BOOK REVIEW:TAMAL BANDYOPADHYAY:FROM LEHMAN TO DEMONETISATION

BOOK REVIEW

TITLE: FROM LEHMAN TO DEMONETISATION-A  Decade Of Disruptions, Reforms  And Misadventures

AUTHOR: TAMAL BANDYOPADHYAY

PUBLISHER: PENGUIN  RANDOM  HOUSE INDIA, PORTFOLIO, 2017

PRICE:  Rs. 599/- IN HARDBACK

Taming the Bucking Bronco of Bad Debts

Tamal Bandyopadhyay, the author of this book composed of selections from his columns from 2008 onwards, writes for The Hindustan Times Group’s pink paper Mint. This book is divided into two sections- the first on banking and its concerns ex 2008. 

Bandyopadhyay chronicles the various dilemmas and conundrums of a banking sector trying to stay solvent despite regulatory constraints like the non-interest earning  cash reserve ratio (CRR), tiny deposit retail banking which loses money, being besieged by wilful defaulters, and the pressures of politically dictated but massive loan waivers.

The second section has engaging pen portraits of some of the larger figures in the banking space that he encountered over a 20 year career. The point of the latter is probably a thank you from the author for the goodwill he experienced from many of them. But, as a reader, one is left wondering why the Indian banking sector is not bigger and much better than it is, given all this apparently stellar leadership. They all seem to be propped up by the relative size and stature of their office, with the exception of the Goldman Sachs India chief written up in the back of this section. In the end, size matters.  

In turn, Tamal Bandyopadhyay has long been recognized by the movers and shakers in section two of this book, as one of the country’s finest business journalists.

Bandyopadhyay has also worked in Business Standard earlier, and has written books on both the Sahara Group and Bandhan Bank. He brings his university degree in English literature to bear on complex financial matters, albeit with the help of good research assistants. This makes his columns not only interesting and readable, but clear and lucid to the layman.

And thanks to his selection, most of the content of this book remains relevant,  even though the reader  is looking at essays in the rear view mirror. These range from the 2008 financial crisis, India’s response to it, subsequent events right up to the 2016 demonetization , which he thinks did hit black money hard, but for how long?

Indian banking today appears to be paying the price of the low interest rates, exuberant lending, and lax regulatory systems,  including the expedient of loan recasting, over the last decade.

Climbing steadily, the discovered gross non-performing assets were, in 2017, already at 9.6% or around Rs.10 lakh crores, dwarfing most union budget allocations.

With even stricter prescriptions imposed, against rolled-over loans, bad loans under Rs. 100 crores, regulatory breaches, runaway scamsters, this percentage could climb well into double digits, and stay there for a while.

This won’t destroy the banking system by itself, particularly because it receives regular doses of recapitalization using tax payer money, but it does cast a pall over its functioning .

But, too much regulatory and supervisory caution in the aftermath, will also cripple lending. And this flies in the face of the growth necessary to lift India out of emerging nation status.

The government’s recent and unprecedented efforts to access untroubled and unencumbered assets and businesses of willful defaulters, via a clutch of new and strengthened laws, will certainly yield results, and haul in some of the monies owed.

But, a lot of the bad debt is not wilful default. This particularly applies to the power and infrastructure sectors, where borrowers are in the soup because of governance related blockages including environmental objections, adverse litigation, non-payment of contractors, and land acquisition. And remedy means the rescue and resuscitation of various projects into economic viability and completion by untangling all this. Again, the government is on the job, and getting results, but not as fast as one would have liked.

At least one devil in the detail, that of inflation, as high as 13% in 2009, has been tamed to under 5% today. Provided oil prices do not skyrocket afresh, low inflation should prevent any increase in interest rates.

The fiscal deficit too, for all the challenges this government is facing, is stubbornly being held down to under 4%. And the Indian economy is the fastest growing major economy in the world, at around 7.5% GDP growth, projected in fiscal 2018. It is also about to become the 5^th largest economy in absolute terms, overtaking, if only just, Britain and France, to secure its spot.

Bandyopadhyay expects, in his epilogue to the book, the only bit that talks of the future, for PSU banking to shrink to 60% of the market share, down from 70%, by 2025.

But is there not a case for privatization of the entire sector, given that government owned banks seem to have become a free source of public money via a nexus between crooked businessmen   and politicians?

Bandopadhyay expects the non-banking finance companies ( NBFCs), regulated “lightly”, to concentrate on financing affordable housing going forward. Well, at least there is a tangible asset to hypothecate in this!  Very interestingly, he points out that the Indian mortgage market is small yet, accounting for just 9% of GDP at Rs. 12 trillion, growing at about 19% per annum.

This is in contrast to the US and the UK where it is 81% and 88%  of their GDP. China is at double of India, and in small countries  such as Denmark has a mortgage market  at 104% of GDP.

