cambridge University. This friend invited him to tour India after finishing his studies, and he accepted. In 1958 he completed a 7 month tour through India by car, nearly covering the entire country. Having made a number of new friends, he returned often for short visits. As a result, Dr Nobel regarded India as a second home, and himself as half-Dutch and half-Indian. During his many stays, Dr Nobel saw not only attractive areas of the country but also the misery in which a large portion of the population still lives. Dr Nobel was inspired to make a difference, and began organizing funds for development activities in India after his retirement. With some money of his own he founded a Charitable Trust that, after a few years, also received support from various funding agencies. From 1998 to 2005, the Trust financially supported several non-governmental organizations (NGOs) for development work to help prostitutes and their children, HIV-AIDS wards, leprosy colonies, orphanages, cataract operations for the blind, schools, drought relief, environmental conservation, sustainable agriculture and many other important causes.
However, what is most important is that in addition to managing the Charitable Trust, Dr Nobel maintained continuous contact with Indian NGO workers, traveling to meet them and see their work up close. Due to his age and the increasing demands of this work, he stopped travelling at the end of 2005. But his philanthropic work continued apace gaining in its depth and reach. When Professor Swapan Bhattacharya decided to take up residence in Kakrana and help with the development of the school, Dr Nobel enthusiastically supported the new initiatives which have now propelled the school into a much higher level than before. We can only pay homage in humility here to this great soul who is with us no more

Saturday, December 10, 2016

The Rights of the Disabled

Today is International Human Rights day commemmorating the adoption of the Universal Declaration of Human Rights (UDHR) by the United Nations General Assembly in 1948. Coming as it did after the excesses of World War II, it was a great document comprehensively setting out the basics of liberal rights of the individual for peaceful and just human existence. Article 25 (1)  of the UDHR states -  "Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control". This is the only article that mentions that those who are disabled too have the right to live a fulfilling life. This is one area in which in India a lot remains to be done. There are some provisions from the Government to aid disabled people but they are minimal and in most cases inadequate. Therefore, NGOs have to step in to help people with disabilities.
Here is the story of one such disabled person who had to fall back on the Khedut Mazdoor Chetna Sangath (KMCS) for help and how he benefited from that. Vanji is the son of a veteran activist of the KMCS, Nevji, who has fought many battles for the rights of Bhil Adivasis in Alirajpur. On one occasion when he and Vanji were returning from the market town of Kavant to their village Vakner on their motorcycle there was an accident as another motorcycle driver crashed into them. Vanji was grieviously hurt and his kneecap was dislocated. Given the lack of proper Government health facilities nearby, Nevji took Vanji to a private hospital in a nearby town Bodeli. The private hospital did not treat Vanji properly and sent him back to his village.

After some time Vanji's leg developed gangrene and he had to be taken back to Bodeli where another doctor, an orthopaedic surgeon said that his leg would have to be amputated from above the knee. Thus, Vanji became disabled and his life became severely constrained. All through this time the KMCS had offered to provide proper medical treatment for Vanji but his father Nevji had decided to pursue his own remedies which included going to the traditional Adivasi medicine men. However, now that his son had lost his leg, Nevji finally came round to the view that the help of the KMCS should be sought. Research revealed that fitting a state of the art artificial leg which gives very good mobility would cost Rs 1 Lakh and other associated expenses. This was clearly beyond the budget of both Nevji and the KMCS. So instead a comparatively less efficient leg was fitted which was available free from the Bhagwan Mahaveer Vikalang Sahayta Samiti (BMVSS) which is famous for having developed the indigenous and cheaply manufactured Jaipur Foot. With time this organisation has collaborated with the Johns Hopkins hospital in the USA to improve the foot design so that now even feet that fold at the knee have been developed and one of these was fitted on Vanji. With a little practice, Vanji soon got habituated to this prosthesis and is now able to walk freely and even raise fifty kilo weights as shown below. He is running a grocery shop quite profitably and is very happy that he has regained considerable mobility.
The Government does provide financial help to the BMVSS so that it can provide its prosthesis to people free of cost. However, not all people with disability know of this organisation and so there are many disabled people going round without proper prosthesis in this country despite it being their right to get help from the Government. The Government has now decided to provide state of the art prosthesis that allows a person to drive motor vehicles and run also. It remains to be seen how soon and how effectively this new scheme is implemented. 

