Tightening The Screws

Tightening The Screws

The Congress Party may have blundered by deciding to up the ante  much too early. It has little to show for its noisy obstructionism in parliament, except for the wilful blocking of the GST and Land Bills. This has harmed the economy much more than the BJP. And its petulant name -calling and cynical use of excitable students outside, hasn’t done much better than a lead balloon either.

Congress is in some danger of running out of steam, with three whole years to go. It undertook this reckless and confrontational course under the non-leadership of Rahul Gandhi. This, despite being reduced to a rump in parliament. It took premature heart perhaps, from the NDA’s humiliating defeats in the assembly elections of Delhi and Bihar.

And also perhaps from the inexplicable timidity on the government’s part to press on with prosecutions. However, with Congress belligerence unrestrained, the Modi government too might have decided to take the kid gloves off. Apparently, the attempt to try and get along and form consensus has utterly failed, and a tougher line has emerged since the start of the first part of this budget session.

It is, after all, very difficult for the Congress to profess outrage over the relatively minor alleged transgressions of the BJP/NDA/RSS. And also tiresome of it to keep waving the communal card via staged ‘intolerance’ agitations. This, particularly, when it is hard pressed by countless skeletons that keep tumbling out of its own UPA era cupboards.

And these shenanigans are not only corrupt and exploitative, but criminal in nature, and appear to involve the top leadership of the erstwhile ruling combine.   

After the National Herald case, in which both Sonia Gandhi and Rahul Gandhi were personally indicted, necessitating their obtaining bail; the Augusta Westland scam has erupted again.

This time, ironically, it is the Italian court that has mentioned Indian Congress recipients of bribery, including ‘the family’ that was allegedly paid a whopping Rs. 225 crores. This, over just six unsuitable helicopters!

Former multiple-time finance minister/home minister P Chidambaram is not only accused of personally doctoring the papers on an LeT operative sent to eliminate current prime minister Modi, but of falsifying the thrust of investigations.

The attempt was to allege that Modi’s Gujarat government killed the LeT operative Ishrat Jahan, who was portrayed as an innocent student, along with her male associates, in a ‘fake’ police ‘encounter’.

In addition, Chidambaram’s son Karti, is accused of amassing masses of property worth millions of dollars. These are in hot-spots all over the world, allegedly owned by the Chidambarams, but through benami deals. This was only revealed because the properties have all been willed to Karti’s daughter, by a bewilderingly diverse set of people who are ostensibly the current owners.

These two issues have come to the fore just as the second half of the budget session has begun. But there are several other problems for Congress simmering in the background.

There are revolts from within at some of the few states it still controls, such as Arunachal Pradesh, Uttarakhand, and apparently, Manipur too.

And, as usual, there are reports of state level corruption too, not only in the lower levels of government, but engulfing the chief ministers of Karnataka and Himachal Pradesh as well. The latter is being investigated by the ED and tax authorities for some time now.

All this,  when the Modi government, by way of contrast, is showing some early signs of consolidation.  A ministerial reshuffle is impending, and expected to reflect Modi’s views much more emphatically than was possible two years ago. There are some new inductees in the Rajya Sabha under the nominated quota. They will help the BJP make a better case for itself in the upper house, particularly with the hugely well-deserved inclusion of Subramanian Swamy.

The economy meanwhile, is slowly reviving, with the GDP up to about 7.3% p.a.. Inflation is largely controlled, interest rates are moderating, the CAD is practically non-existent, and the fiscal deficit is firmly boxed in at 3.5% .

FDI at some $51 billion, is at an all-time high. The relationships in the SAARC region and farther afield, particularly with the US and Japan, are making steady progress.

After three droughts, the monsoon forecasts are good this year. If they fructify, it will go some way to relieve the massive distress in rural India. It is another matter that Indian agriculture, and indeed its floods and droughts, are so much a matter of the weather, instead of harnessed science and technology.