As for technology becoming all pervasive, Bandopadhyay holds out the argument that “Bharat” if not India, will still need interactive banking with human interface for a period much beyond 2025.

This is a collector’s item of a book,  as YV Reddy, the former RBI Governor put it, and well worth a read, both for its historicity and its prescience.

For: The Sunday Pioneer BOOKS

(939 words)

February 23, 2018

Gautam Mukherjee

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BOOK REVIEW: ON THE TRAIL OF THE BLACK-Edited by Debroy & Desai

BOOK REVIEW

TITLE: ON THE TRAIL OF THE BLACK Tracking Corruption

EDITED BY: BIBEK DEBROY & KISHORE ARUN DESAI

PUBLISHED BY: RUPA PUBLICATIONS, 2017

PRICE:   Rs.595/- IN HARDBACK

Collusive Corruption & Flouting The Law

This collection   of 16 essays, written by the staffers of Niti Aayog, is called an anthology, as in poetry, by Rupa, its publisher. However, it deals with the cancer of black money, which has penetrated every nook and cranny of the economy.

Indeed, most other countries have a parallel cash economy, but rarely on this scale, or to this extent. This book was published in late 2017, and was probably intended as a set of theoretical prescriptions think- tank style- that is, neither radical, nor controversial.  

Given the goings on in the corporate and PSU banking sector, being revealed in all its shocking and seamy detail, a book like this has suddenly gained greater relevance and topicality.

The brazen diamentaire and disposable pen scams raging like a storm outside, threaten to crash the PSU banking system. It is already reeling from an unprecedented Rs. 10 lakh crores in bad debts, incurred during the preceding UPA rule from 2004-2014.  

But this government is apparently reluctant to act with aggression against the perpetrators. It is awkward and inept when it does, ponderous, busy shifting the blame to expendable minor factotums and the previous dispensation.

The links, for example between the Nirav Modi-Mehul Choksi families and the Ambanis is surely embarrassing. They  have been beneficiaries of collateral free monies running into thousands of crores from the government controlled PSU banks, quite a lot of it in the last 4 years during the currency of this regime. Likewise, there are the Kothari family’s links with the Adanis.

The rot of systemic corruption runs deep. The fountainhead of black money generation in the Indian economy is, of course, the political process. This is explored in an essay by one of the two editors of this book, Kishore Desai.

The elected representatives of the Government of India come to power using truck loads of unaccounted for, tax-evaded cash. While something is being done about it by this administration, particularly in the area of political donations- it is unlikely to prevent massive cash usage coming straight from candidates in future elections too. This, in gross violation of prescribed overall campaign fund limits, let alone the ban on cash for the purpose.

The Real Estate sector can, and does, absorb large tranches of cash.  Again it starts at the political level. Land prices can be manipulated ruthlessly by politicians in power who have the authority to make their fortunes by changing “land-use” norms. They can convert agricultural land around expanding cities for example, valued generally by the acre or hectare, into commercial, residential, institutional land, at the stroke of a pen.

Politicians can renotify pristine areas into new cities, as in the green-field capital of Andhra Pradesh. This turns its land value to be calculated in square yards and even square feet, rocketing up its price.

It is the easiest way for State Chief Ministers and their political parties to accumulate fabulous but unaccounted for wealth in cash. This by simply forming a nexus with builders at the detrimental expense of the original landowners.

Bibek Debroy, one of the editors of this book, smoothly meditates on this outrage, and ways to mitigate it, not, one might add, with very much conviction. He writes on the digitization of land records at greater length than the scandal surrounding CLUs.

Various statistics cited by this book are plainly horrific. Misinvoicing, says one chapter, “cost the country more than $40 billion in 2008”.  So imagine the amount 10 years later in 2018.

On the plus-side, it is more difficult for all except the smallest enterprises, which are exempted, to get away with invoice manipulation, since the advent of GST. It is, amongst other things, a transparent online process for indirect taxation.

Evasion of taxes, gaming of systems, bribery, subversion, forgery, fraud, scamming and larceny are rampant everywhere though. The Prevention of Corruption Act 1988, and its amended version from 2013, is distinguished by its loopholes and has as yet, scalped very few. Likewise the Benami Properties Act with new teeth, which should have garnered perhaps Rs. 100,000 crores worth  by now. So far, the government proudly announces, it has confiscated Rs. 3,500 crores worth.

Executive government agencies, such as the Central Vigilance Commission (CVA), the Enforcement Directorate (ED), the Central Bureau of Investigation (FBI), the Central Board of Direct Taxation (CBDT) - even the Intelligence Bureau (IB), the National Investigative Agency (NIA), and the Research and Analysis Win g (RaW), turn in indifferent results, often marked by sub-standard work that doesn’t stand up in court.