Tuesday, December 6, 2016

The Death March!!

A trip into the remote interiors of Alirajpur district was accomplished a few days back in which Professor Anandswarup Gadde from Australia, Nagendra Subbakrishna and his wife Kathryn Baranackie from USA and Professor Swapan Bhattacharya from Indore were the special guests. Professor Gadde I first met on the internet when he read the blogpost by another internet friend Bhupinder Singh about my e-book "Recovering the Lost Tongue" and offered to finance its publication in print. Since then we have remained connected on the internet and on one occasion on his last visit to India we had met briefly. He has from time to time contributed funds to the work being done among the Bhils in western Madhya Pradesh and this time he expressed a desire to see some of this work. Nagendra or Noggy as he is more popularly known is a very close friend of mine as we were from the same batch and same hostel as students in the Indian Institute of Technology, Kharagpur. After passing out we lost touch with each other what with Noggy having gone abroad and I having gone into the interior!! Once again the internet was instrumental in bringing us together after more than three decades year before last. He has ancestral roots in Bengaluru and Karnataka as a whole and so comes down frequently to India. He too read my book and was intrigued enough to want to see the work being done among the Bhils and his wife Kathy, who is a social worker in the USA, too showed interest. Swapanda of course is now an integral part of the Rani Kajal Jeevan Shala after he too ferreted me out from the internet about two years ago. However, he had not yet seen the really remote parts of Alirajpur where life is still very primitive as compared to the modern lifestyles we are used to in cities.
The trip started off from Swapanda's house in Indore on one fine morning and the first stop was our farm in Pandutalav village in Dewas district about fifty kilometers away where we are practicing organic agriculture. There we had lunch prepared on wood fired stoves with the organic produce of our farm. Our farm is next to the farm of Shri Raisingh Patel shown below and we had our lunch in his wooden, tiled roof home. The lunch consisted of rotis prepared from millets, rice, chawla daal cooked in buttermilk and vegetables and an indigenous breed of chicken. The dessert was laddoos made from sorghum flour and sesame seeds bonded with jaggery.
Noggy found the ambience to be very stimulating with the fresh air and the greenery all around and was mesemerised by a buffalo offspring that had just been born the day before.
After lunch at Pandutalav we had a long road journey of about 250 kilometers and reached the Rani Kajal Jeevan Shala school late at night. Everyone was tired but still they enjoyed the simple repast consisting of rotis made of millets, rice and daal. After the tiring first day the next day was devoted to interacting with the students and teachers at the school. Noggy insisted on cooking the fresh fish brought from the River Narmada in Indian Sula wine that he had bought in Indore. So with me as the assistant he proceeded to direct the cooking of Fish Nagendrano as shown below.

The next day was the one that everyone had been waiting for. We set out early in the morning at 6.15 a.m. from Kakrana and reached the headquarters of the Mathwar forest range at Bakhatgarh. Here we left the car we had been travelling in from Indore and switched to a local jeep that could negotiate the hilly terrain and untarred roads of the Vindhyas that had been arranged for us by Nevji, the veteran activist of Khedut Mazdoor Chetna Sangath. This jeep took us via the village of Vakner where there is a field office of the Khedut Mazdoor Chetna Sangath to the village of Chilakda on the banks of the River Narmada. Then began what Noggy has characterised as the "Death March"!! Whereas I had arranged for this trip through hilly terrain to a remote village to underline the realities of the life that the Bhils were living at the margin, Noggy jokingly alleged that I was forcing them to their death!! First of all there was a three hundred walk downhill to the edge of the river where a boat was waiting for us. Once everyone was in the boat, however, their spirits rose at the prospect of a ride through the serene hills surrounding the river as is evident from the smiles in the composite picture below.