This government is determined to double farm income across the country, and therefore must tackle fundamental challenges posed by too much or too little water that face a good half of our massive population. This even as the services sector has stolen a march on all else with a 61% share in the GDP!

Politically, if Assam slips into the NDA camp, after the assembly elections, much of the other states in the north east may well follow suit.

While this will come as a much needed shot in the arm for the BJP, after   its  recent bad showing in state elections, it will herald, (there’s that word again), the beginning of the end of Congress as a national party.

Congress hasn’t been in power in electorally important UP for over thirty years, and despite the use of a master strategist that helped Modi win the general elections and the mahagatbandhan  into power in Bihar, it may prove a bridge too far in 2017.  

Karnataka is also under threat, after Congress chief minister Sidaramiah’s controversies, and the revival of former CM Yedurappa in the BJP camp. Punjab may be a hard fight too, with AAP looking good.

Kerala also may see a change of government, and again, not to the betterment of the Congress. And joining hands with the Communists   might give it a few seats in West Bengal, but is not expected to unseat the TMC. In Tamil Nadu it is possible that the AIADMK may retain power and leave the DMK supported by Congress, out in the opposition once again.

The efforts of the ambitious chief minister of Bihar, Nitish Kumar to form an anti-BJP front nationally, is not getting much traction. This partially because of widely differing regional vested interests, and also because there is no dearth of prime ministerial aspirants.

If it is a crystal ball that one is gazing at therefore, it looks very unlikely that Narendra Modi will be unseated in 2019, given his own hard work, the weakening of internal and external opposition, the advantages of incumbency, and the TINA factor.  

For: The Pioneer

(1,099 words)

April 26^th, 2016

Gautam Mukherjee

Ola Uber Allez: Fare Turned Unfair!

Ola Uber Allez! Fare Turned Unfair

There is something fascist about surge pricing. It says I’ve got you over a barrel and so!

Kejriwal of Delhi, definitely not my favourite uncle, any more than Siddaramaiah of Karnataka, who’s impounded some 30 Uber/Ola cabs for nonsense surge pricing, have both got this one right.   

All the twaddle about algorithms and variable pricing, private enterprise, based on surges of demand in micro localities, where the cabs may or may not hover in sufficient numbers, are just so much rapacious talk about taking unfair advantage. Particularly in cruelly congested cities like Bengaluru and Delhi, with grossly inadequate public transport.

Walk away a bit, some commentators helpfully suggest, get away from the hot spots and ask the app again.

This Ola/Uber outrage has been hastily withdrawn at government threat, out of guilt and prudence, if not remorse. Meanwhile, the government in the city state continues to play ducks and drakes with pollution control.

And this, by picking on soft targets- persecuting the freedoms of private car owners who have paid road tax, all 15 years worth, to presumably drive their cars as they please.

Meanwhile, the Communists at the Green Tribunal, aided and abetted by the Supreme Court, have gleefully banned the registration of large, frightfully expensive SUVs, purchased, no doubt by the masses, at over a crore of rupees each.

They are also out to sting those numerous and modestly placed, with the temerity to buy new diesel vehicles, of any size whatsoever, with a new, 30% punitive tax!  

For the rest, the Delhi government does not know how to stop heinously polluting out-station trucks, roaring into the city every night, killing anybody in the way, not one less than a copiously spewing 15.

Nor can it dare to attack the loads of two to four-stroke engined motorcycles that buzz like flies over the streets. Or the cancer generating CNG vehicles; and certainly not the fat cat VIP cars.  

The pollution statistics meanwhile, are proving stubborn. They are little impressed with this much advertised scheme, colluding sometimes with summer breezes, sometimes not.

The Ola and Uber cab saga is meant to be about demand and supply. But, when it leans on an artificial demand created by the hubris of a state administration, it is out of whack.

There is nothing capitalist about this. It is old fashioned profiteering from protectionism – a neo licence-permit raj, particularly if this goes odd-even every month as is being threatened.