The three arms of government- the Executive, the Legislature, and the Judiciary, are also none too efficient.

The Judiciary is not only extremely over-burdened, increasingly biddable with inducements, and slow, but often resorts to copping out altogether by “reserving” its judgements.

The Indian Constitution, probably the longest, most disjointed and complicated in the world, is often subverted in practice and cynically used by rival politicians as a battering ram.

Attempts such as the Lok Pal, the Lok Ayukta, and the Right to Information Act  (RTI), all designed to promote greater accountability in public life, have also not succeeded to any appreciable degree either.

The problem everywhere is the near immunity from being held to account built-in by the permanent cadres of the government, its bureaucracy, as well as the political classes.

It is very difficult, except in theory, for the citizen to do much beyond vote when elections come around, at least as far as the politicians go, and then get out of the way till the next time.

This book helps mildly raise the pertinent issues and the pervasiveness of  the black economy. It is up to the evolution of our education, awareness and democracy however, to lift this country out of the grip of its more feral elements.

For: The Sunday Pioneer, BOOKS

(963 words)

February 21, 2018

Gautam Mukherjee

The Modi-Choksi-Kothari System Gaming:: Power Does Not Brook Weakness

The Modi –Choksi-Kothari System Gaming: Power Does Not Brook Weakness

Jimmy Carter, the millionaire Peanut Farmer- Physicist- Naval Officer- Governor   and one-term President of the US, from Plains, Georgia, projected weakness.

This despite his essential and almost improbable decency, for a politician. But  events as they unfolded told us that he couldn’t do that in the most powerful political office in the world and be forgiven for it. That is why Carter lost 49 out of 50 states to Republican Ronald Reagan in his second term campaign.

Of course, luck too, did not favour Carter, with the Iranian hostage crisis dragging on throughout the campaign. But it ended, ironically, almost as soon as Reagan was elected.

Carter wore cardigans and conducted televised fireside chats with the American people on folksy, largely non-political themes- rather like Indian Prime Minister Narendra Modi’s quaint Man-ki-Baat sessions on All India Radio (AIR).

Carter prayed frequently in public, and put his Baptist faith on display, just as Prime Minister Modi does, visiting an array of temples around the country and abroad.  Jimmy Carter spoke famously of lusting “many times” and committing adultery in “his heart” in a Playboy interview. Prime Minister Modi makes no comments whatsoever on sex, but he does speak up about the need to promote and preserve the “girl-child”.

The American people, despite Carter’s winning smile and Southern drawl, were not impressed. The Indian people, on their part, as the Modi administration completes 4 years, have long expected Narendra Modi to put a legion of corrupt people from the UPA in jail. Indeed BJP supporters cannot understand why Modi as PM is so timid. The electorally mauled Opposition, unable to believe its luck, counter attacked within months of May 2014, and have never stopped since.

Carter won his mandate as a Democrat President after Richard Nixon had gamed, quite unnecessarily, as it turned out, the American political system. Nixon escaped jail time by virtue of a presidential pardon from his mid-term successor President Ford, who was both unelected and dependent.

Nixon escaped a near impeachment in exchange for his resignation half way through his second term, which he had won handsomely, without any real help from the Watergate break-ins to the Democratic Party headquarters, that brought him down.

Modi’s timidity in office with an inexplicable surfeit of tolerance for corruption and scams from the UPA years has emboldened every crook, dacoit, and anti-social on his watch, to carry on regardless.

They have realized Modi’s sonorous bark on the hustings in 2013 and 2014 is actually a substitute for his non-existent bite as Prime Minister. Not only are corrupt people allowed to strut about abusing the BJP, the Sangh Parivar and the Prime Minister himself, but sedition, anti-nationalism, fringe organization atrocities, rapes, murders, including those that are politically motivated, insolent dissidence within the BJP, all appear to be treated as business as usual.

The challenges posed by a Rs. 30,000 crore systems failure in the PSU banking system brought about by Nirav Modi and Mehul Choksi, is yet another demonstration of this strange lack of consequence.

Things appear to be the same in Modi Raj, just as it was in the UPA years,  for the rich and well-connected.

There is quite a hue and cry after the offenders have fled abroad under the noses of this Government, and its sleuths, as did Vijay Mallya before this, and Lalit Modi before him. It remains to be seen whether they, or indeed any of them, are extradited back to India to answer for their multiple violations of a plethora of laws. These include money-laundering, shell companies, benami deals, round- tripping,  hawala using black money, over and under-invoicing, grand larceny, fraud, loan default, etc.

These crimes come on top of almost 10 lakh crores worth of bad debts racked up by a score of mostly private companies in the UPA years between 2004 and 2014. And now a Gutka businessman cum throw- away pen manufacturer from Kanpur, has just added a further Rs. 5,000 crores in defaulted on loans.  