 The man in the middle with the headdress is Nevji who not only planned and organised the trip but also provided a helping hand to the death marchers to help them negotiate the hilly slopes. The motor boat in which we made the trip is owned by another veteran fighter of the Khedut Mazdoor Chetna Sangath, Geria pictured below. He tied his hand boat to our boat and hitched a ride to his hut on the banks of the river.
Geria is a rupee millionnaire now which is saying quite a lot for a Bhil person living in these remote hills. When the Narmada River became a lake after the Sardar Sarovar dam was built further downstream he lost most of his farm land which was submerged. While he had fought against the dam to stop it along with others but he did not succeed. So he had to look for alternative livelihoods. Once some fishermen came from Gujarat and used big nets to catch a new breed of small fish that had multiplied in the reservoir water and dried them and took them away to sell in the cities. Geria had been a great fisherman earlier but then the catch was small and done with hook, line and sinker. He quickly learned the technique of fishing with large nets and bought a net himself. Thus, began his journey towards becoming a millionnaire. Today he not only catches a lot of fish himself but is also a wholesale buyer of fish from others. He then dries up the fish and sells it to big traders in cities who come to get the fish from him. Though this flourishing business is under threat as the Government is proposing to lease out the reservoir to some big contractor and eliminate small players like Geria from whom it does not get any revenue.
Finally we arrived at Bada Amba village to be faced with the prospect of climbing up a high hill to reach the Motia Bhil Bhanai Ghar school perched on the top as shown below. The school is named after a Bhil king of the region who was murdered by Rajput invaders who usurped his kingdom. Bhanai Ghar means a place of learning. 
The climb up to the school was indeed a challenge for some of the guests, especially the seventyfive year old Anandji who could make it only in short climbs with rests in between with the help of the driver Sanju as shown below. He blamed it on his habit of smoking which he said he would try and reduce.
The school was resonating with the chants of the children with the younger ones reciting the English alphabet and the elder ones the tables!! Noggy was quick to point out that it was absurd that the children were reading A for Apple when it would be more appropriate to say A for Aonla!! There is only one teacher, Mavsingh, in the school who has to do multigrade teaching. He has been given training to teach with locally relevant teaching material but this is not enough to wipe out the legacy of the way he himself was taught when he was a student. He gets Rs 20000 a year from the Government as a guest teacher. The Khedut Mazdoor Chetna Sangath gives him another Rs 40,000 a year to enable him to do a better job. A solar lighting solution has also been installed to enable the adolescent youth to learn in the evenings. He also does some fishing on the side apart from farming. But in the end it is too much to expect him to provide quality education. At least he does better than other government schools where mostly the teachers don't teach at all. Even the school in Kakrana which is considerably better funded and has more qualified teachers cannot compete with the well provided private schools in cities. Thus, in this digital age a huge and increasing gap is builiding up between the children of the Bhils and those of the privileged sections of society. 
After a quick lunch of rice and daal we headed back from Bada Amba and reached Kakrana around 7 p.m. after a very long and tiring day. Instead of dying, the guests felt that they had seen some of the most pristine beauty of nature and met people who lived a simple life amidst it. The next day after breakfast we headed back to Indore. 
This is the first time that some of the many people who read about the Bhils and their struggles from my posts on Facebook have visited Alirajpur and that too one of its most remote villages. They were overwhelmed both by the simplicity of the people and the way in which they were working hard to lead their lives with minimal resources in the absence of much help from the Government.

Monday, December 5, 2016

Internet Blues!!