Just as well that Ola-Uber have beat a hasty retreat for now. Even as the so called free-market believers, are sulking at their scam coming apart, and allegedly refusing to ply.

It is back to the black and yellow, the three-wheeled scooter, the regulated rogues and thieves of old, who have become ubiquitous and part of our popular culture. They’ve been trying their hand at daylight robbery since time immemorial, given half a chance at breaking the law.

The argument that consumers can take it or leave this new-fangled 2X, 3X, 4X pricing from Ola/Uber, begs the question about how is this workable, never mind the strenuous justificatory babble? Why not the devil you know, if this is all? The solution may be in issuing more scooter-rickshaw licences and sending these people packing.

Sure, these foreign inspired aggregators, with billions in play, have tried to corner market share by loss-leader pricing, but nobody asked them to do so. And expensive other goods don’t justify variable pricing on the basis of how many people want to buy!

Agreed that this is a perishable, but gouge pricing at the other end of the stick cannot sustain. But then, odd-even dobara, or nine-times-out-of- ten, is not normal, every-day conditionality either.

But at the nub it is Ola-Uber’s very own devilish streak at play, disguised as free market work with air conditioning. And this in a quasi-socialist/semi-liberalised country, uncomfortable in both worlds, with more codicils and exceptions than straight laws. And a legal system that is broken.

Bleeding VC money profusely from their subsidies, despite deep pockets, Ola/Uber has withdrawn its ‘incentives’ to its free-lancing drivers/cabs.

But maybe it told its cabbies, before it called a halt, that it’s okay to go on a limited spree of loot, rapine, and pillage, just until Kejriwal uncle calls off his Mengele style experiment.

But clean air apart, the next time, Ola/Uber must try conning a less price sensitive people. Most inconveniently, they happen to know their onions, out in the sun, or listing in the shade; and so do their political masters.

For: The Quint

(752 words)

April 20^th, 2016

Gautam Mukherjee

Growing Government Revenues

Growing Government Revenues

India is now at the top of the heap globally in terms of GDP growth at 7.5%, a full percentage point higher than the six times bigger economy of China.

And yet, even with a PPP rating of $7.5 trillion ( $2 trillion, in flat dollar terms), we seem to be much too poor to finance our own development, let alone take our proper place in the comity of nations.

The prime minister is frantically looking for, and fortunately succeeding at, garnering unprecedented levels of FDI (enough to wipe out our CAD by itself), during his hectic foreign travels.

This, even as China uses its deep pockets as a potent instrument of its foreign policy in many parts-Nepal, Pakistan, Sri Lanka,  several countries in Africa, just to name a few.

India has no earthly hope of keeping up with Chinese largesse or developmental work, even though we too, make modest contributions in places like Afghanistan and elsewhere in the SAARC region. Our role in the UN is also constrained by our finances. All of it put together affects both our credibility and stature in the broader international arena, and even in our immediate neighbourhood.

Whatever gains we have made is because of difficulties being faced by the developed world making our relative buoyancy stand out as a ‘beacon of hope’ in a troubled world. And then there is the relatively calm domestic security situation that is attracting even West Asian countries like the UAE, Saudi Arabia and arch rival Iran, towards India.

But is it really intractable poverty, or a paucity of good policy that is keeping India down?

The Current Account Deficit (CAD) is wiped out, thanks also to vastly lowered oil bills, and the fiscal deficit too is tightly controlled at 3.5% of GDP, but our revenue deficit is immense and the biggest economic dampener in our national balance sheet.

We cannot, it seems, generate enough money and resources to fund ourselves, let alone our aspirations and ambitions.

The finance minister allocates inadequate amounts to a hundred things in every union budget, in almost token recognition, because  that is all he can afford. The States are always complaining, and even our defence budgets are not supported properly.