The financial system rot in the nationalised banks is deep and almost endemic. Yet,  very little preemptive striking is being done by the Modi Government. It  seems content to hide behind the so called due process of the law. This even when it is well known that the legal system is over-burdened, broken in most parts, and extremely slow.

The investigative agencies such as the Enforcement Directorate (ED), The Central Bureau of Investigation (CBI), and so on, are leaky ships themselves, with informants and subverted operatives, whispering warnings, in cahoots with the thieves. Supervising Bureaucrats seem lethargic, demotivated, ignorant and deeply compromised. The political will and competence atop this ineffective edifice in the Home, Law, Finance, Company Law Ministries too is also sorely lacking. Ditto in the Reserve Bank of India (RBI).

While the Prime Minister and indeed the PMO cannot fairly be held responsible for the carelessness of various operational units and ministries directly tasked to look after the various checks and balances which are supposed to exist, he is the one who has to find a solution.

Almost everything, from the Indian Constitution, to the legal system, the perpetual electioneering, the judiciary, the functioning of parliament, the historical burdens of Article 370 and 35A, the battle readiness of the Armed Forces, is in need of reform and renewal. It is a formidable task, but even so, it can and must be tackled.

But while this Government has shown signs of being serious in this regard- the implementation of GST, the Bankruptcy Act, the Benami Act, the reformed Company Law, RERA, OROP is evidence, it is not being tough enough on those who break the law. It cannot afford to continue with this. The Indian people want to see the corrupt punished. Nothing less than that will do, if this Government’s leadership is not to meet the fate of one-term President Jimmy Carter.

For: SirfNews

(977 words)

February 19, 2018

Gautam Mukherjee

The Riches Of The 3rd Biggest Economy Underway Belong To all Indians

The Riches Of  The 3^rd Biggest Economy Underway Belong to All Indians

Ten days after the budget proposals of  February 1^st, it seems to be a blueprint for what the Modi Government proposes to deliver till 2024, and perhaps beyond. It is a game-changer because it has shifted the goal posts from lip-service to the poor and disadvantaged, to serious action.

  

Conventional political logic all this time had it that rural poverty, education, and

health are bottomless pits of want and thankless effort. It is best staved off at

election-time with  feudal mai-baap style doles and soaring rhetoric of the garibi hatao variety accompanied by a pogrom or two against the rich .

For a Government to take  the disadvantaged on squarely is both startling and revolutionary. To do so with a constructive programme of elevated farm prices, incentives and tax benefits to small and medium enterprise, senior citizen benefits, massive outlays for education, health, and a Rs. 5 lakh each  medical insurance programme for 500 million people is impressive by any standards and provides a wealth of talking points on the electoral stump. Indeed Modi’s rally at  Bengaluru showed a reenergized Prime Minister blowing hard on the electoral conch.

The  reach and transformational scale of the planning suggests it has envisaged at

least a 15 year run for the BJP led NDA.  It may seem audacious to think like this some 11 months before the next general election, given the noise, heat, abuse and derision from a panicked Opposition. But let us remember 15 years a modest ambition, in comparison to Jyoti Basu’s 30 plus year Left Front domination in West Bengal.

Meanwhile, this year, 2018, India is already expected to become the 5^thbiggest economy in the world, just overtaking Britain and France.

For those woe-begone over the singular, faux Socialist focus on the disadvantaged, poor, and struggling, apparently ignoring the middle class and fat cats of business and industry, there is a need to rewind just a little bit.

Modi declared at Davos in his key-note address barely a week before, that he wanted his Government to devise mechanisms so that the Indian economy can double to $5 trillion in GDP by 2025. This would also make it the 3^rd biggest economy in the world in just 8 years time.

Critics think that Modi forgot this as soon as he came off the mountaintop ski-resort  That he spoke of globalization being inevitable there but tightened the screws on all imports and even foreign car assembly in-country and in the budget. But,  the Government does have a resource crunch if it is to nearly  hold the line on the fiscal deficit.

But read between the lines, and place in context, and  there is reason for optimism. It is not just the softening tone of Chinese hectoring post our 10 state ASEAN showing at Republic Day on the 26^th of January, flanked additionally by the Japanese Foreign Minister. Not only is trade sure to grow with this block, but military ties are also likely to proceed apace. Given the pressures felt at Karachi and Gwadur ports after the commissioning of Chabahar and the routing of Afghnistan’s trade through it, the Chinese have suddenly offered to discuss PoK in the context of the CPEC with us. There can’t be much in it, of course, because they will surely not decide to throw Pakistan under the bus like the Americans already have.

And the daily threats on Doklam have been suspended too as India begins to put paid to China’s takeover-the- backyard ambitions.

There are a couple of other pertinent domestic questions that appear in sequence. How do you fire up the engines of growth if you fail to catalyse a 50% rural population?