The community owned wireless internet facility was set up with great difficulty at the Rani Kajal Jeevanshala school in Kakrana in July this year. However, in the first week of November it stopped working barely three months after its successful installation. Initially Gulab, the barefoot engineer in Kakrana who had been trained by the designer of the network, Arjun, tried to solve the problem himself. However, it appeared the problem was beyond his rudimentary knowledge and so the raspberry pi and dongle was sent to Indore. Then, Swapanda had a go trying out the various parts with online help from Arjun but even he could not solve the problem. So finally the pi and the dongle were couriered to Arjun in Delhi.
Arjun found the pi to be working fine but the dongle had stopped functioning. So he bought a new dongle and upgraded the software of the Cowmesh based on later developments he had made in the cowmeshes he has set up subsequently in Uttarakhand and tested it out and found the set up was working well again. He then couriered the set up back to Indore and now it has been installed again at Kakrana and is working fine after a hiatus of about a month.
There are many lessons to be learnt from this. The first is the unreliability of these Chinese dongles. All dongles available in the market are from Chinese manufacturer or other and invariably then go kaput in about a year or so. But in the present case the dongle had lasted just three months. The reason is that the dongle had been working 24 x 7 in Kakrana and that had heated it up continuously leading to its precipitate decay. The second is the difficulty of setting up and running Cowmeshes in remote areas, where there are very few technically competent people, given that the software is newly developed and open source. Remote online solution to the problem was not possible and so the pi and the dongle had to be sent to Arjun by courier. Luckily he was in Delhi at the time and so the set up got repaired quickly.
Seeing that constant running of the dongle greatly reduces its life, arrangements have now been made to regulate its use. The internet is turned on only for four hours in the early morning and five hours in the evening and night. This is done automatically with the use of a timer which can be programmed to turn the internet on and off at fixed times as shown below. Arjun is also now writing an operation and repair manual so that in future any problem can be set right in Kakrana and Indore instead of having to courier the system to him.

While we were setting up the timer and internet in Kakrana it came to our notice that the printer was being operated on the solar power system. Initially this did not strike us much as the printer took out a few photocopies easily. However, when we wanted to test the internet and timer we found that the batteries had discharged due to the heavy drawal of power by the printer. The staff at the school had put the printer on the solar power system because of the low voltage of grid power. There is a voltage stabiliser on the mains for the internet and so it steps up the low voltage but even so some power is drawn from the batteries to run the printer. Earlier the printer used to be run on a diesel generator but since this is costly the staff began using the solar power system which has a maximum capacity of 1000 watts while the printer has a rating of 800 watts. So when other appliances and devices and the internet runs together on the solar system, the printer drains the batteries. The printer had to be taken off the solar system and now another separate voltage stabiliser is being sourced for it. The government does not provide proper internet connectivity and proper power in remote rural areas nor does it support citizen's efforts to set up their own internet and power systems and yet it expects the whole country to go digital and cashless!!

Tuesday, November 29, 2016

A Tragedy and A Farce!!