Our indirect taxation, which the actually government survives on, is too high. It hampers commerce and industry when combined with rampant petty graft and corruption that add to costs. And our direct taxation applies to too few in the population. Also, our inadequate and antiquated infrastructure mars our efficiency, quality and competitiveness.

What is in the way is a lack of political will, to grasp the nettle and solve this gross imbalance.

Still, we may be heading in the right direction, not so much because 0f empty government threats to bring back black money and arrest capital flight, but because of more modest but extremely far reaching structural initiatives.

We are indeed trying very hard to improve our roads, ports, airports, railways and freight corridors. Along with alternate sources of energy such as nuclear power and solar, we are also clearly headed towards becoming electricity surplus soon. This, just as we became food surplus after the concerted efforts of the Green and White Revolutions.

We remain essentially food surplus even today, despite a much increased population. But again our food storage/processing, material handling abilities, etc. continue to be largely primitive, leading to vast wastages and spoilages. 

Financial inclusion at the bottom of the economic pyramid via the Pradhan Mantri Jan Dhan Yojana  has garnered 200 million new bank accounts of the poor and an aggregate of $ 4.8 billion in deposits as of February 10, 2016. Perhaps this $4.8 billion was essentially in cash, from India’s parallel black economy. It has now entered the formal banking system. Distribution of subsidies directly into these very same bank accounts by linking it to the bio-metric processed Aadhar cards, is another step to keep the white money subsidies paid by the government white and productive in the economy.

And now with the launch stage reached for the 10 new small banks, the 11 new payment banks, licensed over 2015 by the RBI, more deposits, loans and payments will be made through the formal banking system.

These will not involve the big players and banks struggling with scandalous levels of NPAs. It is directed instead to millions of  heretofore unbanked small traders, micro, small and aspects of medium-sized enterprises, a good deal of the unorganised sector, small farmers, migrant workers etc. Loan sizes will be in the region of Rs. 25 lakhs each for at least 50% of them.

While most poor people fall below the radar when it comes to Income Tax, their money too is now going towards enriching the nation, even as they are provided deposit/credit facilities and insurance, via millions of new branches in places that had no banks.

The payment banks will operate in collaboration with post offices, mobile telephony operator networks, supermarkets and so on. Together, it brings the financially invisible, anywhere up to half the population, both in urban and rural areas into the formal grid.

Most of these people are in no danger of being brought into the tax net via stealth, because they do not earn more than the current exemption limit. In fact, only 3% of our 1.2 billion are actually PAN card holders. Income Tax and its cousin Corporate Tax therefore need to see a vastly increased footprint in the interests of equity and justice, or be done away with.

So either more people, currently exempt, such as the rich farmers and companies catering to the agricultural space, need to be brought into the tax net, or the Income and Corporate taxes need to be abolished in favour of a near universal Expenditure Tax instead.

 This Expenditure Tax idea has been mooted in the run up to the general elections of 2014. It was suggested that it be applied to all bank transactions above a minimum threshold limit, and be miniscule in size, in the order of 0.2% of the value of each transaction.

With rising costs of big government that is the norm here, and the relentless pressures of awakened aspirations, the old methods and thinking will neither suffice nor sustain.

 It is true that a reliance on technology will reduce operating costs in many instances, but grow our revenue base, we must.  We cannot keep flogging the same 3% and expect adequacy!

So revenue generation too must become more inclusive, of the many who can afford to pay a small expenditure tax. This will painlessly set right the nation’s chronic revenue deficit and unleash unprecedented double digit growth.

For: The Pioneer

(1,106 words)

April 12^th, 2016

Gautam Mukherjee

Private Boot-Strap Banking:Start For Small Banks

Private Boot-Strap Banking: Start For Small Banks

Here comes the latest instalment in the effort to include the financially invisible and perennially unbanked: small banks.

The resultant boost, to both the ‘official economy’, and ‘white’ bank credit, at reasonable rates, can only spur GDP growth .