And what a state of medieval disgrace it is in, that it is headed towards delivering a single digit contribution to GDP, and a farming growth rate of  between 1-3% despite the Green and White Revolutions and producing surplus food for a population of 1.25 billion people, 3 times  over that at Independence.

As for cold chains and food processing- there is hardly anything visible above ground as yet despite talk of 50 food courts and the employment buzz around it.

However, along with the mega- push on infrastructure via Bharatmala and other road/port/connectivity development, analysts have been conceding, post budget, that more than 5 million of the annual ten million jobs needed could well be forthcoming from this. The Statistics Office has to update its matrix to capture this information along with other “informal” sector jobs.

Women are a major growth opportunity recognized by this Government. The Mudra Yojana has handed out Rs. 400,000 crores in micro loans without collateral to grass roots entrepreneurs , allocating 75% of it to women. This is on the pattern of the pioneering and wildly successful Grameen Bank of Bangladesh.

The liet motif of the coming general election could well be the anonymous pakoda seller( Mudra-financed) as aspirational mini entrepreneur. But to three- time Congress Finance Minister P Chidambaram, they are no more entrepreneurial than beggars.

Muslim women too are being liberated by this Government.Those opposed to the Triple Talaq Bill  are being overtaken by the community itself  signaling its willingness to make changes rather than have it rammed into law by the present Government.

The Opposition thinks talk of doubling farming income by 2022 and affordable housing for all by then, hundreds of smart cities, toilet-building in millions for the safety and dignity of rural women, not to mention major pushes given to the bottom of the pyramid in the budget, are all so many “jumlas”.  

That some work has already been completed on these missions has only served to infuriate them. They point out that it could be inflationary, and ask where is the money going to come from?

Caught out for patronizing the poor with handouts and not doing any empowering work for decades, the Opposition characterizes almost everything the Modi Government says and does as fraudulent.

The Finance Minister’s budget speech, the first since the implementation of GST, did not have to spend long talking about indirect taxes. Instead he spent an hour on rural India.GST, languishing for decades in the making, has been pushed through by this Government. Even as it is experiencing wobbles in the implementation presently, it has great long-term potential to deliver increasing amounts of revenue to the in a smooth and seamless manner. It will certainly become double that of the direct tax yields in due course, and make room for cuts in corporate and individual taxes, perhaps to align with the best ASEAN country practices.This is acknowledged, even by a sly Government baiter, the erstwhile RBI Governor Raghuram Rajan,  who was also at Davos.

But who can build Bharatmala, the renewed railways, the new ports, the bullet trains, new military hardware, naval ships and submarines, helicopters, planes, fighter aircraft, provide universal electricity, water, solar power, telecommunications, information technology solutions, cyber security, education and healthcare and so on, if not the other half of the population and its collaborators?

This applies to ISRO, space exploration, DRDO, Mazagaon Docks, expeditions to Antartica, UN peace-keeping, and the like too. None of these things can be neglected or put on hold. So the urban masses and classes will need to participate in this work. They may not be at the bottom of the pyramid, but they have the knowledge, the education , the know-how and the drive to meld it all together.

 The big problem, ever since this Government came to power in 2014 has been an inheritance of huge NPAs in the banking sector. These were partially due to collusion and lack of due diligence and political influence, but also because of a reckless borrowing programme and over leveraging of businesses.

When the economy began to slow in 2012 and 2013, despite a lot of liquidity from the years after the global financial crisis of  2008 pushing up the fiscal deficit figures, there was nowhere to run  to. Particularly, as Finance Minster Chidambaram, back as FM in 2012, raised interest rates to curb the deficit and severely cramped growth in the process.

The private sector is beginning to borrow again now, there is a 10% uptick. And the NPAs have been tackled to an extent via the tough bankruptcy law and Government recapitalization of banks. But can the bruised private sector drive a fresh growth surge? Not yet. And certainly not without Government help.

This budget, like many before it, should also begin to be viewed as an annual accounting exercise inherited from British times. Its delivery dates have been changed for swifter disbursements, and may be aligned with a calendar financial year in the future. The Railway Budget has been merged with it. It is slowly, steadily, and inevitably, giving way to diminishing returns. It is not a State of the Union address as in the US. Nor is it comprehensive and sacrosanct as a set of proposals and a financial bill.

The middle class needs to remember that they have already received a 5%  income tax rate applicable to 80% of all tax payers last year.  Of course, it is annoying to see that the parliamentarians have created a glide path to pay increases for themselves alright! And the 10% capital gains tax on equity may give way to indexing yet.

Worrying about a measly 7% rise in allocations to Defence is also not warranted. It is not the whole story, given the well known twin threats from Pakistan and China. The Government will step up to the plate with any monies required, even via foreign soft loans, and internal borrowing as necessary, but it will be off-budget.