The world today is data driven and most Governments take economic decisions on the basis of detailed data analysis. However, Prime Minister Modi has given short shrift to this principle and has instead embarked on grandstanding actions based on his intuition which he believes served him in good stead during his many years as the Chief Minister of Gujarat earlier and will do so in his present stint also. Whether it is the construction of toilets to rid India of shit or the demonetisation of high value notes to "extinguish" black money, Modi has followed his sixth sense and not the logic of data!!
What, however, is the data available with regard to black money. At the outset one is confronted with the problem that there is no reliable data. Mainly because those who are supposed to track the generation and accumulation of black money, the staff of the direct and indirect taxes and vigilance departments, are least interested in doing so as they too are mostly involved in generating and accumulating Black wealth!! Black money is generated either by fudging by organisations and citizens of their production, trade and income data or by defalcation of Government funds. In all these cases the departments who are tasked with tracking evasion and corruption can fight this evil and also form a reliable estimate of the black money generated and accumulated if they have the will to do so. For various reasons this will is absent.
Nevertheless some rough estimates can be made. The GDP of the country in 2015-16 was Rs 140 Lakh crores at current prices and should be around Rs 150 lakh crores this year. Assuming that the black economy was 50% of this we arrive at the figure of Rs 75 lakh crores. If we further assume that the black economy has the same savings rate of 30% as the mainstream economy, we get an annual accumulation in the black economy of Rs 23 lakh crores. Assuming again that 50% of this gets reinvested in productive economic activity we are left with about Rs 12 lakh crores per year as accumulation and assuming also that due to the effect of inflation the current value of the annual accumulation that has taken place in earlier years is the same as that in the present year, we can roughly estimate the total stock of black wealth accumulated over say the last thirty years or so since the economy began to be opened up from the mid-1980s and thus offered greater opportunities for generating black income, to be around Rs 400 lakh crores, held mostly as real estate, gold and jewellery and financial instruments within the country and abroad. How much of this huge stockpile of black money is held as cash? On the day demonetisation was announced there were about Rs 15 lakh crore in Rs 500 and Rs 1000 notes. Assuming once again that 50% of this was black money we arrive at a figure of about Rs 8 lakh crores. Thus, only 2% of the total black wealth of Rs 400 lakh crores was held in cash.
Therefore, it is indeed farcical that instead of targeting the other 98% held in the form of real estate, gold and jewellery and financial instruments, to rid the country of black wealth, Modi should characterise demonetisation which can at most neutralise 2% of the accumulated black wealth as a great epoch making strike against it. Especially since Rs 500 and Rs 2000 notes are being reintroduced and so there will once again be accumulation of black money since the process of such accumulation has not been rooted out. Instead a much more effective strike and one that would not only root out black money but also yield substantial revenues to the Government would have been to vigorously track real estate and gold and jewellery holdings and trace out bank accounts and financial instruments that have not been declared. The huge human power being deployed in managing the demonetisation could have been better deployed in this tracking operation. 

The need for grandstanding through a sudden dramatic announcement and the maintaining of secrecy to ensure that even this paltry 2% is neutralised, meant that no elaborate preparations could be made to immediately replace the cash that was to be suddenly demonetised. This has subsequently resulted in a tragedy of gargantuan proportions, which is still unfolding, that will set back the economy seriously in the near future. Production and trade have fallen drastically due to the lack of cash and daily wage labourers who constitute a bulk of the labour force have been temporarily laid off. The huge unbanked population is all at sea without cash and have even cut down on their already minimal consumption. Desperate measures are being taken now to salvage the situation, with the latest being an amendment to the Income Tax Act that says that only 50% of the declared black money will be taxed. This is another red herring that will not yield anything. The recent tax declaration scheme resulted in the declaration of only Rs 64,000 crores which is just 0.16% of the total black money and it is unlikely that the proportion will go up now. Simply because tax evaders are habitual offenders and will be loathe to declare their sources of income while coming clean, as it will lead to future black incomes drying up.  Another measure is the urging of people to open bank accounts and use mobile phones to transact business instead of using cash. When the banking system has already been paralysed by the huge work of replacing the demonetised cash, it is nothing short of Quixotic to expect it to engage itself in opening bank accounts for the poor which are anyway an unprofitable exercise. Mobile telephony on the other hand cannot properly provide its basic service of voice and data connectivity and so it is a great leap of faith to think that it will be able to suddenly become able to handle a huge increase in mobile banking transactions. This should have been put in place through trial over a period of a year at least before the demonetisation. Thus this too is yet another red herring. 
Finally there is the huge cost of the whole exercise which is much greater than the benefits in terms of black money and counterfeit currency neutralised. Initial estimates are that the GDP will take a hit of about 2%  due to the decrease in economic activity which is a loss of Rs 3 lakh crores to the economy and the Government will lose revenue to the tune of Rs 50,000 crores as a result of lesser tax collection. Though it is being touted that the Government will get a greater dividend from the Reserve Bank due to the net reduction in currency liability from the demonetisation, this will not be much due to the higher expenses incurred in managing the fallout of the demonetisation which is increasing every day in the form of various concessions having to be offered and the overtime having to be paid to bank staff. The banking system is in complete disarray handling the cash disbursal and not much other work is getting done.
One would have expected an economist of Manmohan Singh's stature who has been both a Governor of the Reserve Bank and a finance minister, to lay out in more detail how the demonetisation exercise is a red herring when he spoke in parliament.  But since he, like Prime Minister Modi, is not interested in really tackling the menace of black wealth, he ended up mouthing meaningless rhetoric and terming the demonetisation process to be legalised plunder and organised loot without elaborating on why it is so.