But these small banks, are aimed, not at individual women entrepreneurs at the absolute grassroots level, like in the Grameen Bank of Bangladesh, but established small traders, service providers, micro and SMEs, the massive unorganised sector, and small farmers.

The loan sizes here are intended to be about Rs. 25 lakhs each for at least 50% of the bank’s portfolio, though the rest can be larger. The promoters can start with owning 100%, but need to bring their equity down gradually to 40% by year five, and 26% by year 12, per the RBI guidelines.

FDI investment is permitted, up to 49% automatically, and 74% after approval, but they need to get in at the start, as none other than the promoters can own more than 10%.

Minimum net worth required is Rs. 100 crores, and since prior experience, in local banking of 10 years, is required, you need to be an existing entity, with a profile to match.

Of course, much bigger fish want to start small banks too, but the RBI will proceed cautiously. It sees small and payment banks as ‘niche’ operations for now. It has licensed 2 new full service banks, 11 payment banks, and 10 small banks over 2014 and 2015, to kick off.

To answer sceptics, yes, it will be difficult to avoid infiltration and proxy controls via a juggling of shareholding. But extending credit to large numbers of productive and responsible people, is worth taking the risk. Besides, the classic solution to monopolistic practice, and even efficiency, is privatisation and competition. You cannot grow an economy if there is no access to enabling funds.

Now, the very first small bank, the Jalandar based Capital Small Finance Bank Limited (CSFB) is about to open, on Baisakhi.

It will morph from the Capital Local Area Bank, in business for 15 years, with 700 employees, operating via 49 branches. In its small   bank avatar, it hopes to grow to 216 branches and spread to other states.

As a local bank, it has a turnover of Rs. 3,000 crores, with a profit of Rs. 16 crores, and a net worth of Rs. 116.68 crores. It wants to grow its top-line four-fold, to Rs. 11,800 crores by March 2021.

Informal but usurious micro-financing, the village money-lender, larger straight-up chit funds, vast networks of ‘para-banking’, have been working in the sub-continent for a long time. These accept tens and hundreds of rupees in deposits, and lend to a scale, from mere thousands, to much more, but mostly in cash, both ways.  And this, often to people at the bottom of the pyramid, with no influence and collateral, principally on trust, and the strength of their network.

The present large banking landscape has the PSU banks controlling 77% of badly distressed loan portfolios, with just 36% of the market capitalisation. The situation involves politicians, bankers and influential businessmen, rather than viability. This will have to change.

This latest initiative on competitive financial inclusion comes in sequence. First came this government’s Jan Dhan Yojana ,that has enrolled 200 million hitherto ‘unbanked’ account holders, aggregating to an impressive $4.8 billion in deposits, into  the big banks, as on February 10^th, 2016.

Then, recently, the linking, by law, of bio-metric Aadhar cards to these very bank accounts belonging to the poor, for the direct receipt of subsidies, minus leakages en route.

And now, we have small banks, to serve those who are some steps up the economic ladder, to be followed by the payment banks, in collaboration with post offices, major mobile telephony providers, supermarkets etc.

But there are large threats too. Dreaded Ponzi schemes and scandalous looting have plagued giant chit funds. Many of the cooperative banks are dodgy and self-serving; as are some in the NBFC space.

Will this new initiative work any better in this environment? It will certainly bring millions of the unbanked into the mainstream. As for the skulduggery, private capital at risk, plus competition, will check dishonesty, better than just regulatory supervision ever can.

For: The Quint

(705 words)

April 11^th, 2016

Gautam Mukherjee

BOOK REVIEW: GITA PRESS by AKSHYAYA MUKUL

BOOK  REVIEW

Title:                    GITA PRESS AND THE MAKING OF HINDU INDIA

Author:                AKHSHAYA MUKUL

Publisher:            Harper Collins Publishers India, 2015

Hardback price: Rs. 799/-

Gita Press: Moulding The Idea of India

This excellent book and its timing obliquely posits the identity issues of Hindustan versus Pakistan.  Islamic Pakistan may be Muslim in its sine qua non, but seems to have more fragmentation issues than India, always, seen, in context, like it or not, as Hindustan.