India’s fiscal prudence is well regarded amongst emerging economies and receives regular praise from the ADB, IMF, the World Bank,  the BRICS Bank, and the international rating agencies. It  is able to secure loans as a responsible borrower from all the agencies it once took grants and aid from. It has a robust FDI input of over $ 60 billion and nearly $500 billion in foreign exchange reserves- both at the highest ever levels.

India is also a shareholder in some of these multilateral development lending agencies now.

The  move to strengthen the Bond Market by asking top corporate to invest in “A” rated bonds in addition to the “AA” and “AAA” is a dynamic parallel move. This is along with the intent to require 25% of all corporate borrowing to come from the Debt Market rather than exclusively from the Banks/ domestic/ foreign lending agencies.

 That the Government has exceeded its divestment target set last year is also a first, and it seems determined to sell Air India to the private sector along with a 49% foreign component.  

With the increasing moves to involve the private sector into areas that were once the sole preserve of the Government such as Defence manufacturing, things can only get bigger and better for them. It was once subordinated to the “commanding heights” of the PSU world but now,  we need perhaps, to look at not one, but 4 American companies, all in the IT space,- Google, Apple, Facebook, and Amazon, all nearing $1 trillion in valuation terms. They are worthy examples of what the private sector can do even when our entire GDP is at $2.5 trillion presently.

India already has the 6^th largest number of billionaires in the world today, and inexorably, at a 7.5% or more growth rate per annum over the coming years, the future is glorious. We cannot therefore tolerate poverty in our midst because there is no excuse that can justify it.

It is the responsibility of our leadership to take this to heart and a prime minister who has come from humble beginnings has done so. Let the critics carp, and take a disjointed view of budget 2018.  The poor, the middle classes, and the rich, indeed the whole country, have a friend on Raisina Hill.

For: The Sunday Pioneer AGENDA cover story of 11^th February 2018

(1,984 words)

February 5^th, 2018

Gautam Mukherjee

BOOK REVIEW: MICHAEL WOLFF'S FIRE AND FURY

BOOK REVIEW

Title: FIRE AND FURY- Inside the Trump White House

Author: MICHAEL WOLFF

Publisher: Little Brown, 2018, U.S. /U.K./Hachette India

Price: Rs.699/- in softback

The First Nine Months Of The Trump Presidency

If Michael Wolff, the Manhattan based glamour-magazine columnist and author of six prior books, wrote this one to make money from the curious and the Trump-baiters, it is a thumping success.

The racy read about Donald Trump’s late campaign and first nine months in the White House, cast by Wolff as an unlikely, chaotic, even preposterous President of the United States, debuted at No.1 on the New York Times Bestseller List. It sold over one million copies in hardback in just four days. Worldwide sales are also terrific, and it is flying out of the warehouses at Amazon.

But now, Trump has completed a year as President, and Wolff’s book is growing rapidly out-of-date. Its subliminal suggestion that the Trump Whitehouse and indeed his Presidency was about to implode, with generous input from former top aide Steve Bannon, is seen to be an exaggeration.

Instead Trump has flawlessly delivered his first State Of The Union Address to Congress. He has been steadily moderating his stance in recent months without reneging on any of his more prominent campaign pledges.

The economy has picked up to a GDP growth of 3% per annum. Some of this, despite being a billionaire businessman President, is because Trump inherited eight years of repair-work done by his predecessor Obama. Still, it takes good luck to receive such inheritance.

The stock markets are booming. Trump has had the courage to unilaterally  announce the relocation of the US Embassy to Jerusalem, thereby recognizing it as the capital of Israel. Saudi Arabia got into the President’s early good books by ordering $110 billion worth of US arms, to be followed by $350 billion worth over ten years.

Trump has repaired his relationship with the bulk of the Republican Party and its Congressmen/Senators. He has raised import duties on some Chinese goods as a precursor, and urged China to Make in America. The original “Fire and Fury”  military threat was Trump’s, to the dictatorship of North Korea, though sensibly, he has settled for strict economic sanctions for now. The Mexican Wall is still on the agenda and is being financed as a quid pro quo on immigration with Congress. Some immigrants are being given a pathway to citizenship, but Trump is still very opposed to Islamic country immigration in particular.

Pakistan has had its military aid suspended, and Trump gave it the most direct warning to cease helping terrorism that any US President has ever done. Relations with India appear to have a lot of upside potential.

Trump has been shedding campaign era factotums and early appointees steadily, including many of those that populate Wolff’s book. Notable amongst them is Steve Bannon, the Alt Right ideologue who had outlived his purpose. A clutch of erstwhile Goldman Sachs advisors have also been shown the door. The bid of the Democrats to discredit the President and possibly even impeach him for taking help from Putin’s Russia during the campaign has also come largely unstuck.The Nunes Memo from within the FBI, indicates that the Obama administration was aiding the Hillary Clinton campaign by  trying to implicate Trump using the FBI. Trump wants to made this memo public, but the FBI is naturally resisting. However, it does compromise the Mueller Investigation into the matter. 