Marx once wrote, referring to the usurpation of democratic power in a coup and the becoming of emperor by Napoleon Bonaparte in France in 1804 and later his nephew Louis Napoleon in 1852, "history repeats itself first as tragedy, second as farce"!! In the present case of demonetisation, Prime Minster Modi has gone one better than the Napoleons by simultaneously enacting a tragedy and a farce!!!

Monday, November 14, 2016

The Scourge of Kalodhono!!

A new devil, as malevolent as any of the others that make their lives difficult, now plagues the long suffering Adivasis of Alirajpur – Kalodhono. He is so potent that he has for the time being eclipsed all the bounty in the form of a plentiful harvest that has resulted this year from the munificence of their rain god Kalorano. What is this Kalodhono which has suddenly made life so difficult for the Adivasis? These are the demonetized rupees five hundred and one thousand denomination currency notes!! In their typical way with all Hindi or English words, the Adivasis have picked up the Hindi word for black money, Kala Dhan, which is being bandied about on television channels frequently as being the target of the demonetization, altered its pronunciation suitably to accord with the phonetics of the Bhili dialect and have named their latest nemesis with this phonetically altered word.
The Adivasi household economy in Alirajpur these days is heavily dependent on migrant labour in the agricultural fields and construction sites in Gujarat. This migratory labour goes on all the year round and more than ninety percent of the households in Alirajpur have some people engaged in migrant labour. Many had just returned with money paid in lumpsum to them after a month or more of labour just before Diwali to celebrate their own Diwali which is held at different times in different villages. Many Adivasis have bank accounts these days but they don’t use them preferring to handle cash instead, as accessing the bank accounts is a pain given that they are situated at great distances from their homes. These bank accounts are accessed only to receive payments from the government for various schemes like Indira Awaas Yojana, Mahatma Gandhi National Rural Employment Guarantee Scheme and the like. Since most of these schemes are not being funded properly by the Government, in many cases the people are not getting any payments and these accounts are in disuse for a long time and so blocked by the banks as per the Reserve Bank of India regulations, to prevent the use of many bank accounts intermittently for laundering black money. Therefore, many Adivasi households are now sitting on thousands of rupees in demonetized notes without any easy way to deposit them and get the new notes. They will have to open new bank accounts or reactivate their blocked bank accounts and this will only happen after the huge rush of depositing notes and withdrawing money in the banks eases somewhat in about a week or ten days. Thus, most Adivasi households are without any cash at the moment and will remain so for at least another two weeks.
Given this situation and the dire need for cash of poor Adivasi households at a time when the harvest has not yet been winnowed, it is not surprising that via media have popped up in the form of middlemen who are ready to exchange the demonetized notes for one hundred rupee notes for a commission ranging from 10 to 20 percent imposing a heavy tax on some of the poorest people in this country. Not surprisingly Kalodhono has emerged as a major blight on the Diwali festivities of the Adivasis and they are running from pillar to post to exorcise it.