And now, with the idea of the Nehruvian India under siege from certain quarters, is a new, blatantly majoritarian but inclusive India, under construction?

Contemporary Indian historians who treat history as a traditional discipline to tell it largely like it was, are few and far between. Most turn the telling into a pulpit.

There is the erudite Bengaluru-based Ramachandra Guha. There is also the resident Scotsman with Indian sensibilities, William Dalrymple. And now, joining the ranks of this select set, comes a self-effacing journalist-historian, still working hard for the Times of India, Akshyaya Mukul.  

Mukul has written an admirable and even-handed book, based on painstaking research. It will doubtless prove to be a seminal reference work for its wealth of detail on the role of Hindu consciousness, and its effect, both on the formation of modern nationalism, and indeed, the evolving idea of India.

The enduring Gita Press, in Mukul’s book, was a force to reckon with, not so much because its singular mission  of ushering in a Hindu Rashtra, but because it gave space, voice and prominence to some that unequivocally wanted to do so, and aired all their associated concerns.

The Gita Press and its publications, books, pamphlets, magazines in Hindi and English, have influenced and informed generations of Indians and admirers of India, at home and abroad, for nearly a century.  

It continues to do so today, to a much lesser extent. Its primary salience as a mass-influencer is much diminished. This is the age of globalisation, the Internet, 24x7 satellite TV, and an evolving national identity that is leaving some of the burdens of contemporary history behind. It is now a demographically young nation, with 65% of the 1.2 billion population born well after Independence, in the 15-35 year age group.

India today is also visibly shedding its post-colonial, post-socialist skin, religion too hasn’t got the same frisson. It is en route to becoming one of the leading, if not top level nations of the contemporary world.

Gita Press made its greatest contribution, to an unstated mission, that of assisting Indians to believe in their own ancient culture in the face of the fierce imperial policy of divide and rule, and to provide a reliable source of  intellectual/spiritual fuel to the yearning for independence.

By the forties, Gita Press succeeded in providing a template, as much for the acceptance and formation of a majoritarian national identity, as a trampoline for rejection of several of its suggestions and implications.

The alternative discourse favoured a non-casteist, egalitarian, affirmative actioned, secular order, influenced by foreign ideas, favouring and protecting the minorities, and a distinctly socialist vision.

Meanwhile, true to its name, Gita Press sold over 72 million copies of the Gita, priced affordably, amongst other scriptural texts from Tulsidas, the Puranas, the Upanishads and so on, also running into sales of millions of copies.

But through it all, Gita Press remained an essentially private effort, a publishing house in its commercial bare-bones, run by its long-time Marwari owner, Hanuman Prasad Poddar, taking on from co-founder Jaydayal Goyandka. It is based in the smallish town of Gorakhpur in U.P., but has long enjoyed a kind of cultural centrality in Indian life.  This via its Hindi language Kalyan magazine, and its English counterpart Kalyan-Kalpataru, which even now has  subscriptions of over 200,000 and 100,000 respectively.

Kalyan’s tireless helmsman Poddar roped in most of the luminaries from various fields over his long stewardship.

Many prominent Indians in public life, famous Indian writers such as Munshi Premchand, poet Harivansh Rai Bachchan, and illustrators like  Satyendranath Banerjee, recommended  by Christian clergyman C.F. Andrews, then located in Shantiniketan, and also a contributor- wrote/ painted/drew for Gita Press.

Other foreigners and indophiles, such as Russian painter Nicholas Roerich, also contributed towards its spiritualist world-view.

MK Gandhi certainly wrote articles for Gita Press’ Kalyan magazine,  as did Rabindranath Tagore, even if Nehru resolutely did not.

