Demonitization-Gurumurthy Take

Gurmurthy piece in The Hindu

His contention:

The balloon of HDN was expanding in dangerous proportions. This needed to be reined, otherwise Indian Economy was doomed by 2021. This was a reset.

The growth during UPA years was jobless growth powered by HDN, via high asset price and high private consumption.

Interestingly he faults Govt late introduction of Income declaration scheme late in the day, otherwise this could have fetched 2-3 lacs Cr in tax.

Now he states 45K Cr is black money is already unearthed and 2.9 lacs Cr in under scanner, the yield is far more than any earlier income declaration.

Following demonetisation, there are 56 lakh more assessees, advance tax receipts have gone up by 42% and self-assessment tax risen by 34%. It has also led to an attack on benami assets. Even as intelligence agencies note a 50% drop in hawala-related calls post demonetisation, nearly 2.24 lakh shell companies that have been used for hawala have been uncovered; 35,000 have been found laundering ₹17,000 crore; one of them, ₹2,484 crore.

Everyone has their numbers.

 

 

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Did CAG contributed to downturn India Facing

Kapil Sibal scathing piece on ex-CAG.

 

Presumptive loss is actionable. Actual loss is not. Ironic but true. It seems Rs 2,50,000 crore lost on account of demonetisation is not actionable because the Comptroller and Auditor General of India (CAG) says he cannot go after policy decisions. Also, no-one can be held responsible not just for over 100 lives lost of people forced to stand in queues, but also for the yet untold stories of those who lost loved ones for want of cash in medical emergencies. But his predecessor not only questioned the policy decision of not auctioning spectrum and coal blocks but also conjured up astronomical figures of alleged presumptive loss. I suppose institutional positions change with the change of CAG. Institutions don’t matter, people do. That is why we often witness the ugly spectacle of the National Investigation Agency and the CBI doing a U-turn, depending on the political masters they wish to please.

Are the Bankers new scapegoats.

Generally the incoming government is quick to put its own people in places of power it starts with IAS and goes down to Governers and VC of varasities. But it seems this time it has gone to a new level. The government seems to be scapegoating bankers for the loans they granted to Kingfisher. Former chairman of IDBI and other top officials were arrested recently. Bankers in mumbai definately feels it is vendetta politics. Swaminathan writes in ET a piece on it. He exhorts the government to be pragmatic and set up a bad bank. That possibly the solution to this mess.

 

Trump disregarding new normal

While it is sad to believe who can not grow forever, atleast in terms of economics, but it is hard reality. Ruchir Sharma offer his two-cents. His contention is that, at the time of Reagan productivity and population growth was both 1.75%, hence US could grow at 3.5%. With population growth declining and productivity at just .75% its hard to achieve purported 3-4% growth. This is the new normal and we all have to adjust to it.

 

How Modi govt lobbied Moody’s for ratings upgrade, but failed

Rating Agencies are major stake holder in international finance. No wonder they were identified as the prime culprit when global finance ran wild. The hallow institutions were tarnished. But not enough, I guess. Recent effort by Indian government to lobby one of the three  major rating agency.

Though it is highly unbecoming of Indian Govt to indulge in this, I guess the practice is quite widespread.

UPA real growth Story

Rajiv Gowda, a professor at IIMB, and a Congress Rajya Sabha articulates in The Hindu, what is the real story behind the growth in UPA.

The story started when previous PM Dr Manmohan Singh, penned a article in The Hindu expressing his concerns on demonetization. S. Gurumurthy, RSS ideologue, published a rejoinder to same, that it was growth of now demonetized money which fuelled the growth. This also fuelled corruption and black money, he argues.

  • In the present of article Prof. Gowda argues:
  • Growth was real
  • The growth in asset price and gold and stock market was in line with norms.

All the three articles are very nice reads.