(Photo by Javed Iqbal, www.moonchasing.com)
Given that it is not possible to deposit more than 50,000 rupees of demonetized notes at a time without a Permanent Account Number from the Income Tax Department and more than Rs 2,50,000 in all without coming under the scanner of the Income Tax Department and being taxed and penalized to the cumulative tune of 90 percent of the amount deposited if one cannot furnish the details of where one got the money from and also exposing oneself to the possibility of property searches later, it is unlikely that the really big holders of unaccounted cash are going to deposit the same and will prefer to lose this cash altogether as in most cases it is a small proportion of the accumulated black income that they hold mostly in the form of real estate, gold and financial instruments. Since new Rs 500 and Rs 2000 notes are being issued, the unaccounted property of high income people is not being traced and the generation of future black income is not being prevented through the compulsory introduction of cashless transactions, it is indeed doubtful as to how much of a deterrent this one time demonetization will be against the creation of black money and whether the huge costs being borne in the form of the temporary disruption of the economy of both the country and of poor households like that of the Adivasis of Alirajpur will be offset by the destruction of the stock of black money instead of its being deposited and so taxed and penalized by the Government. If the Government had the guts, it should instead have put all the human power at its disposal into tracing the property holdings of citizens. It is the people with high property holdings that are under reporting their incomes in a big way and it is they who should have been tracked and penalised instead of launching this ill planned demonetization exercise which is turning out to be a Tughlaqian farce!!

Wednesday, November 9, 2016

The Gimmick Man

High denomination notes have been demonetised with immediate effect and this has created a great news splash in the country. However, what will this really achieve? Most of the black income that is generated is kept in the form of real estate, gold and undeclared financial instruments such as insurance policies and only a part as cash. For instance whenever there are vigilance raids on businessman or corrupt government servants by the tax department or the anti-corruption wing, most of the undisclosed income unearthed is in the form of property and only a small part is cash. The really big players in the black economy all use offshore havens to stash the better part of their black incomes and use the hawala track to transfer cash to India as and when this is required. Thus, only a part of the huge store of black income will be neutralised through this demonetisation. It will have little effect on the generation of black money which will continue apace. Especially since the golden opportunity to curb black money generation by introducing a single flat rate of Goods and Services Tax has been given the go by.
As things stand there will effectively be as many as nine slabs of GST - no tax on essential commodities, 6% on mass use commodities, 12%, 18%, 26% on luxury goods, special tax on gold, special tax on petroleum products, cesses on various sin goods and cesses for education and Swacch Bharat Mission. There is already a big fight going on between the centre and the states over the classification of goods under these various slabs which will later be followed by even greater litigation between the tax authorities and the tax payers. The big problem will be that a huge bureaucracy will have to be maintained both at the centre and the states to administer this complex system of taxes as at present. The argument that it is necessary to have a differential tax rate with no or low taxes for essential and high volume goods so as to not burden the poor and also control inflation is a specious one. A low single flat tax on all commodities will not only not have an inflationary or anti-poor effect but will hugely reduce the cost of administration and also improve greatly the tax collection as it will be very difficult to avoid paying this flat tax. Such a flat tax will also easily end the turf war that is now going on between the centre and the states as to who is going to collect which of these taxes and from which category of tax payers. When there is a single flat tax then it only boils down to deciding on the cut off line for the cumulative amount of tax that a tax payer pays to apportion the tax payers between the centre and the states.
Once the GST system is simplified and all economic transactions become tracked then it will be very easy to determine the high value expenditures being made and track those who are making them through appropriate algorithms for the same. The huge tax bureaucracy can be redeployed from administering the indirect taxes to tracking the high value expenditures and so ferreting out the high income people who are not declaring their incomes. Thus, both the direct tax base and the total collection will go up substantially and we will have a much better direct to indirect tax ratio and a total tax to GDP ratio like it is in the developed economies. This would enhance the revenue of the government and its ability to spend for equitable and sustainable development of the country.
Like in the case of the Swacch Bharat Mission or the Digital India initiative, in this case too Prime Minister Modi has not gone into the nitty gritties of the issue and made a big announcement around demonetisation which is yet another gimmick!! It is indeed a pity that people in this country fed on the inane fantasies of Bollywood films lap up these gimmicks without realising that they are not going to achieve anything substantial.