Nehru did not even deign to send  Kalyan a short message of good wishes. Other marked socialists with their antipathy to religion, had the same attitude as Nehru towards Gita Press.

Contributors also included eminent others in the Centrist space of independence era and after public life, such as Annie Besant, C Rajagopalachari, S Radhakrishnan, Lal Bahadur Shashtri, Rajendra Prasad. Madan M ohan Malaviya was an ardent backer.

The Hindu Right was prominently featured, with Poddar ignoring the rivalries of organisations such as The Arya Samaj and the Sanatan Dharma Sabha.

Gowalkar of the RSS sent in several articles. As did Shyama Prasad Mookerjee, the founder of the Bharatiya Jan Sangh. And many sadhus with a political bent of mind also contributed, such as the once well-known Swami Karpatri Maharaj.

Muslim contributors included professor of philosophy at Allahabad University, Mohammad Hafiz Syed and journalist Syed Kasim Ali from Jabalpur. But as the demand for Pakistan formed and intensified, the Muslim League demanded that its adherents be counted as Muslims first. The Gita Press, in turn,  sharpened its attack, and saw Jinnah as  a modern day Aurangzeb.

Women writers were few, in conformity with the Gita Press’ patriarchal world view, but prominent amongst them were R.S. Subbalakshmi, an educationist from Madras, Raihana Tyabji, a Krishna bhakt and ardent follower of Poddar, and Vijaya Lakshmi Pandit, Nehru’s sister - the latter appearing only in reprint of a Navbharat Times piece.

Today, with a section of the population feeling threatened at the reappearance of  calls for a Hindu Rashtra, the calls for a Ram temple at  Ayodhya, the abrogation of Article 370 in Kashmir, the conflicts over cow slaughter, a uniform civil code etc., the seminal and dogged work done over decades by the Gita Press has a fresh relevance.

In 2016, it can be seen, that many of the issues supported by Poddar and Gita  Press over the years: cow protection, opposition to the Hindu Code Bill, and the Hindu Succession Act, are far from resolved and settled issues.

Particularly, as the Muslim Personal Law Board and leading Islamic seminaries like the Deoband are, even now, having to be reminded that its fatwas can only be accepted voluntarily, and do not have the force of law - as was explained by the Supreme Court recently.

Poddar died in March 1971, after a nearly five decade run, and has been succeeded by Radheshyam Khemka. Times have changed, but even otherwise, Khemka does not have equivalent stature. Still, he upholds the orthodoxies of the Poddar doctrine unchanged, and grew up in the ethos and under the mantle of the Gita Press himself.

For: The Sunday Pioneer BOOKS

(1,130 words)

April 8^th, 2016

Gautam Mukherjee

For Sale: Shady Panama Hats, Tailors, Laundromats

For Sale: Shady Panama Hats, Tailors, Laundromats

Ramon Fonseca, of the suddenly famous law firm Mossack & Fonseca  housed in an impressive steel and glass building in the canal country of Panama, could be the real Tailor of Panama.

Has John Le Carre’s fictional Harry Pendel just come to life? Except that this Fonseca tailor-makes companies to suit.

He does so for the rich, famous, powerful, and dangerous too. The fictional ex-convict Harry made bespoke suits for the Who’s Who of Panama, pretending he was Savile Row, not prison-craft. Plus he tailored information for MI6 to overthrow the government.

The juicy ‘Panama Papers’ from Fonseca, involving laundered money, dodged sanctions, and evaded taxes, some 240,000 companies over 40 years, has just come to light.

Fonseca insists his is a respectable firm, perfectly legitimate and he is just a ‘victim of an international campaign against privacy’.  

But this line isn’t working, particularly when the top link in the scandal involves Vladimir Putin, and at least $ 2 billion. Xi Jinping, running an anti-corruption drive in China, along with protectee Nawaz Sharif, features too.