There is also a simmering hostility towards the Department of Justice (DoJ) and judges hostile to Trump’s  executive orders. And a total lovefest when it comes to the military.

Trump’s JFK-style inclusion of daughter Ivanka and son-in-law Jared Kushner not only during the presidential campaign but into the White House, has added an inside track piquancy. This has survived the revolving door and is likely to last out, despite outbreaks of focus on the Kushner family’s business dealings and suggestions of financial impropriety. Ivanka and Jared are seen as a moderating influence on Trump and he trusts them as family. Trust, otherwise, is not an easy commodity to find in the Trump 

White House, and he is always looking for “rats” to kill.

Much of the outrage that finds voice in Wolff’s book is the difficulty in digesting the presence of a billionaire real estate mogul in the Presidency with no prior political experience, who improbably insists on being his own man.

Then there are the personal habits Wolff describes. Donald and Melania have separate bedrooms at the White House. Trump often goes to bed at 6.30 pm with several television sets, his cellphone and a cheeseburger. He has put a lock on his bedroom door. He is afraid of being poisoned. He begins tweeting at 3.30 a.m. He is allergic to criticism and dubs it all as “fake news”. He is inordinately susceptible to flattery.

The White House Press Secretary, several of whom have come and gone already, finds it difficult to say whether Trump’s tweets are policy announcements or just  personal commentary. Obama didn’t even have a private cellphone in the White House, and tamely surrendered his much loved but unencrypted Blackberry.

Trump seems to favour a style, Wolff concedes, in which he keeps most of the thinking and power to himself. He uses a cluster of changing people, both in the White House and Administration to extend his orders. He does not empower the Chief of Staff particularly, nor any of his key Secretaries. He likes military men, particularly retired Army Generals, and fellow billionaires in terms of his major appointments.

As things stand, attempts to portray Trump as mentally unsound, a serial womanizer, dangerously incompetent, a foul-mouth, a liar and a fool, are floundering. Wolff’s book, and a hostile Democrat section of the US media has tried. 

Donald Trump meanwhile, is pulling ahead, leaving his critics the snakeskin of his previous avatar, and personally he thinks there is a second term in sight.

For: The Sunday Pioneer BOOKS

 (957 words)

February 3^rd, 2018

Gautam Mukherjee

A Battering Ram Of An Inclusive Budget

A Battering Ram Of An Inclusive Budget

With its sizeable allocations for Farming, Healthcare - including Medical Insurance, Education, Medium/Small Manufacturers/ Businesses, and Infrastructure – this final whole year Budget, is designed to bring “New India” to the masses.

It is a New India the contours of which are nationalist, honest, and progressive, much to the discomfort of the deal-making old order. One out-maneuvered by real actions taken for the disadvantaged, rather than routine lip-service, elitism, dynastic privilege, the role of black money and attendant corruption.

This budget also comes in the context of multiple initiatives taken over the last 36 months and more. It is the first budget post-implementation of an imperfect one- nation-one- indirect tax  GST, some 20 years in the making, even though it is still undergoing regular refinements. It also clearly means to address large military outlays, as necessary, and off-budget.

More than a year after an overnight shock 86% demonetization, and months after GST was trundled out, cash transactions have made a limited comeback, but the number of direct/indirect tax payers has risen sharply.

This is in addition to the advent of digitization and its benefits spurred on by multiple Apps, and the linking of Aadhar to most things, including bank accounts, cellphones, insurance, investments, property purchases.

Other tough measures such as the new improved Benami Law and RERA are starting to both net the big fish, and improve the discipline in the Real Estate universe.

Companies have begun to borrow afresh, there is a 10% uptick, the NPA menace has been halted, and recoveries under the Bankruptcy Act are underway. It is very difficult for fat-cat defaulters to either run or hide, and many are under threat of losing their lucrative other assets.This, even as the banks are being substantially recapitalized.

Holy cows such as Air India are en-route to being sold off an d the Government is up on its disinvestment targets.

Finance Minister Jaitley has been letting the fiscal deficit slip a little, targets notwithstanding, in order to accommodate it all, possibly on the calculation that accelerated GDP growth will compensate.

And while there is a threat of renewed inflation from elevated farm prices, high oil,  and the big spends- it could well not go that way at all. Oil prices may have peaked, elimination of layers of middle men may mean that food prices will not go up, and the big Government spend may stimulate employment and growth rather than runaway prices.

All of it, of course, could be viewed as a massive stimulus to the economy, via a wide array of enabling incentives.