The client list roll calls kings, 72 former heads of state, prime ministers, lawyers, international mafia, solo gangsters, politicians, dictators, businessmen, bankers, actors, footballers - and FIFA too.

It is so ubiquitous that it seems as if those who are not using Mossack-Fonseca must be using someone else. But, the tax haven/offshore company business is badly threatened. Discretion is clearly breached. The old pen- and-ink code secreted in vaults has given way to hackable computers despite encryption.

This present lot, passed on over a year ago, is from just one anonymous ‘partial hack’. It exposed 11.5 million documents, 2.6 tetrabytes, on 214,000 shell companies, set up between the 1970s and 2016.

The trove was sent first to the German paper Suddeutsche Zeitung, and then distributed to a filmy-sounding ‘International Consortium of Investigative Journalists’, in 78 countries, and 107 media organisations, to make sense  out of.

This is practically everybody in the international media business.

India received its portion into The Indian Express where staffers have been beavering away for over eight months on code-named ‘Project Prometheus’. Discovering ‘beneficial ownership’ through a thicket of proxies is no easy task! That’s where Ramon Fonseca earns his money.

The analysed news has now just broken, and unlike in the old print era, there are no ‘yesterday’s papers’. This stuff is going to be immortal in cyberspace.

The Indian actors on the list, pose various dilemmas of culpability or lack thereof. It is to do, at least partially, with the ponderousness of a closed economy opening up at a snail’s pace.

All the shell companies set up for Indians before 2004, were simply not allowed for resident , repeat resident, Indians. But, if you had a non-resident friend or relative signing up, there is no prima facie wrong-doing involved.

Then, if there is business and profit, and resident Indians are indeed ‘beneficial owners’, there may be a case of possible tax evasion. But, usually it is seen to that there are no profits to tax, given the expensive lawyers and financial experts that attend. And people turn NRI at will.

 Why go far. It’s amazing how many domestic companies with prosperous promoters/shareholders, happily run at a loss year after year, all profits presumably gone to cash!

The legal position is also typically tortuous. In 2004, the RBI allowed, for the first time, $25,000 per resident individual p.a., to be taken abroad officially, no questions asked. Even this amount was quite enough to set up shell companies, because nobody explicitly said you couldn’t.

This was subsequently liberalised, in stages, to $250,000 per individual, reduced in a foreign exchange crunch, increased again etc.. So now, individuals and families could buy property, shares, but still, though it was not made crystal clear, set up offshore companies.

In August 2013, an ODI, overseas-direct- investment permission was, at last, granted by the RBI.

Early days as it is, many named Indians, have responded they are not the ‘beneficial owners’ anyway.

It will take a month of Sundays to prove anything, and it is doubtful if the Indian authorities have the expertise, political will, or the manpower to accomplish the task.

It makes for a fine entertainment though- imagining so many prominent people caught in embarrassing circumstances. Look at the names: KP Singh, Vinod Adani, Harish Salve,  Jehangir Sorabjee,  Amitabh Bachchan, Sameer Gehlaut, Iqbal Mirchi, Garware,  Shishir Barjoria, Onkar Kanwar, Poonawalla, Rajendra Patil, the Salgaocars, Sivasailam, Rashid Mir.

There are over 500 Indian names, with more specifics to be revealed.

What prompts this? Maybe income and corporate taxes applied to a mere 3% of the population instead of everyone. And of this hapless 3% , a miniscule section are  rich enough to need Panamanian help.  Then consider the onerous indirect taxes applied. Plus the black money sent off via hawala that needs tending.

The ambiguous drafting of our laws and administrative orders leaves  room for interpretation. Smart chartered accountants are trained to exploit loop-holes, even now, with the Modi government promising stern action. Its politics versus greed, but greed has guts, imagination, and enormous ingenuity.

For: The Quint

(850 words)

April 4^th 2016

Gautam Mukherjee