It is therefore not surprising that there is a degree of carping from those very quarters   that have long professed concern for the poor farmer, unemployed youth, and so on. However, these armchair warriors should take comfort in the strong push given to infrastructure, designed to eventually put money in their pockets.

It is a garland called Bharatmala, amongst others, including an unprecented gush of FDI at over $ 60 billion, and foreign exchange reserves approaching the $500 billion mark.

How much more foreign money can we expect after labour law reforms expected post August 2018, when the BJP/NDA will have a majority in the Rajya Sabha?

In the meantime, yes, there are creeping though not onerous taxes on the middle classes and above, such as the modest capital gains on equity tax, necessary to pay the piper for social upliftment. However, the FIIs are reportedly off to France and the Netherlands to route their monies, because they still enjoy the exemptions plugged in Singapore and Mauritius.

Oxfam’s recent and racy report did say 73% of the wealth has been cornered by 1% of the Indian population, even if this accounts for 12.5 million people.  And India does have the 6^th largest collection of billionaires in the world now.

That the wages of a disgracefully irresponsible set of parliamentarians, particularly in the Opposition, has been put on automatic track for raises, is regrettable. Raises for the President, Vice President and Governors were long overdue, particularly when a quasi-state like Delhi gave itself disproportionate pay hikes.  

A positive perspective on this budget is only possible however if  one pays no heed to Doubting Thomases. They have readily cast all the initiatives for the poor and smaller businessman, particularly the talk of creating millions of new jobs, and even “Modicare” , as a neat set of fresh “Jumlas” .

The insurance that seeks to cover secondary and tertiary medical care for 500 million people at first, is also going to boost the prospects of the sector. Indeed many of Modi’s initiatives, and his stamp is very evident on this budget, seeks to organize several bites of the cherry.

Similarly SEBI, announcing that a large listed company might soon be required to raise 25% of its financing needs from the Bond Market, is also a simultaneous move to widen and deepen the Debt Market.

Something we have not seen in a while but in keeping with global trends is an increase in customs duties on most imported goods and inputs, including luxury cars. Not sure what this is aimed at, unless it seeks leverage in international commercial negotiations or is a tit-for-tat action.

Between the myriad woods and trees of the detail, this budget has Socialist overtones, but without its ideological emphasis on “redistribution” of resources. But, it does squarely address the bottom of the pyramid, where a third of our heaving millions live.

While we are indeed already the fastest growing major economy, shortly to become the 5^th largest in the world, and aiming at $5 trillion by 2025, to become the 3^rd biggest- we must carry most of our people on this joy-ride too.

The Congress President Rahul Gandhi, seen sporting a $1,000 Burberry jacket recently, may have inadvertently kicked it all off with his “Suit Boot Ki Sarkar” jibe quite early in the day of this present Government.

If this budget seems to have gone lightly over the rest of the population, including the middle- classes and the rich, it does so without apology or defensiveness. Perhaps, Modi seems to say, you cannot fault me for addressing the needs of those who need it most, and my development agenda does benefit the masses as much as the classes. Truth be told, direct tax benefits were given to 80% of the tax payers via last year’s budget.

That this budget has come 11 months or so before the 2019 general election, and not in 2014, in this Government’s can-do-no- wrong first flush, is indeed a pity.Though, it probably suggests that it is an economic manifesto for the next term of five years.

Given the emotive appeal of a positive Ram Mandir verdict expected shortly, and a strict military attitude towards China and Pakistan beginning to pay off diplomatically too, in the context of Afghanistan and North Korea, Modi may have much more than a pro-poor budget to bank on.

In 2014, for the record, ours was a bruised and battered economy, inherited from the UPA, that may not have been able to sustain this present ambition.

This Government, in the face of mounting criticism for promises unfulfilled, is resolutely looking forward. It seems to say 5 years is not long enough to complete the agenda.  Indeed, the Finance Minister unabashedly lets his plans, including the much touted doubling of farm-income, and affordable housing for all, spill over to 2022,  independent India’s 75^th year.

But despite the confidence in the future, and the formidable electoral track record,  the 2018 Budget presentation came on a day when the Congress swept three bye-elections, two from significant places in Rajasthan, such as Alwar and Ajmer. This has followed on from losses to the BJP in civic polls in Madhya Pradesh, and a fright in the Assembly polls in Gujarat. Allies such as TDP and the Shiv Sena are also breaking away.

So, this budget, that puts the BJP back in the driver’s seat, has not come a moment too soon. It is likely, in August 2018 and after, that the second act before the important Assembly and General Elections will play out. This could address, via fresh legislation, a taming of the judiciary, the anomaly of Article 370, Muslim affairs, simultaneous elections, the aspirations of big business, the nationalist middle class, any other neglected support field. It could well lay waste to the Opposition in the process.

For: The Sunday Guardian

(1,399 words)

February 2^nd, 2018

Gautam Mukherjee